The cryptocurrency market is a complex ecosystem where various factors influence price movements. One such factor is the global money supply, often measured by M2, which includes cash, checking deposits, and easily convertible near money. In a recent video by Colin Talks Crypto, the correlation between Global M2 and Bitcoin (BTC) is explored, alongside technical chart patterns that suggest a bullish breakout. Let's dive into the details.

Understanding Global M2 and Bitcoin Correlation

Global M2 represents the total amount of money in circulation across major economies. Colin highlights that there's a significant correlation between the growth of Global M2 and Bitcoin's price, often with a delay of 84 days. This delay accounts for the time it takes for monetary policy changes to impact the broader market.

As seen in the chart, the Global M2 money supply line has been steadily increasing, which Colin suggests is a backdrop for Bitcoin's potential upward movement. This correlation isn't perfect, with deviations occurring about 20% of the time, but the overall trend remains strong.

Technical Chart Patterns Indicating a Breakout

Colin's analysis doesn't stop at macroeconomic indicators. He delves into technical chart patterns that further support the bullish outlook for Bitcoin. Three key charts are discussed:

1. Inverse Head and Shoulders Pattern

The inverse head and shoulders pattern is a reliable indicator of a bearish-to-bullish trend reversal. Colin identifies this pattern on the Bitcoin price chart, with a measured target of $150,000.

This pattern forms when the price action creates three consecutive lows, with the second trough being the lowest (the head) and the first and third slightly shallower (the shoulders). The breakout above the neckline, currently around $113,000, could propel Bitcoin towards the $150,000 mark.

2. Bull Flag and Pennant Patterns

Zooming into smaller time frames, Colin identifies a bull flag and a pennant pattern within the right shoulder of the inverse head and shoulders. These patterns are characterized by a sharp price increase followed by a consolidation phase, often resembling a flag or a pennant.

The bull flag has already broken out, and a retest of the support trend line could confirm the upward momentum. The pennant, with multiple points of contact on both trend lines, further reinforces the bullish sentiment.

3. Long-Term Consolidation and Breakout

Taking a broader view, Colin points out that Bitcoin has been in a sideways consolidation phase since December 2024, which is now shaping up to be an inverse head and shoulders pattern. This long-term perspective suggests that the current breakout is part of a larger trend.

The confluence of these patterns across different time frames indicates a strong bullish signal, with Bitcoin potentially reaching $150,000 as the measured target.

The Role of Global Liquidity

Colin's analysis also touches on the impact of global liquidity, driven by factors like Trump's proposed "Big Beautiful Bill," a five trillion dollar inflation package. While the political implications are debated, the influx of money into the economy is expected to increase the M2 money supply, further supporting Bitcoin's price.

The delay in this impact, as mentioned earlier, is crucial. It takes time for the injected liquidity to trickle down to retail investors, which is why the 84-day offset is used in the correlation analysis. This delay helps explain why Bitcoin's price movements might not immediately align with M2 growth but eventually catch up.

Conclusion

The combination of Global M2 growth and technical chart patterns provides a compelling case for Bitcoin's bullish outlook. Colin's video underscores the importance of looking at multiple indicators and time frames to get a comprehensive understanding of market trends. As Bitcoin continues to break out of these patterns, the target of $150,000 seems increasingly within reach.

For those interested in diving deeper, Colin's YouTube video offers a detailed walkthrough of these charts and more. Whether you're a seasoned investor or new to the crypto space, understanding these correlations and patterns can be a valuable tool in navigating the volatile world of cryptocurrencies.