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Cryptopolitan 2025-07-02 10:30:32

BTC may be due a new liquidity boost as US M2 money supply hits new record

The wider M2 money supply in the USA moved up to a new record at $21.94 trillion. The money supply has climbed rapidly in 2025, a metric that is closely watched for its effect on the crypto market. The M2 money supply for the USA expanded to a new record, with $21.94 trillion in circulation. The M2 metric closely correlates with the performance of assets, including BTC, potentially signaling ongoing gains for crypto. The US money supply hit a new record, also boosting the global M2 money. | Source: Federal Reserve The metric started climbing from a low of $20.7 trillion in 2023, coinciding with the reawakening of crypto after the years-long bear market. The expansion of the M2 coincides with another debt ceiling crisis looming. The Fed may have to continue with the monetary easing, further growing the available M2 and boosting market confidence. BTC still follows the M2 trend closely Over time, BTC has shown a correlation to both the global and US-based M2 supply. BTC lagged the indicator by a few months, being especially reactive to an M2 supply squeeze. A similar lag is seen in BTC expansion, which lags M2 growth by 3-6 months. On a shorter time scale, the M2 global money supply predicted the April BTC rally, when the price broke out and revisited levels above $100,000. On some occasions, the BTC price rally lags by only 1-2 weeks after shifts in the money supply. BTC has sometimes surged ahead during periods of low M2 growth, but those rallies are now seen as signs of a bubble. If the BTC price moves more closely to the M2 supply, the effects may be a more sustainable trend, when the market has not yet peaked with a short-term bubble. Global M2 money supply expands more gradually The global M2 money supply has been expanding more gradually in the past five years, based on data from the four leading central banks. As of July 2025, the M2 supply is at $93.69 trillion, growing by 7.45% in the past year. The recent BTC growth far outpaces the money supply, based on additional directed liquidity from stablecoins. However, the general sense of growing inflation and stock market exuberance is also translating into crypto expansion. While crypto activity is highly concentrated in the USA, China may also be a source of growing liquidity. The M2 money supply of China has been expanding for the past decade, with no slowdowns even during the Covid-19 pandemic. As a result, China’s M2 supply is over $44 trillion, more than double the liquidity of the USA. Global liquidity is even more closely watched in relation to BTC and its potential performance in the second half of 2025. BTC is now seen as lagging , while the M2 trends may boost the price to new price peaks up to $150,000 per BTC. The recent performance of BTC is raising questions about the effect of demand. The M2 chart is seen as a potential trigger, where corporate and ETF buying are too small to drive up valuations. The global M2 growth, however, coincides with a period of uncertainty, though still potentially affecting the nominal prices of all assets. Cryptopolitan Academy: Coming Soon - A New Way to Earn Passive Income with DeFi in 2025. Learn More

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