Analysts Reveal The Chart That Predicts Bitcoin Better Than M2 Ever Did

On-chain analyst Willy Woo asserts that the era of using global M2 money supply as the primary liquidity gauge for risk assets like Bitcoin is over. Woo argues that the US Dollar Index (DXY), which tracks the dollar's strength against other major currencies, is now the most accurate leading indicator for Bitcoin's direction. He explains that M2 is flawed because it is measured in USD, while only 17% of global liquidity is actually dollars, whereas DXY clearly reflects global risk sentiment and Bitcoin's inverse correlation to it.

Woo's updated model shows a strong MACD divergence between Bitcoin and the inverse DXY, confirming that markets rely on dollar movement to signal liquidity; a high DXY (strong dollar) signals risk-off sentiment and tight liquidity, pressuring Bitcoin, while a falling DXY suggests expanding liquidity and potential rallies.

Analysts are split on DXY's immediate future: macro trader Donny Dicey believes gold is signaling an imminent DXY rollover, which would flood the market with liquidity and cause Bitcoin to rally explosively. Conversely, analyst Henrik Zeberg forecasts the DXY could climb significantly higher, suggesting a continued "King Dollar" scenario that would pressure risk assets like Bitcoin. Regardless of the immediate direction, the consensus among these analysts is that tracking DXY is now the smarter strategy for predicting Bitcoin's macro movements.

(Source：BeInCrypto)