Summary
- The rapid increase in global M2 supply is reported as a favorable factor for the cryptocurrency market.
- Generally, M2 growth is said to strengthen risk asset investment sentiment and serve as a positive factor for the cryptocurrency market, including Bitcoin.
- However, excessive M2 growth could lead to inflation, which may become a reason for interest rate hikes.
There is an argument that the surge in global M2 (financial products issued by depository institutions, cash currency, demand deposits, and deposits with maturities under two years) could act as a favorable factor for the cryptocurrency market.
On the 2nd (local time), CoinDesk cited data from Barchart.com, stating, "By the end of May, the global M2 supply surpassed $21.94 trillion, exceeding the previous peak of $21.72 trillion recorded in March 2022," and "the annual growth rate of M2 also remains at its highest level since 2022."
They further explained, "In general, increases in global M2 can strengthen investment sentiment towards risk assets," adding that "this can serve as a positive factor for the cryptocurrency market, including Bitcoin (BTC)."
However, it was noted that an excessive increase in M2 could become a reason for raising interest rates. The report stated, "If the speed of money growth outpaces economic growth, it may lead to inflation," and "this could provide grounds for the Federal Reserve System (Fed) to raise interest rates."
Son Min
sonmin@bloomingbit.ioHello I’m Son Min, a journalist at BloomingBit
