M2 Money Supply Hits $108.4 Trillion, Bitcoin's Next Rally in Sight
1min read The global M2 money supply has reached an unprecedented high of $108.4 trillion, sparking renewed interest in Bitcoin's potential movements. This milestone comes amidst escalating economic uncertainty following the implementation of new tariffs by Donald Trump and swift retaliatory measures from China, which have collectively disrupted global markets.
Ask Aime: What impact will the record high M2 money supply have on Bitcoin's price?
Despite the extreme volatility over the past two weeks, Bitcoin’s average value has remained almost unchanged. Analysts attribute this volatility to macroeconomic fears and fluctuating long/short ratios, but they assert that Bitcoin is far from entering a bear market. This stability is largely due to the historical correlation between rising M2 levels and significant Bitcoin rallies.
M2 is a broad measure of a country or region’s money supply, including physical cash, checking and savings deposits, and other liquid assets that can be quickly converted to cash. When M2 increases, it typically signals greater liquidity in the financial system, meaning more money is available to seek returns in riskier assets such as equities, real estate, or cryptocurrencies like Bitcoin.
Past surges in the M2 money supply have preceded major Bitcoin rallies. For instance, following the COVID-era stimulus programs in 2020-2021, the US M2 supply jumped by over 25%. This correlated with Bitcoin’s rise from under $10,000 in mid-2020 to an all-time high of over $69,000 by November 2021. Analysts point to a similar pattern today, albeit with a lag. Bitcoin’s price often trails global M2 growth by roughly two months.
With M2 accelerating since late February and the current spike taking it to its highest level ever, market watchers suggest that Bitcoin could see a delayed but strong upside if liquidity continues to expand. However, macroeconomic headwinds could temper near-term gains. Trump’s tariff shock and China’s tit-for-tat response have already triggered significant market losses. Investors may delay allocating capital to high-volatility assets until trade tensions stabilize.
Still, with M2 surging and Bitcoin supply capped, the setup for a renewed bullish move remains in place. That is if historical patterns hold and markets regain confidence. Maksym Sakharov, Co-Founder of WeFi Deobank, noted that market proponents view Trump’s tariffs as primarily a negotiation strategy, with manageable effects on businesses and consumers. Adding to the uncertainty are inflationary pressures that could challenge the US Federal Reserve’s rate-cutting outlook. Resolving the debt ceiling remains a pressing issue, as the Treasury currently relies upon ‘extraordinary measures’ to meet financial obligations. The exact timeline for when these measures will be exhausted is unclear, but analysts anticipate they may run out after the first quarter.
