U.S. M2 Money Supply Hits Near Record High, A Positive Sign for Crypto Markets

The U.S. M2 money supply has increased significantly, nearing its all-time high, signaling bullish trends for risk assets, including cryptocurrencies.

Key Points:

• The U.S. M2 money supply reached $21.5 trillion in December 2024, approaching its peak of $22 trillion.
• A rising M2 supply often indicates greater liquidity in the market, which typically favors riskier asset classes.

The M2 measure includes all cash equivalents accessible within the economy, along with less liquid assets, suggesting significant economic activity. The CPI index reflects price changes over time, providing insights into inflation levels.

Bullish Implications

Continued growth in the M2 money supply suggests increased liquidity entering the economy, which is expected to benefit risk assets in the short term. Notably, this growth journey has marked new monthly highs since January 2024, despite the Federal Reserve’s tightening measures aimed at curbing inflation.

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