The global M2 money supply has surged to an all-time high of $108.4 trillion, raising fresh questions about Bitcoin’s next move. 

The milestone comes amid escalating economic uncertainty following former President Donald Trump’s new “Liberation Day” tariffs and China’s swift retaliatory measures, which together have roiled global markets.

What is M2 and Why Does It Matter for Bitcoin?

Despite the extreme volatility over the past two weeks, Bitcoin’s average value has remained almost unchanged. 

Analysts claim that Bitcoin’s latest volatility reflects macroeconomic fears and fluctuating long/short ratios – but the largest cryptocurrency is nowhere near a bear market. 

This is largely due to the historical correlation between rising M2 levels and significant Bitcoin rallies.

M2 is a broad measure of a country or region’s money supply. It includes physical cash, checking and savings deposits, and other liquid assets that can be quickly converted to cash. 

When M2 increases, it typically signals greater liquidity in the financial system. It simply means more money that often seeks returns in riskier assets such as equities, real estate, or cryptocurrencies like Bitcoin.

Past surges in the M2 money supply have preceded major Bitcoin rallies. Following the COVID-era stimulus programs in 2020-2021, the US M2 supply jumped by over 25%. 

This correlated with Bitcoin’s rise from under $10,000 in mid-2020 to an all-time high of over $69,000 by November 2021. Analysts point to a similar pattern today, albeit with a lag.

“Market proponents say that Trump’s tariffs are primarily a negotiation strategy, and their effect on businesses and consumers will remain manageable. Adding to the uncertainty are the inflationary pressures that could challenge the US Federal Reserve’s rate-cutting outlook. Also, resolving the debt ceiling remains a pressing issue, as the Treasury currently relies upon ‘extraordinary measures’ to meet US financial obligations. The exact timeline for when these measures will be exhausted is unclear, but analysts anticipate they may run out after the first quarter,” said Maksym Sakharov, Co-Founder of WeFi Deobank.

Also, Bitcoin’s price often trails global M2 growth by roughly two months. 

With M2 accelerating since late February and the current spike taking it to its highest level ever, market watchers suggest that Bitcoin could see a delayed but strong upside if liquidity continues to expand.

However, macroeconomic headwinds could temper near-term gains. Trump’s tariff shock and China’s tit-for-tat response have already triggered the steepest Wall Street losses in five years. 

This week in crypto, a lot happened across different ecosystems, despite the broader market’s prevailing bearish sentiment. Besides Bitcoin’s (BTC) drop to a 7-day low of $81,400, here are this week’s biggest updates.

For starters, crypto markets could have a new Ethereum Layer-2 roadmap. Meanwhile, Hyperliquid users could soon start enjoying better security.

Vitalik Buterin Pushes for Ethereum L2 Roadmap

Co-founder Vitalik Buterin outlined a roadmap for Ethereum’s Layer-2 (L2) ecosystem, emphasizing decentralization, security, and cost-efficiency.

He advocates for a model that reduces centralization risks while ensuring user-friendly experiences for developers and investors.

Buterin also reiterated his commitment to open-source funding within the Ethereum community. This stance comes as the phrase “public goods” has become politically and socially loaded. The phrase is often used in ways that prioritize perception over impact.

Against this backdrop, Buterin proposed shifting the focus from “public goods funding” to “open-source funding.” He said this would encourage greater financial support for projects that enhance network security and scalability.

“A big part of the reason why the term ‘public good’ is vulnerable to social gaming is precisely the fact that the definition of ‘public good’ is stretched so easily,” Buterin argued.

His vision aligns with ongoing efforts to strengthen Ethereum’s L2 playing field and make it more resistant to potential censorship or network failures.

Hyperliquid Tightens Security After JELLY Crisis

Decentralized trading platform Hyperliquid also features among the key headlines this week in crypto. The platform announced new security measures following the JELLY incident, which resulted in substantial losses for users.

