Transcription
Looks like in two months, regardless of whether this is a final top or whether this is a sub peak, we are in for both a parabolic move, but also a pretty significant crash or correction.
Hello guys, my name is Colin and this is Colin Talks Crypto. It's time to bring you an update on the global M2 money supply as it correlates to Bitcoin. And in this video, I'm going to cover that as well as I'm going to show you the inverse DXY, the inverse Dixie and its correlation to Bitcoin. And there's some interesting things that have taken place here and we're going to dive right in.
So the global M2 money supply is an aggregate of the global liquidity of the top nations on Earth combined into one line and then shifted forward by 90 days in this case. And you're probably mostly all familiar with that by now. Now what has been happening with the global M2 money supply is that it has been in a steep uptrend for a period of 6 months. We're already about four months into that and we have about two months to go before this point right here. And I'm just going to draw a little box because this is our point of interest for today of discussion. And then we have another month of data that is basically downtrended. And if you step back, first of all, this is extremely bullish. We have this massive massive uptrend. But we also right now from the last month of data we have a downtrend of about a month and that is the largest downtrend the largest decline in global M2 that we have seen this entire move. It's bigger than the corrective move right here which we are just kind of climbing out of right now in Bitcoin. So, this downturn is larger than the move we saw back in June. And since we've pushed the global M2 line forward by 90 days, this means that this drop in global liquidity could reflect itself in Bitcoin around late September, right here, or October, just 2 months from today.
So, the big question is, will this be a Bitcoin sub peak or will it mark the final top? And I'm going to discuss both outcomes and the potentialities of this. So, if this is just a sub peak, it does look like a fairly significant correction could be in store in the month of late September/ October and possibly longer. And we'll have to see what the M2 line does next to see how long it could last. Obviously, if the line kept moving down in the next several weeks, that would be very bearish. That would be pretty bad. That would be the largest decline since this decline in global M2. And I would say if that happens, if it drops down this far, that would make a fairly strong case for it being a final top and not just a sub peak. But I'm not ready to make that call just yet because while this is a large drop, this isn't the magnitude I would expect. Obviously, the data hasn't come in yet to determine whether this is the final top or not. And keep in mind at the top in the previous bull runs, the global M2 line actually did not correctly indicate the top. I really want to hit that home. And I made a video on how we're going to navigate that. And essentially, we're going to use a basket of other metrics to sort of corroborate and double check what the global M2 line is showing us because the global M2 line toward the top of the cycle seems like it so far. I mean, there hasn't been that many Bitcoin cycles, but it has led us astray each time, each bull run top. So, it's been good for the intermediate cycle moves, but when it comes to the tops, it has failed. And obviously you wouldn't want to follow something that's going to fail on you all the way to the top because it's going to miss. And basically what would happen as in the past cycles is Bitcoin would head down down while Global M2 kept going up up. There's even a chance that could be where we're at right now, but I give that like a 3% chance. I really don't think we're there. But I've learned anything is possible in markets.
Now, so that's a scenario. if it's a sub peak. Now, if it's the final top, that means that we only have about two more months remaining in this bull run cycle, which I just want to make a comment on this. I feel like that's not very likely that the cycle is going to end in just two months, but I will also not ignore the data. Like, if this M2 line just keeps dropping and dropping and dropping and it doesn't go back up, that's a big red flag and I will not ignore that. I will also look at other metrics and cross corroborate that. But I think that that would be pretty telling if Global M2 just tanked. Like we know that Global M2 can give us a false sense of security. It can keep heading up while Bitcoin drops. But a scenario where Global M2 actually just keeps dropping, that's not even trying to give us a sense of false hope. It's telling us directly global liquidity is leaving the system. So, I would say that's even more bearish. I think that if the global M2 line does keep dropping, which I really don't expect it to do, but we have to watch. Like, I can't predict the future. Global M2 has already shifted forward by 90 days, but I'm certainly not going to guess at what the next Global M2 data is going to be because I don't know. I have a feeling it's going to hover around here, drop a little bit, and then make a new all-time high. I think that's what it's going to probably do because I don't think that the cycle is going to be done in two months. I feel that for Bitcoin to top in two months, I mean, the sentiment right now is so low. It's so low. And for the sentiment itself to reach the levels of euphoria, which would mark a cycle top, it just takes longer than 6 months for that to happen. I mean, I would say at a minimum it takes like 6 months for that to happen, not 2 months. Here we are scraping along, barely making new all-time highs slowly, bit by bit. Sentiment is at the bottom. I'm showing you a chart right now. This is from Benjamin Cohen of Into the Cryptoverse. And it just shows you how the sentiment is super super super low right now. So look at this chart and tell me, do you think that it's possible for sentiment to peak out in euphoria in just 2 months? I think that's very unlikely. And that's how a bull run concludes. It's when you have dumb money fomoing in, chasing because they saw it on the news, they heard about it on the radio, they heard it from their friends, you know, word of mouth gets out and everyone's rushing in to pile their money in. And that's when the top is formed. You know, after some period of time of that happening, when people start getting excited, you start hearing it from people you you don't normally hear about crypto from. They ask you questions. They want to know how to buy it. They want to know what's a good wallet. They want you to help them find how to buy their favorite crypto on some obscure exchange. Those are like topping indicators. And the more of that you get, the more euphoria you get. But on this chart, you can see that we are nowhere near euphoric stages of the bull run.
