Is The Bitcoin Rally Over After $111,900 ATH? Global M2 Money Supply Is Still Going

Bitcoin has seen a sharp pullback in the past few days, dropping below $110,000 after setting a fresh all-time high of $111,900 just four days ago. The correction saw the price fall as low as $107,500 before rebounding slightly, raising doubts among investors about the strength of the recent rally. Despite this retracement, some analysts argue that the bullish structure is still intact for Bitcoin. Particularly, crypto analyst Colin pointed to an interesting macroeconomic indicator called the Global M2 Money Supply as a reason for continued optimism.

According to an analysis posted by crypto analyst Colin on the social media platform X, Bitcoin continues to track the global M2 money supply with accuracy offset by an 82-day lag. The chart highlights that the global M2 aggregate, which reflects the total liquidity circulating in the world’s largest economies, has recently hit a new all-time high. Historically, Bitcoin has closely mirrored this trend with a slight delay, and Colin believes this pattern suggests there is still considerable room for the Bitcoin price to climb.

The correlation between the Global M2 money supply and Bitcoin’s price action is statistically significant across various time frames, with the highest correlation of 93% found in the 1½-year window. This strong correlation shows that Bitcoin’s recent rally is on the back of deeper monetary expansion trends. 

Keeping this in mind, the interpretation is that Bitcoin is undergoing a healthy retracement within a broader upward trend, especially when viewed in the context of the global money supply. The pullback to $107,500 doesn’t invalidate the bullish setup, and Bitcoin’s ability to hold above the previous consolidation level between $102,000 and $104,000 is also a positive note.

Despite the new $111,900 all-time high and Bitcoin bulls successfully holding its breakout level as support, social sentiment is still somewhat uncertain. This was also noted by Colin, who pointed out that many market participants still doubt the sustainability of the breakout, describing this disbelief as ironic given the strength of the underlying data. 

Colin also referenced the CBBI (Crypto Bull Run Index), which currently reads 79, still comfortably below the overheated threshold. This indicates that, by normal standards, the market is far from its euphoric peak, and there’s still significant upside left in the cycle.

The chart provided by Colin highlights a projected upward trajectory that would see Bitcoin breaking above current levels toward $130,000 and beyond if the M2 correlation continues to play out. 

Interestingly, Colin’s analysis of the Global M2 supply and its relation to Bitcoin has been spot on in predicting Bitcoin’s rally. In April, when Bitcoin dropped to as low as $74,000, he projected that May would mark the next major breakout period for Bitcoin’s price, and this forecast has materialized exactly as he anticipated.

At the time of writing, BTC is trading at $109,670, up by 2% in the past 24 hours.