Hi YXI friends,

Since Bitcoin hit $77k on March 10-11, we have had a relatively quiet week for crypto. The price action has been constructive despite equity markets making bigger moves later in the week.

The key question is - has Bitcoin bottomed? If not now, when?

We attempt to address this question through our liquidity, seasonality, correlation, and ETF sentiment analysis for Bitcoin.

We also go through all of the charts for ETH, SOL, XRP, MSTR, and COIN.

Let’s dive in!

Table of Contents

• 1. Bitcoin In The Bottoming Phase?

  • Bitcoin Price vs G5 M2 Money Supply

    • Bitcoin Price Sensitivity to M2 Changes

  • Bitcoin March Seasonality

  • Bitcoin Correlations with Yields and Equities

  • Bitcoin Price vs IBIT Fund Flows

• 2. ETH, SOL, XRP

  • Bitcoin Correlation with ETH, SOL, XRP

  • ETH Chart

  • SOL Chart

  • XRP Chart

• 3. MSTR, COIN

  • Bitcoin Correlations with MSTR and COIN

  • MSTR Chart

  • COIN Charts

DISCLAIMER: This newsletter is strictly educational. Any information or analysis in this note is not an offer to sell or the solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice and nor should it be relied upon to make investment decisions. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note's date of publication and are subject to change without notice.

1. Bitcoin In The Bottoming Phase?

Bitcoin Price vs G5 M2 Money Supply

We use the G5 (US, China, EU, Japan, UK) M2 Money Supply to approximate the changing dynamics of global liquidity.

We observe that Bitcoin moves directionally in line with the rise and fall of the G5 M2 Money Supply denominated in US Dollars, but with an 11-week lag. Note that this relationship is not predictive of the extent of Bitcoin’s moves, as its sensitivity evolves over time.

With the lag in mind, Bitcoin is still moving through the final 10 days before the G5 M2 bottomed on January 10. This means investors likely need to stay patient into the month end.

But there is some better news.

Bitcoin Price Sensitivity to M2 Changes

This graph above charts the percentage changes in Bitcoin prices relative to the percentage changes in the G5 M2 Money Supply as a ratio. This comparison has incorporated the 11-week lag noted above.

We see that since February, Bitcoin’s rolling 10-day price sensitivity to M2 (with lag) spiked from 20x to over 100x (i.e. for every 1 basis point change in M2, Bitcoin moves by 1 percent).

Fortunately, this sensitivity ratio has declined dramatically this week. It could indicate that these final 10 days of M2 trough may be less painful than how investors felt in the past month.

Bitcoin March Seasonality

Month-to-date, Bitcoin has been flat. Historically speaking, March is mixed, with negative returns every year in 2014-2018 but positive returns every year in 2021-2024.

The recency bias point to a potentially positive outlook for March this year, especially given Bitcoin’s increasingly positive correlations with equities, which tend to be stronger in the second half of March.

One caveat is that historically, when Bitcoin fell in February (which doesn’t happen often), March always saw negative returns, namely in 2012, 2014, and 2020.

Bitcoin Correlations with Yields and Equities

There are some very interesting findings here.

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