- Bitcoin’s correlation with global M2 has dropped to its weakest level since early 2024, raising cycle top concerns.
- Analyst Colin Talks Crypto sees a possible Bitcoin peak within three months as past decoupling patterns reappear.
- Despite near term divergence, long term M2 correlation remains strong, with a two year alignment still at 91.3%.
Bitcoin’s long standing correlation with the global M2 money supply has weakened after months of strong alignment. According to analyst Colin Talks Crypto, Bitcoin and global liquidity have recently moved out of step, the weakest connection since early 2024.
This comes as Bitcoin trades near $115,371 following a surge from below $50,000 earlier this year. Global M2 trends often precede Bitcoin’s market moves by nearly three months, but that alignment has grown less reliable over recent months.
Long Term Correlation Holds
The correlation between Bitcoin and global M2 has historically remained strong when measured over longer horizons. A two year comparison shows a correlation of 91.3%, while one year holds at 82.7%, showing a consistent relationship over time.
However, shorter windows reveal volatility. For example, the 60 day timeframe shows a negative correlation of -51.7%, showing how quickly the alignment can break down in the near term.
This divergence has prompted closer monitoring from analysts, especially as Bitcoin has previously decoupled from liquidity growth near past cycle tops. The same pattern occurred during all three historical peaks, where Bitcoin separated from M2 shortly before topping out.
Analyst Suggests Cycle Top May Be Near
Colin Talks Crypto emphasized that the recent breakdown could be the early stages of another cycle top. The analyst suggested a potential peak could occur within the next three months if historical patterns repeat.
He also noted that Bitcoin’s tight correlation with M2 began after the launch of spot ETFs in January 2024, which drew increased liquidity attention to the asset. For nearly a year following the ETF approvals, Bitcoin and M2 moved in close lock step.
However, over the past three months, this relationship has weakened sharply, becoming the least aligned since ETFs went live. This shift raises questions about whether the decoupling signals a final phase in the ongoing bull cycle.
Liquidity Expansion and Future Moves
Despite the short term breakdown, M2 continues to be key in Bitcoin’s long term movement. Rising liquidity levels since early 2024 fueled Bitcoin’s exponential gains, indicating its sensitivity to monetary expansion. Since global M2 trends are offset by about 80 days, current movements could still influence Bitcoin’s price direction later this year.
Colin Talks Crypto added that the correlation may resume during Bitcoin’s next sharp upward leg, but he cautioned that no guarantee exists. With liquidity conditions still expanding globally, analysts are monitoring to see if Bitcoin reconnects with M2 or continues its decoupling trend.
