Cryptocurrency analysis platform Alphractal has indicated a slowdown in a key indicator of global liquidity. According to data shared by the company, the annual rate of change (YoY) of the global M2 money supply has begun to show a downward trend.

The analysis noted that while the global M2 money supply is still increasing compared to last year, its growth rate has slowed significantly. This indicates a loss of momentum in liquidity creation worldwide, particularly in major economies.

Alphractal pointed out that historically, increases in the M2 money supply have often shown a positive correlation with the Bitcoin price, meaning that increased liquidity can support rallies in the crypto market. However, he also noted that this correlation is not always consistent.

On the other hand, it was stated that the global M2 money supply turning negative on an annual basis has generated significant signals in past cycles. According to the analysis, especially in the last three Bitcoin cycles, the periods when M2 growth turned negative in the post-halving periods tended to coincide with market lows.

A graph comparing the M2 money supply with the Bitcoin price.

However, it was also noted that it could take months for M2 growth to move into negative territory, or in some scenarios, it might never reach that level. Therefore, analysts said that this indicator should be closely monitored to understand the direction of global liquidity and to interpret market cycles more accurately.

*This is not investment advice.

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