Global M2 Surge and Coordinated Easing Point to Potential Crypto Rebound in 2026
Global M2 money supply is approaching a record near $130 trillion, led by China (~37%, ≈$47.7T). Late‑2025 coordinated easing — including three Fed rate cuts and U.S. Treasury measures (a $40 billion cash-injection plan via debt issuance) — has loosened funding conditions and increased liquidity available for risk assets. Regional divergence persists: M2 is contracting in several economies (Japan, India, South Korea, Argentina, Israel) while expanding elsewhere, which may drive volatile cross‑border flows. Despite the liquidity tailwind, the crypto market ended Q4 2025 cautiously: total market capitalization fell ~21% during the quarter and remains below late‑Q3 peaks. Historical correlations suggest rising global money supply tends to support risk‑asset rallies; some models referenced estimate a potential 20–30% upside for crypto if liquidity momentum continues. Traders should monitor Global M2, central‑bank policy moves, Treasury liquidity operations, and macro risk appetite as leading indicators for a sustainable crypto recovery. Short‑term price action may remain muted or volatile while markets reprice risk and valuation; a sustained liquidity trend would be a key bullish catalyst for 2026.
Bullish
The combined news points to materially looser funding conditions: Global M2 near-record levels, Fed rate cuts, and U.S. Treasury liquidity operations increase the pool of capital available for risk assets. Historically, higher broad money supply and easier policy tend to support asset-price appreciation, providing a favorable macro backdrop for crypto. However, the immediate market reaction has been muted — total crypto market cap fell ~21% in Q4 2025 — indicating that liquidity is a necessary but not sufficient condition for a rebound. Short term, expect continued volatility and range-bound price action as traders weigh valuations, risk appetite, and cross‑border flows driven by regional M2 divergence. If liquidity momentum persists into 2026 and translates into higher risk-taking, the net effect is likely bullish for crypto, potentially supporting a multi‑week to multi‑month rally. Risk factors that could limit upside include subdued investor risk appetite, tightening in regions showing M2 contraction, or negative macro shocks that drain liquidity despite policy easing.