So flipping back to the global M2, to say that this is going to be the final top would very much surprise me. That's just my honest opinion because it's only two months away and for sentiment to climb to euphoric stages to actually form a proper top, I just don't think that's possible. So that would leave us with one heck of a sub peak though and one heck of a correction. I wouldn't joke around with this correction. This will scare many people if it reflects itself in Bitcoin as it looks like. You know, we don't know. Bitcoin doesn't always perfectly follow this. So, we will have to see how closely it aderes to it. But, you know, back here we had global M2 dropping from this peak down to here and and Bitcoin did follow it pretty much to the tea. You know, some delays, some fake outs, but it did follow it. It followed that move. So, I would expect as a default for Bitcoin to follow this. And that could be a massive drop. I mean, that could be um not that these prices on the right here are showing you what the price will be, but let's hypothesize and say that let's say that Bitcoin in 2 months is around $150,000. I mean, the drop that we could see could be a $30,000 drop, something like that. I'm just kind of throwing a ballpark figure out there so you can get the idea of the magnitude. like it could be a a 20 or 30% drop, which is pretty standard for a Bitcoin cycle. So, I would say be ready. That's my takeaway is be ready for this period. And we're going to know more as we get closer. Like, as the weeks go by, we're going to know more. I would say in 2 to four weeks, let's re-evaluate this and see, does it go down more? Because if it does, then red flag bull run looks like it might be in trouble. or does it kind of find a bottom here and make a new high? In which case, then it's still going to be messy, but it doesn't mean it's going to be the absolute top. It doesn't mean it's going to be the final top, unless it's a fake out, in which case we've covered that. We're going to be looking at a basket of other metrics to diversify our opinion. So, we're not focused and reliant on just one metric alone, not just the global M2 money supply. Because, as I said, in the past bull runs, it has led us astray. So, I think the key thing here is to not jump to conclusions. I know it's easy. I even drew a red box like red alert, but like keep a level head. Um, expect perhaps a massive correction, but until we get the further data, I'm not going to make a call whether this is the final top or not. I know a lot of people on X on social media are very quick to make calls, but as I've pointed out, most people tend to not be patient enough and they tend to be overly emotional and jump to conclusions way too quickly. And I think you need to step back and relax and take a deep breath. And you know, whether you personally want to try to time the top of this and sell and then re buy like that's over to you. I am not making any recommendation. That tends to be a way to mistime the market and to FOMO in later because you sold and bought at the wrong times. Generally, most people aren't skilled enough to pull that off. So, I would recommend against it if it's not the final top, but I'm not giving financial advice here. And you can do whatever you want. If you want to try that, you can. I would say if there was a time to try to do that, I mean, aside from this drop right here to here, this is the next most obvious opportunity that you could try to do that, especially if it goes down a bit more. You know, that's a pretty significant drop. So, even if you're sloppy, you might catch 50% of the drop and re buy in at the right time if you're skilled and you know what you're doing.
