The M2 money supply has reached a record high, but unlike in previous cycles, Bitcoin’s price is no longer closely tracking it. Historically, when Bitcoin has approached cycle tops, its correlation with M2 has weakened — a pattern now reappearing. This decoupling may suggest the market is entering the late stages of the bull cycle, with liquidity gradually shifting from Bitcoin into altcoins. Coins such as Ethereum (ETH), Dogecoin (DOGE), Binance Coin (BNB), and Cardano (ADA) are already benefiting, with the altcoin season index at 72 out of 100, just shy of the threshold for a confirmed alt season. Despite muted growth — Bitcoin is only up 23% year-to-date through September 15, 2025, making this one of its weakest post-halving years — the outlook still includes the potential for a new all-time high, albeit without the massive parabolic surge seen in past cycles.
For traders, the key takeaway is that the historic link between M2 and Bitcoin may no longer be a reliable timing tool. Instead, current conditions indicate the market is transitioning into its late bull phase. Analysts suggest the cycle top could arrive as soon as Q1 2026, roughly three months away, supported by liquidity flows into altcoins and strengthening altcoin performance relative to Bitcoin. These signals align with typical late-cycle dynamics, where Bitcoin consolidates and capital rotation into alternative assets accelerates.
Going forward, traders should watch the correlation between M2 and Bitcoin while closely monitoring altcoin strength. Key pairs like ETH/BTC and DOGE/BTC can serve as indicators of shifting market momentum. With altcoin dominance rising and the altcoin season index nearing confirmation levels, caution is advised: Bitcoin’s upside may be limited, while altcoins could capture more significant gains in the months ahead. Positioning strategies that account for potential cycle maturity and market peak signals will be essential as the market approaches 2026.
