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In the rapidly evolving financial industry, including cryptocurrencies and digital assets, knowing about the key indicators can be quite beneficial for investors. One such metric is M2, which gauges the money supply while indicating the near-cash and cash flows in the economy. At present, while the world is becoming more and more influenced by the leading crypto assets such as Bitcoin ($BTC), Ethereum ($ETH), and stablecoins, understanding M2 has become more crucial than ever. M2 (Money Supply): An Introduction Based on its nature, M2 provides an overview of the cumulative money that exists in economic sectors like crypto market. Moving beyond just physical cash, M2 also takes into account checking accounts, certificates of deposits lower than $100,000, money market mutual funds, and savings accounts. In general, M2 serves as the soul of the economic activity and notifies about the total availability of the resources for user spending, new investors, or business investment. The growth in M2 often highlights an expansion phase as more cash signifies more borrowing, spending, and often more increase in asset prices. On the other hand, the stagnant or shrunk M2 may indicate an approaching recession or at least a wider economic slowdown. The United States Federal Reserve comprehensively tracks the M2 components. They take into account checking deposits and cash, money market funds, small-time deposits, and savings accounts. In particular, checking deposits and cash (also termed M1) denote the rapidly available M2 component. This includes checking account funds, bills, and coins. Apart from that, savings accounts are relatively less liquid by the users can easily access them. They often provide minor interest returns while staying available when needed. Additionally, money market funds offer short-term investment opportunities with better yields in comparison with savings accounts. Along with that, small time deposits are fixed-term deposits, requiring the users…

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Filed under: News - @ April 28, 2025 11:28 pm