Crypto Market Waver as Global M2 Stagnates—Can Stablecoins Save the Day?
The post Crypto Market Waver as Global M2 Stagnates—Can Stablecoins Save the Day? appeared on BitcoinEthereumNews.com.
The crypto market is in a state of flux, with low liquidity, falling capital inflows, and heightened investor fear dominating the narrative. While trading activity has plummeted, the rising supply of stablecoins and the role of global M2 money supply offer a complex but critical backdrop to the market’s next moves. Bitcoin and Ethereum Trading Volume Hits Historic Lows The crypto market has seen trading volumes drop to levels not witnessed since before the U.S. elections in 2024. According to Santiment data, trading volume across major sectors—including memecoins, AI tokens, and Layer 1 protocols—has nosedived by 56.7%, falling from $134 billion in November 2024 to $58 billion in January 2025. This sharp decline reflects a growing investor hesitancy to engage with digital assets. Analysts describe this phenomenon as “trading paralysis,” with participants waiting on the sidelines for clearer market signals. Diverging trends in Bitcoin and Ethereum exchange flows add another layer to the story. Glassnode data reveals that Bitcoin has seen consistent outflows since December 2024, averaging 80,000 BTC withdrawn monthly. – Advertisement – This trend indicates strong HODLing behavior but raises concerns over diminishing liquidity on exchanges. In contrast, Ethereum has shown mixed signals. While January 2025 recorded net outflows of 400,000 ETH, significant accumulation phases occurred earlier, with inflows peaking at 700,000 ETH in October 2024. These patterns highlight differing strategies among institutional and retail investors. Global M2 Money Supply and Its Role in Crypto Liquidity Global M2 money supply—a measure of physical cash, money in bank accounts, and retail money market funds—is a critical factor influencing Bitcoin and broader crypto markets. Global M2 Vs Bitcoin Chart|Source: Raoul Pal Raoul Pal, the CEO of Real Vision, has discussed the connection between the global M2 money supply and Bitcoin. Historically, Bitcoin has closely mirrored changes in M2 with a…
Filed under: News - @ January 20, 2025 10:23 am