Global liquidity has shown signs of decreasing in the past month. Join BeinCrypto to update macro data fluctuations in comparison with asset prices to soon adjust expectations to match reality.
The Crypto Winter Isn't Over Yet?
Global M2 supply data is compiled from the Fed and major central banks around the world. In general, from 2012 to now, the supply of M2 has maintained an uptrend. In that trend, every 4 years there is a correction lasting 1-2 years.
Global Liquidity
If the Bitcoin price is paralleled with this macro data, such corrections in M2 supply coincide with times when the Bitcoin price enters a bear market and bottoms out.
In fact, we have just witnessed a global M2 supply correction from 2022 to present and Bitcoin has also made a bottom below $16,000. But it seems that the M2 supply is not going into the habit of the past. The proof is that M2 has just surpassed the old peak of 2022, but it did not maintain the upward momentum but fell back lower than the old peak.
This volatility has significantly affected the recovery momentum of many assets in 2023. Liquidity at the macro level once narrowed will prevent the price increase of investment assets.
The increase in M2 supply usually comes from reasons such as: The central bank increases the money supply, the government has policies to increase monetary circulation, or increases credit or implements easing measures. However, these signs are yet to emerge in 2023.
The US has yet to meet its 2% inflation target.
Regardless of the US M2 supply also falling sharply, the 2% inflation target is still quite far away.
The blue line is the rate of decline in M2 supply, the colored line is the CPI and the green line is the 2% target to be reached. Looking at the chart, it can be seen that M2 usage has decreased to a rare extent but the CPI is still very much out of the 2% target. Fed experts say that a mild recession may take place by the end of this year.
