US M2 Money Supply Reaches Record High of $21.94 Trillion
The M2 money supply in the U.S. has increased by 4.5% year-on-year, reaching $21.94 trillion, surpassing its previous peak from March 2022. This marks the 19th consecutive monthly increase and indicates a resurgence in liquidity.
Key points:
- Historically, rises in M2 precede inflation, as seen in 2021.
- Investors are preparing for potential inflationary pressures, complicating the Federal Reserve's ability to cut rates amid political pressure.
Bitcoin Performance
Bitcoin is currently trading within a descending channel after peaking at $112,000. Recent price action shows resilience above $105,000 with all short-term holder cohorts remaining in profit.
Significant metrics include:
- Price action remains above one-month realized price of $105.1K.
- Open gaps in CME futures suggest potential dips before upward movements.
Institutional Sentiment
CME Bitcoin futures indicate declining institutional interest:
- The premium on three-month rolling futures has dropped to 4.3%, the lowest since October 2023.
- Perpetual futures funding rates have turned negative, reflecting a growing short bias.
- Reduced cash-and-carry arbitrage activity suggests lower hedge fund participation.
Future Outlook
The crypto market faces uncertainty. The record-high M2 could support asset prices if rate cuts occur, but Bitcoin's current bearish trend and fading institutional activity temper short-term expectations. Historical trends suggest that M2 spikes may positively influence asset prices over time.