Bitcoin, the world’s largest cryptocurrency, is showing significant correction signs, with market analysts suggesting it could drop below $88,000. This projection is based on Bitcoin price historical correlation with the global M2 money supply, a key indicator of liquidity in the global economy. If this trend continues, Bitcoin could face a 20-25% drop from its peak of $99,000 earlier this month.
Market Overview and Recent Declines
Shortly after approaching the $100,000 milestone, Bitcoin’s price has entered a downward movement. It has already lost more than 9% in value over the past four days, dropping to $92,664 at the time of writing. Alongside this decline, Bitcoin’s market capitalization now stands at $1.84 trillion, with trading volumes soaring to $91.14 billion daily.
Despite its recent rise, this sharp correction reflects a cooling-off period as investors take profits. According to analysts, these movements are a natural part of market cycles, particularly in the context of Bitcoin’s recent rally.
Long-Term Holders Increase Selling Activity
Data from Glassnode, a blockchain analytics firm via X, indicates a significant increase in selling by long-term holders (LTHs). The report highlights that 366,000 BTC were sold in a single month — the highest level of selling activity since April 2024. Since September, LTHs have offloaded a total of 507,000 BTC, underscoring their decision to capitalize on Bitcoin’s near-record highs.
Following a flurry of consistent new ATHs, #Bitcoin is just a stone's throw away from reaching a price of $100k per coin. Explosive price action tends to result in a significant increase in the unrealized profit of holders, and Long-Term Holders are ramping up their… pic.twitter.com/DOoUjQjfLJ
— glassnode (@glassnode) November 26, 2024
Despite this increase in selling pressure, Glassnode notes that the scale of distribution remains smaller compared to the 934,000 BTC sold during the rally to Bitcoin’s previous all-time high in March 2024.
Correlation with Global M2 Money Supply
Bitcoin’s price movements have historically aligned with trends in the global M2 money supply, which tracks the total liquidity in circulation. Analyst Joe Consorti notes that since September 2023, Bitcoin’s price has mirrored the M2 supply with a 70-day lag. This correlation is evident in the recent sharp decline, as Bitcoin’s price fell by $5,000 within a single day, reflecting earlier global liquidity trends.
UPDATE: One day after my last chart, bitcoin is now $5,000 lower, following the path set by global M2 several weeks ago very closely.So far, this correlation is shockingly accurate.We'll have to see if BTC follows it all the way down, or stops short & finds support. pic.twitter.com/oEGOuYYRio
— Joe Consorti (@JoeConsorti) November 26, 2024
Consorti warns that if this pattern persists, Bitcoin price decline could get to a 20-25% correction from its recent high of $99,000. This would place Bitcoin’s price below $88,000. However, the analyst also notes that Bitcoin could find support before reaching these levels, depending on market dynamics.
Key Support and Resistance Levels
The loss of the critical $94,000 support level has heightened concerns about further declines. Different analysts have identified several key levels to monitor in the coming days:
$88,000: A crucial support level that could slow Bitcoin’s descent.
$80,000: A deeper correction level if selling pressure intensifies.
$73,000: A critical liquidity zone that marked the starting point of Bitcoin’s rally to $100,000.
Prominent crypto analyst Justin Bennett emphasizes the importance of Bitcoin price holding above $93,600 to avoid steeper declines. He points out that as long as Bitcoin remains below this level, the $86,000 and $73,000 ranges are critical areas of interest.
The largest block of $BTC liquidity over the last 30 days is sitting at $73k, where the impulsive move began.$86k and $73k are in play while below $93,600.Source: @hyblockcapital Sign up at: https://t.co/6VoQzA6b14 (affiliate link) pic.twitter.com/ay7BsXQguO
— Justin Bennett (@JustinBennettFX) November 26, 2024
Declining Optimism for $100,000 Milestone
The chances of Bitcoin reaching $100,000 by year-end have dropped significantly. According to prediction market platform Kalshi, the likelihood has fallen from 92% to 64%. The odds of achieving this milestone by the end of November are even lower, declining from 88% to 18% in just four days.
There is now just a 15% chance Bitcoin will hit $100K before DecemberDown from 88% just a few days ago pic.twitter.com/xZsyFyHMsq
— Kalshi (@Kalshi) November 26, 2024
Adding to the bearish sentiment, the stock of MicroStrategy, one of the largest corporate holders of Bitcoin, has plummeted by 35% over the same period, reflecting broader uncertainty in the market.
On-Chain Indicators and Broader Market Trends
Beyond the M2 correlation, Bitcoin’s on-chain data from Coinglass reveals signs of market weakness. The spike in selling by long-term holders and reduced liquidity at key price levels suggests that market participants are taking a more cautious approach.
Altcoins have also experienced a decline alongside Bitcoin, as the overall crypto market sees reduced euphoria. Open interest in Bitcoin has dropped by 4.74% to below $60 billion, while options open interest has surged by 34% to $5.92 billion ahead of major expirations.
Expert Perspectives on the Market Outlook
Despite the recent downturn, some experts remain optimistic about Bitcoin’s long-term prospects.
Ki Young Ju, CEO of CryptoQuant, notes that corrections of up to 30% are common during bull markets. He advises investors to manage risk and avoid panic selling, emphasizing that the current correction does not signal the end of the bull market.
Even in a parabolic bull run, #Bitcoin can see -30% pullbacks.Such corrections repeatedly occurred during the 2021 price discovery from 17K to 64K.This isn’t a call for a correction—just manage your risk and avoid panic selling at local bottoms. We’re in a bull market. pic.twitter.com/B5zpk7P0N9
— Ki Young Ju (@ki_young_ju) November 26, 2024
PlanC, a prominent crypto analyst, views the current consolidation phase in the $90,000 range as a positive development for the market’s longevity. He suggests that spending more time in this range could reduce volatility and support sustainable long-term growth.
Happy to see #Bitcoin take a breather and consolidate a bit in the 90s. I was hoping this would happen.It’s looking more and more likely that we could actually spend some time consolidating in the 90s.If that’s the case, it would be the best-case scenario for the longevity…
— PlanC (@TheRealPlanC) November 26, 2024
What Lies Ahead for Bitcoin?
As Bitcoin price goes though this volatile period, its movement will depend on several factors, including global liquidity trends, investor sentiment, and key support levels. While a drop below $88,000 remains a possibility, analysts urge caution, noting that Bitcoin’s historical resilience often leads to recoveries after sharp corrections.
For now, investors are advised to monitor the market closely and approach the current phase with a balanced perspective.
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