The fortunate thing about the Global M2 money supply line is that we have the gift of 90 days of advanced notice. And you probably know as you've watched my past videos that this yellow line has been shifted forward by 90 days because it correlates with the Bitcoin line by about 80 or 90% accuracy. So we already have this gift of foresight of 90 days advanced notice like where we are today here to what the data shows here on this chart. This is 90 days, but it looks like in 2 months, regardless of whether this is a final top or whether this is a sub peak, we are in for both a parabolic move, but also a pretty significant crash or correction. And that will shake out a lot of people. And we already had a ton of people around this area of Bitcoin when Bitcoin was um in the sub 113,000 range before it finally broke out calling this a top. Like tons of people were saying I was wrong and this was a top. And it turns out that they were incorrect. But there was a lot of people. Now, if you think that there was a lot of people around this range calling this a top, imagine how many people are going to be calling this a top. I mean, honestly, legitimately, it could be, right? We don't know until we get more data. And it doesn't mean that the price has to be $190,000. That's not the price of the yellow line. The yellow line is this axis over here shown in quadrillions of dollars or something like that. This is just the Bitcoin line. And the global M2 money supply line is directionally correlated to Bitcoin. It shows directional moves. It doesn't show percentage based moves. So, you can't just say, "Oh, we're going to hit 190,000 right here in two months and we're done." That's not how you view this chart. A lot of people view this incorrectly. And I expect that we'll see between 140 or $150,000 by the time um the end of September rolls around. So, in 2 months, I think we'll be around 140, maybe 150 if we're lucky, $1,000 for Bitcoin. And then the crash will maybe occur and we'll drop by 30%. Or whatever. And we have to watch this. Does it continue to unfold in a negative fashion? Is that drop going to be even bigger? We will find out.
Okay, so that's where we're at right now. We have a couple more bullish months in store and that's great. But I just wanted to bring to your attention this sort of like growing red flag. Like what's going to happen here, guys? Like I don't know. No one knows. But we're going to keep an eye on it. Sub peak or final top? That is the question. But either way, strap on your seat belts because that's not going to be a fun ride. That's no one's going to enjoy that. Even the most diehard holders are not going to enjoy that.
Okay. Now, for the second part of the video, I'll make this kind of brief here, but I want to show you something that a few people have brought to my attention, which is that the inverse DXY is also correlated to Bitcoin. And in a um predictive sense, the blue line here is the inverse dxy. And let me just scale it sort of properly so that it fits onto the chart correctly. I'm just doing this kind of visually right now, but you can see how look at that drop. More recently, the DXY, the inverse DXY had a bigger drop than even the Global M2 line did, but it's always been like that. You can see from here to here, it's always more exaggerated. And if you go back, you can see how it's not as correlated. And so the people who tell you that global M2 money supply line is garbage. It's not meaningful. It's all it is is the inverse DXY. And this is my rebuttal. And no, it's not. It's similar, but it's not the same. And you can see it breaks apart and it's less accurate than the global M2 money supply line. And in case you don't know what this is, the DXY, and in this case, it's an inverted DXY. It's a measure of the US dollar strength versus a basket of six foreign currencies including the euro, Japanese yen, British pound, Canadian dollar, Swedish crona, and Swiss frank. And so when the line heads up here because it's inverted, that means that the US dollar is actually losing strength versus these other currencies. And when this line is dropping, it means the US dollar is gaining versus these other currencies. However, that is irrelevant because we really just care about the correlation to Bitcoin. And I even did a table here. The lower table is showing the correlation of the DXY line and it's at minus 50. It's a negative correlation. It's not really correlated to Bitcoin. I mean, visually, I guess sloppily it is, but other than that, not really. Whereas up here, you have the table for the global M2 line, and it's 89.7% correlated, which is much more correlation than the inverse DXY. So, in a way, you can say that the inverse DXY offers a little bit of a confluence in a way. I mean, the fact that they both trend up is a good sign because they both have been tracking with Bitcoin, roughly speaking. But it does seem to me that the inverse DXY, this blue line, and the global M2 yellow line here, while they do share complimentary movements, they're not equal in accuracy. And if I had to pick one as the most accurate and correlated with Bitcoin, I would hands down pick Global M2, both visually and per the math over here on the left. So now you know global M2 is similar to the inverse DXY but not identical and the inverse DXY does not track Bitcoin as well as the global M2 line does.
Okay guys, so let us continue to watch the global M2 line as it unfolds and let's see, you know, is this a sub peak or is this the final top? I think that we will have a better idea within two to four weeks, really within a month as we get closer to it. We'll have a lot more data. And I think I want the key takeaway here to be, you know, this is a a yellow flag, but don't jump to a conclusion and don't get panicky. Just observe and watch as the data unfolds and let the data unfold. Okay guys, and I'll be here with you watching the data as it unfolds. Take care and I hope this was useful. Have a great day.