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M2 Surge Near $22 Trillion: Bullish Signal for Crypto

Coin WorldWednesday, Jan 29, 2025 8:20 am ET

1min read

The M2 money supply, a key indicator of liquidity in the economy, has been on a steady rise and is now nearing its all-time high of $22 trillion. This trend, observed by CoinDesk Senior Analyst James Van Straten, is a bullish signal for cryptocurrencies, as it suggests an increase in liquidity entering the system.

The M2 money supply, which includes cash, checking deposits, and easily convertible near money, has been growing consistently since January 2024. This growth is a positive catalyst for risk assets, as increased liquidity typically finds its way into these assets first. The M2 money supply influences the Consumer Price Index (CPI) by affecting inflation trends, despite the Federal Reserve's efforts to tighten monetary policy and bring inflation back down to its 2% target.

Van Straten, a senior analyst at CoinDesk specializing in Bitcoin and its macroeconomic environment, has been monitoring these trends closely. His expertise in on-chain analytics and experience at a Swiss hedge fund have equipped him to analyze Bitcoin's role within the broader financial system. Van Straten's insights suggest that the ongoing growth of the M2 money supply is a positive development for the cryptocurrency market.

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