To prevent future incidents, the platform has increased monitoring, enhanced smart contract audits, and introduced stricter withdrawal limits.

Hyperliquid’s response aims to restore confidence in decentralized finance (DeFi) platforms amid rising security concerns.

“Hyperliquid is not perfect, but it will continue to iterate and grow through the collective efforts of builders, traders, and supporters,” the network explained.

BeInCrypto data shows that Hyperliquid’s HYPE token price was $11.89 as of this writing, up by a modest 0.97% in the last 24 hours.

Crypto Markets, Equities Sync Amid Recession Fears

Another headline this week in crypto was how the digital assets industry continues to mirror traditional financial (TradFi). Specifically, more than ever, the crypto market appears synchronized with indices like the S&P 500 and Nasdaq.

The synchrony comes as investors react to growing recession concerns. Bitcoin and Ethereum have followed similar downturns seen in stock markets, reinforcing the argument that cryptocurrencies are increasingly correlated with broader economic conditions.

With macroeconomic uncertainty looming, analysts warn that crypto could further decline if economic conditions worsen. However, some argue long-term investors may find opportunities in current market lows.

According to former BitMEX CEO Arthur Hayes, Bitcoin could reach $250,000 by year-end. However, this forecast is contingent on the Federal Reserve (Fed) shifting to Quantitative Easing (QE) to support markets.

Meanwhile, former Goldman Sachs executive Raoul Pal pointed to macroeconomic indicators that suggest a Bitcoin rally is imminent. He shared a chart correlating the global M2 money supply and Bitcoin’s price.

Based on history, Bitcoin tends to rise around 10 weeks after M2 increases. Pal’s analysis suggests that Bitcoin may soon enter a bullish phase.

“The waiting game is almost over…the 10-week lead is my preferred… but,” Pal stated.

Ripple Unlocked $1 Billion in XRP

Also, this week in crypto, Ripple released another 1 billion XRP from its escrow, increasing selling pressure on the token.

Historically, such unlocks have been followed by price declines. This aligns with recent Keyrock research that showed that 90% of unlocks create negative price pressure.

The tokens were moved from the “Ripple (27)” escrow address to two operational wallets, “Ripple (12)” and “Ripple (13).” This suggested the intention to distribute or sell XRP.

Investors remain cautious, watching for signs of potential accumulation. Meanwhile, others anticipate further downside as XRP struggles to regain upward momentum amid broader market uncertainty.

Notwithstanding, there are other positive developments for the XRP market. According to Glassnode data, Retail investors are choosing XRP over Bitcoin, and nearly half of XRP’s realized cap is increasing.

Another bullish fundamental for XRP this week is Coinbase’s filing for a futures contract offering in the Ripple token. The move indicates shifting regulatory tides in the US and also bolsters XRP ETF (exchange-traded funds) approval odds.

Standard Chartered Predicts Crypto Winners

Standard Chartered also made it to the top headlines this week in crypto. The bank identified Bitcoin (BTC) and Avalanche (AVAX) as the primary beneficiaries of a potential post-Liberation Day crypto market surge.

The bank suggests that favorable macroeconomic conditions and increasing institutional adoption could propel these assets higher in the coming months.  

“We expect volatility to edge gradually lower once the ETF market matures, increasing Bitcoin’s share of an optimal gold-BTC portfolio. Access plus lower volatility could see Bitcoin reach the $500,000 level before Trump leaves office,” wrote Geoff Kendrick, Head of Digital Asset Research at Standard Chartered, in an email to BeInCrypto.

This forecast aligns with the growing narrative that institutional interest will play a key role in shaping the next phase of the crypto market cycle. However, skeptics remain cautious, citing regulatory uncertainty and potential economic headwinds as factors that could delay or dampen such a rally.

The US 10-year Treasury yield has fallen below 4% for the first time since October.

