Key Notes
- The US M2 money supply has reached an all-time high of $21.94 trillion, growing 4.5% year over year.
- BTC remains inside a descending channel since its $112K peak but shows resilience above key levels.
- The increase in M2 money supply indicates increased liquidity that could boost risk assets like Bitcoin.
The M2 money supply, a broad gauge of circulating currency including cash, checking deposits, and money market funds, just surpassed its previous peak from March 2022. Year-on-year growth is now at 4.5%, the highest in 3 years, signaling a resurgence in liquidity.
Historically, increases in M2 have preceded inflation. The 2020 rise in M2 contributed to higher inflation in 2021, leading to tighter monetary policy.
BREAKING: The US M2 money supply jumped +4.5% Y/Y in May, to a record $21.94 trillion.
This marks the 19th consecutive monthly increase.
It has now surpassed the previous all-time high of $21.86 trillion, posted in March 2022.
Furthermore, inflation-adjusted M2 money supply… pic.twitter.com/HsCLFZSgAT
— The Kobeissi Letter (@KobeissiLetter) July 1, 2025
Now, as M2 growth picks up again, investors are bracing for potential inflationary pressure, a situation that complicates the Federal Reserve’s ability to cut rates, especially with political pressure mounting to lower them to 1% as proposed by US President Donald Trump.
Bitcoin: channel-bound but resilient
With M2 supply rising, more liquidity means more risk appetite. On the other, the looming threat of inflation and tighter policy could spook markets. Bitcoin
BTC
$107 556
24h volatility:
1.0%
Market cap:
$2.14 T
Vol. 24h:
$28.28 B
has been trading inside a descending channel since peaking at $112,000 in May.
Pullbacks have been shallow, with recent price action showing resilience above $105,000. A key CME futures gap at $106K was recently filled, and Bitcoin still trades above its one-month realized price, suggesting short-term holders remain in profit.
#Bitcoin dips remain shallow – so far contained above the 1-month realized price ($105.1K). Other realized prices:
🔸<24h: $105.6K
🔸<1w: $106.3K
🔸<3m: $101.2K
🔸<6m: $98.1KAll short-term holder cohorts are still in profit, signaling improving market momentum. pic.twitter.com/ZCLPKs5O8P
— glassnode (@glassnode) July 2, 2025
Futures show fading institutional appetite
CME Bitcoin futures, a strong indicator of institutional sentiment, unveils further insight.
#Bitcoin CME Futures Gaps 🕳️
Two downside gaps still open in the 4H chart:
🕳️ $108,300 – $107,800
🕳️ $106,600 – $106,300
Don’t be surprised if #BTC dips into them before the next leg up.Gaps tend to get filled.⏳ pic.twitter.com/FiEFLMg8V1
— Titan of Crypto (@Washigorira) June 30, 2025
The premium on three-month rolling futures has dropped to 4.3%, the lowest since October 2023, down from over 10% earlier this year, according to research from 10xResearch. Perpetual futures funding rates have also flipped negative, indicating a growing short bias and a drop in speculative interest.
The decline in basis rates has eroded the appeal of cash-and-carry arbitrage, reducing activity from hedge funds that traditionally help drive inflows during bullish periods.
As a result, it is clear that without strong institutional backing, any rally could remain shallow unless retail sentiment and volume pick up dramatically.
What comes next?
The crypto market sits at a crossroads. The record-high M2 money supply could act as a tailwind, especially if rate cuts eventually materialize. But the current bearish channel in Bitcoin, paired with declining institutional futures activity, tempers near-term expectations.
Still, historical data suggests M2 spikes tend to feed into asset prices after a lag. If inflation remains tame and Fed policy loosens, Crypto Rally 2.0 could be a question of when, not if.
Disclaimer: Coinspeaker is committed to providing unbiased and transparent reporting. This article aims to deliver accurate and timely information but should not be taken as financial or investment advice. Since market conditions can change rapidly, we encourage you to verify information on your own and consult with a professional before making any decisions based on this content.
A crypto journalist with over 5 years of experience in the industry, Parth has worked with major media outlets in the crypto and finance world, gathering experience and expertise in the space after surviving bear and bull markets over the years. Parth is also an author of 4 self-published books.
