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Recent critiques by analyst TXMCtrades raise questions about the reliability of global M2 money supply data as a predictor of Bitcoin price movements.
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His analysis highlights how inconsistencies in M2 data updates can distort long-term trends, emphasizing the need for rigorous approaches in crypto forecasting.
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“You’re looking at an M2 weighted inverse dollar exchange rate 95% of the time. Be better at math!” TXMCtrades criticized the common practices used in Bitcoin price prediction.
Financial analyst TXMCtrades critiques the use of global M2 money supply data for predicting Bitcoin (BTC) prices, advocating for more rigorous analysis in crypto forecasting.
Is Global M2 Money Data a Reliable Predictor for Bitcoin Price Movements?
The analyst, known as TXMCtrades, shared critical insights regarding the use of global M2 money supply charts in predicting Bitcoin price movements. His remarks coincide with a notable surge in M2 reaching record levels, prompting various analysts to draw parallels with Bitcoin (BTC) forecasts.
The Flaws in Charting Global M2 Against Bitcoin
In a detailed post on X (formerly Twitter), TXMCtrades specifically referenced a chart from macro investor Raoul Pal, which attempted to correlate Bitcoin’s price with fluctuations in global M2 money supply. He pointed out fundamental flaws in the practice of charting global M2, stating that discrepancies in update frequencies distort the interpretation of data.
“People, you can’t create a daily or weekly time series of ‘Global M2’ when the United States is only updating M2 on a weekly basis and all others are monthly!” he noted, emphasizing the lack of coordination in data reporting from various countries.
Furthermore, TXMCtrades highlighted that many nations had not updated their M2 figures past February, creating significant data gaps. In his view, this inconsistency leads to misleading analyses that mostly reflect foreign exchange fluctuations rather than genuine money supply dynamics.
Understanding the Global M2 Dynamics and Its Impact
He elaborated that approximately 46% of the global M2 is attributed to China, whose monetary policy significantly varies from other major economies. Countries like China face ongoing challenges with debt deflation while showing an upward trajectory in M2 money supply. “They are currently trying to ease out of an ongoing multi-year debt deflation and doing a pretty shit job of it. Their M2 goes straight up,” stated TXMCtrades.
In contrast, the U.S. M2 figures have remained below their peak levels from 2022, growing at the slowest rate since Bitcoin’s inception (excluding the 2022-2024 period), another factor he argues undermines the predictive power of global M2 on Bitcoin prices.
The Issue with Arbitrary Data Offsets
TXMCtrades also voiced his discontent with the practice of employing “random offsets” to align global M2 data with Bitcoin prices, a method widely used among analysts. For instance, Raoul Pal suggests a 12-week lag between M2 shifts and Bitcoin’s price movements, while others propose different timelines, creating confusion regarding the timing of correlation.
“Money is money; it doesn’t have a wait time,” TXMCtrades asserted, advocating for a straightforward interpretation of metrics without artificial adjustments that lead to overfitting based on recent historical data.
Call for Rigorous Analysis in Crypto Forecasting
In conclusion, TXMCtrades has urged fellow analysts to adopt more rigorous and mathematically sound methodologies in their analyses of cryptocurrency prices. Stating that the current models propagate unreliable insights, he emphasizes the importance of analytical integrity and the need to move away from “scammy analysis.”
Conclusion
TXMCtrades’ critique serves as a crucial reminder that analysts must approach the correlation between monetary supply data and Bitcoin price movements with caution. By advocating for higher standards in analysis, he encourages a more reliable understanding of factors influencing the cryptocurrency market.
