Bitcoin stands before a bullish opportunity as USD weakens and M2 liquidity increases

The United States has just reached a new milestone in monetary circulation as the total M2 money supply has risen to an all-time high.

According to newly released data, the M2 money supply of the United States — an important indicator reflecting the amount of cash, demand accounts, savings accounts, and money market deposits — reached a record high of $21.94 trillion at the end of May. Compared to the same period last year, this figure has risen by 4.5%.

The M2 money supply chart of the United States | Source: X/The Kobeissi LetterExperts from The Kobeissi Letter state that this is the 19th consecutive month of M2 growth, surpassing the previous peak of 21.86 trillion USD set in March 2022.

Notably, even after adjusting for inflation, M2 still rose 2.1% year-on-year — the highest real increase in more than two years. Since 2020, the total money supply in the U.S. has increased by nearly 7 trillion USD, equivalent to a 45% rise.

This increase in liquidity occurs against the backdrop of a significant weakening of the USD. The Kobeissi Letter indicates that the Dollar Index has dropped by as much as 10.8% in the first half of 2025 — the worst first half decline since the collapse of the Bretton Woods system in 1973, and the worst six-month performance since the financial crisis of 2009.

US Dollar Index Chart | Source: X/The Kobeissi LetterAnalysts note that the prolonged weakening trend of the greenback clearly reflects the erosion of purchasing power and exposes long-term structural issues within the US economy.

What does it mean for Bitcoin?

For the cryptocurrency market, especially Bitcoin, the current abundant liquidity environment could become a crucial catalyst attracting new capital inflows.

The M2 index – a measure of the money supply that includes cash, deposits, and savings – continuously rising is often seen as a positive signal for Bitcoin, the leading digital asset today. This reflects a financial system that is flush with liquidity, thereby encouraging investors to seek opportunities in higher-yield channels – including Bitcoin – instead of sticking with traditional assets that are less attractive.

Although it cannot yet be confirmed that this trend will open a new price rise cycle for Bitcoin, many investors still believe that the current context is creating a favorable foundation for the recovery of the largest cryptocurrency in the market.

Before Bitcoin entered the recent sideways trading phase, many experts on Twitter shared charts comparing the growth of M2 money supply ( with a 90-day lag ) and the price volatility of Bitcoin in 2025. However, even though M2 continues to rise, the price of Bitcoin shows signs of stagnation, making this correlation more difficult to predict.

However, if the old model recurs, Bitcoin could very well become an attractive destination for new capital seeking yields outside the traditional financial system.

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