Fun

Global M2 Can’t Predict Bitcoin Price, Says Quant Analyst

News Feed - 2025-06-26 07:06:03

Reason to trust Strict editorial policy that focuses on accuracy, relevance, and impartiality Created by industry experts and meticulously reviewed The highest standards in reporting and publishing How Our News is Made Strict editorial policy that focuses on accuracy, relevance, and impartiality Ad discliamer Morbi pretium leo et nisl aliquam mollis. Quisque arcu lorem, ultricies quis pellentesque nec, ullamcorper eu odio.


Sina—co-founder of the hedge fund 21st Capital—publicly dismantled a popular Bitcoin price model promoted by Real Vision CEO Raoul Pal, calling it a textbook case of data illiteracy and overfitting.


The model in question draws a close correlation between Bitcoin and Global M2—a measure of global money supply—by shifting M2 data forward by a set number of weeks, typically 10 to 12, to supposedly “predict” Bitcoin’s future price moves. Raoul Pal has used this chart to argue that macro liquidity conditions drive crypto cycles, and that the current market behavior can be forecast using monetary expansion. Expert Torches M2-Bitcoin Correlation


But Sina, a trained data scientist who teaches data analytics at the undergraduate and graduate level, says this model collapses under scrutiny. “This is a terrible failure of not understanding overfitting,” he said in a June 24 video posted to X. “What I’m seeing doesn’t even pass the first month of a first-year data analytics course.” Related Reading Bitcoin Poised For Rally As Geopolitical Tensions Ease And Inflation Expectations Fall 20 hours ago


Sina points out that the apparent correlation between Bitcoin and Global M2 only exists because the data has been “tortured” to fit historical patterns. “If I’m allowed to play with the data and arbitrarily move things around, I can definitely find great matches between pockets of data,” he said, warning that this flexibility is exactly what allows analysts to create the illusion of predictive accuracy.


The primary issue, he explained, is that the Global M2 data itself is inherently flawed. It’s compiled by multiplying various central banks’ M2 figures by exchange rates—mixing fast-reporting economies like the US with countries that have data delays of weeks or even months. This creates a misleading impression of daily fluctuations in global liquidity. “It seems to be moving on a daily basis, but it’s actually mixing frequent and infrequent updates,” Sina said. “It’s not a true signal.”


More importantly, Sina argues that the model fails the moment one zooms out from selective chart slices. While Raoul Pal and others have showcased examples of tightly aligned tops and bottoms between Bitcoin and Global M2, Sina demonstrated how minor tweaks in lead time or scale can yield dramatically different outcomes. “Let’s try a lead of 80 days. That doesn’t look good. What about 108? Ah, now the tops align—so let’s zoom in again and pretend it works,” he said sarcastically. “This is not modeling. This is playing.” Related Reading Bitcoin Repeats Its 2021 Pattern—Analyst Warns Final Crash Still Ahead 1 day ago


He highlighted how each adjustment to the model—shifting from a 12-week lead to 10 weeks, to 108 days—exposes its lack of systematic foundation. “If you don’t have a proper model, you fail to predict the future,” Sina said. “This is classic overfitting. You force the data to match historical behavior, but you lose any generalizability.”


To illustrate the concept, Sina compared it to fitting a curve through a noisy sine wave. A well-structured model captures the core pattern and ignores noise. An overfit model, by contrast, attempts to match every small fluctuation—resulting in poor predictive performance when new data arrives. “Overfitting looks better, but it models noise. And noise doesn’t repeat,” he said.


Sina also questioned whether Bitcoin might actually lead liquidity, not follow it. “If you look at the last cycle, Bitcoin topped first. Liquidity topped 145 days later,” he said. This reverses the causality implied by the Global M2 model and calls into question its entire premise as a forward-looking tool.


His conclusion was blunt: “You have to be very careful with overfitting. It looks matching, but it’s forcibly fit on historical data. You have no idea about the predictive accuracy of this thing.”


At press time, Bitcoin traded at $106,952. BTC rises back above the 0.618 Fib, 4-hour chart | Source: BTCUSDT on TradingView.com Featured image created with DALL.E, chart from TradingView.com

News Feed

Institutional Investors Say SEC Having More Power to Regulate Crypto Will Boost Prices
Institutional Investors Say SEC Having More Power to Regulate Crypto Will Boost Prices Institutional investors are optimistic about the U.S. Securities and Exchange Commission (SEC
EU Data Act Proposes Shutdown Function for Smart Contracts
EU Data Act Proposes Shutdown Function for Smart Contracts The European Union has published its new Data Act, a law proposal that aims to regulate the generation and handling of da
Telegram Drops TON Cryptocurrency Project After US Prohibits Global Distribution
Telegram Drops TON Cryptocurrency Project After US Prohibits Global DistributionPopular messaging app Telegram has shut down its TON cryptocurrency project. Telegram founder Pavel D
Tom Blackstone2 hours agodYdX exchange launches testnet for ‘fully decentralized’ version 4The crypto exchange launched a testnet featuring an on-chain order book and matching engine, doing away with the centralized
How a decentralized AI movement is shaping a fairer future
Savannah Fortis5 hours agoHow a decentralized AI movement is shaping a fairer futureThe Morpheus Network and 6079 are leading a movement to challenge the supremacy of Big Tech giants by employing decentralized, permissio
Whale buys nearly $13M of Ether, but price needs to reclaim $2.7K for next leg up
Zoltan Vardai12 hours agoWhale buys nearly $13M of Ether, but price needs to reclaim $2.7K for next leg upThe last time this whale address bought the dip was just before Ether rose from $2,100 to $3,100.2877 Total views4
Tornado Cash verdict has chilling implications for crypto industry
Robert D. Knight9 hours agoTornado Cash verdict has chilling implications for crypto industryThe conviction of Tornado Cash developer Alexey Pertsev reinforces a very broad interpretation of criminal liability, which has
Renters Threaten US Real Estate Market, 20 Million Americans Face Eviction
Renters Threaten US Real Estate Market, 20 Million Americans Face EvictionThe aftermath of the coronavirus-provoked business shutdowns in the United States caused a number of market
DBS CEO Sees Crypto as an Alternative to Gold — Says Central Banks Globally Should Regulate Cryptocurrencies
DBS CEO Sees Crypto as an Alternative to Gold — Says Central Banks Globally Should Regulate Cryptocurrencies The CEO of Southeast Asia’s largest bank, DBS, says cryptocurr
Colombian Tax Authority Warns About Consequences of Not Declaring Crypto Related Taxes
Colombian Tax Authority Warns About Consequences of Not Declaring Crypto Related Taxes The Colombian tax authority, DIAN, has reminded taxpayers that they need to start registering
Turner Wright2 hours agoOpenSea manager accused of insider trading sentenced to 3 months in prison, $50K fineNathaniel Chastain will reportedly have until Nov. 2 to surrender himself following his conviction for wire fra
Solana Picture Bigger Than $420: Analyst Predicts 140% Surge To New ATHs
Reason to trust Strict editorial policy that focuses on accuracy, relevance, and impartiality Created by industry experts and meticulously reviewed The highest standards in reporting and pu