Rising M2 money supply signal potential tailwinds for Bitcoin

Share This Post

Quick Take

Analyzing recent data from the Federal Reserve Economic Data (FRED), we observe significant trends in the Federal Reserve’s balance sheet and the M2 money supply. The Federal Reserve’s balance sheet has been gradually declining (quantitative tightening), now standing at $7.3 trillion, down from a peak of $9.0 trillion in April 2022. Despite this reduction, it remains considerably higher than the pre-COVID-19 level of $4.1 trillion, indicating more than $3 trillion yet to be trimmed.

Fed Balance Sheet: (Source: FRED)
Fed Balance Sheet: (Source: FRED)

M2 money supply, which includes cash, checking deposits, and easily convertible near money, reached a peak of $21.7 trillion in 2022 and hit a low of $20.7 trillion in October 2023. It has since begun to rise, currently at $20.9 trillion, according to FRED.

M2: (Source: FRED)
M2: (Source: FRED)

FRED data also shows that the M2 money supply’s year-over-year percentage change has turned positive for the first time since November 2022, signaling potential tailwinds for risk assets.

M2: (Source: FRED)
M2: (Source: FRED)

Coinciding with the increase in the M2 money supply, assets like Bitcoin and the S&P 500 (SPX) have shown significant growth since October 2023. Bitcoin has surged from $25,000 to over $70,000, and the SPX, after bottoming in October at approximately 4,100, has climbed to 5,244.

BTCUSD vs SPX: (Source: TradingView)
BTCUSD vs SPX: (Source: TradingView)

However, the growing money supply complicates efforts to curb inflation. Data from Trading Economics shows that the Personal Consumption Expenditures (PCE) Price Index year-over-year was reported at 2.7%, with the Core PCE at 2.8%, both aligning with expectations but reflecting persistent inflationary pressures. This ongoing challenge indicates that inflation remains sticky, posing difficulties for economic policy aimed at price stability.

PCE Data: (Source: Trading Economics)
PCE Data: (Source: Trading Economics)

The post Rising M2 money supply signal potential tailwinds for Bitcoin appeared first on CryptoSlate.

Read Entire Article
spot_img
- Advertisement -spot_img

Related Posts

Restaked Bitcoin Protocols Skyrocket 4,459% in Just 9 Months

Since the advent of restaking bitcoin and Babylon’s leading role in the space, restaked bitcoin protocols have exploded onto the scene with phenomenal momentum Over the past nine months, these

Bitcoin Rebounds Above $85,000 Amid Weak Market Demand

Bitcoin (BTC) is experiencing a notable price recovery, reclaiming the $85,000 level after a 43% increase in the past 24 hours This rebound has sparked renewed optimism among investors, who are now

Bitcoin Panic Sellers Lost $100M – Why Smart Investors Are Betting on BTC Bull Token Instead

The crypto market is full of surprises, but one thing remains consistent: panic selling always costs new investors a fortune  In the last six weeks alone, speculators dumped their Bitcoin holdings,

Cardano (ADA) Whales Buy 130M Tokens, Bull Run Incoming?

The post Cardano (ADA) Whales Buy 130M Tokens, Bull Run Incoming appeared first on Coinpedia Fintech News As the Cardano (ADA) price continues to consolidate near a crucial support level of $065,

Crypto Expert Reveals Why XRP Will Never Flip Ethereum

A crypto expert has promptly shut down the idea that XRP will ever surpass Ethereum In his post, the analyst shared several reasons why he believes such an outcome is highly unlikely, highlighting

Bitcoin Price Watch: Struggles at $84K—Will Bulls Take Control?

Bitcoin traded at $84,222 on March 15, 2025, with a market capitalization of $167 trillion, a 24-hour global trade volume of $2599 billion, and an intraday price range between $82,705 and $85,139,