This signals a potential shift in Federal Reserve (Fed) policy, sparking renewed interest in Bitcoin (BTC) and other risk assets.

Treasury Yields and Bitcoin: A Risk-On Rotation?

As highlighted by financial markets aggregator Barchart, this decline reflects growing economic uncertainty. Specifically, it suggests rising recession fears and increasing speculation that the Fed may pivot to rate cuts sooner than expected.

A drop in Treasury yields reduces the attractiveness of traditional safe-haven assets like bonds, often encouraging investors to seek higher returns elsewhere.

Historically, Bitcoin and altcoins have benefitted from such shifts, as declining real yields increase liquidity and risk appetite. Crypto analyst Dan Gambardello emphasized this connection. He noted that lower yields are bullish for Bitcoin, aligning with expectations that a dovish Fed will drive liquidity into riskier assets.

“The irony is that when yields fall, there’s less reason to sit in “safe” bonds— And ultimately more reason to chase returns in risk assets like BTC and alts. This is why you see risk-on bulls get excited when 10-year yields begin falling,” he stated.

Additionally, BitMEX founder and former CEO Arthur Hayes pointed out that the 2-year Treasury yield sharply declined after the new tariffs were introduced. He said this reinforced the market’s expectation of imminent Fed rate cuts.

“We need Fed easing, the 2yr treasury yield dumped after Tariff announcement because the market is telling us the Fed will be cutting soon and possibly restarting QE to counter -ve economic impact,” Hayes shared on X (Twitter).

Hayes previously projected that Bitcoin could surge as high as $250,000 if quantitative easing (QE) returns in response to economic downturns.

The Trump Factor: Tariffs and Market Volatility

Further, analysts have tied the yield drop to economic uncertainty triggered by Trump’s aggressive tariff strategy. As Gambardello noted, these tariffs have spurred a flight to safety, pushing bond prices higher and lowering yields.

This trend aligns with Trump’s broader economic approach of weakening the dollar and lowering interest rates, which historically benefit Bitcoin. During his first term, Trump frequently desired a weaker dollar and lower interest rates to boost exports and economic growth. He also pressured the Fed to cut rates multiple times.

Another analyst, Kristoffer Kepin, highlighted that the M2 money supply is growing. This reinforces expectations of increased liquidity entering the market further. This influx of capital could flow into Bitcoin and altcoins as investors seek alternative stores of value amid economic turbulence.

Despite Bitcoin’s potential upside, Goldman Sachs has recommended gold and the Japanese yen as preferred hedges against US recession risks. Specifically, the bank cited its historical performance in risk-off environments.

“The yen offers investors the best currency hedge should the chances of a US recession increase,” Bloomberg reported, citing Kamakshya Trivedi, head of global foreign exchange, interest rates, and emerging market strategy at Goldman Sachs.

The bank expressed the same sentiment toward gold, raising its forecast as investors buy the yellow metal. Similarly, a Bank of America (BofA) survey showed that 58% of fund managers prefer gold as a trade war haven, while only 3% back Bitcoin.

Meanwhile, JPMorgan has raised its global recession probability to 60%. Likewise, the multinational banking and financial services company attributed the increased risk to the economic shock from tariffs announced on Liberation Day.

“These policies, if sustained, would likely push the US and possibly global economy into recession this year,” wrote head of global economic research Bruce Kasman in a note late Thursday. 

However, Kasman acknowledged that while a scenario where the rest of the world muddles through a US recession is possible, it is less likely than a global downturn.

As Treasury yields continue to fall and economic uncertainty mounts, the Fed becomes a key watch for investors for signs of a policy shift.

If rate cuts and liquidity injections materialize, Bitcoin could see substantial gains, particularly as traditional assets undergo re-pricing. However, as experts caution, short-term volatility remains a key risk factor amidst these market shifts.

BeInCrypto data shows Bitcoin was trading for $82,993 as of this writing, up by a modest 1.42% in the last 24 hours.