Global money supply across the US, Euro area, China, and Japan reached a record $103.66 trillion in August. Data from MacroMicro indicates that this total grew by approximately 8% year-over-year in dollar terms. When adjusted for fixed exchange rates, the growth rate is closer to 4.5%, which is about one-third of the peak observed in 2021.
US M2 money supply hit a record $23.34 trillion in August, marking a 5.7% annual increase. During the same period, China reported a 7.5% rise in M2, while the euro area saw M3 growth of 3.5%. Conversely, Japan experienced a slight decline in its M2 supply. The Federal Reserve's balance sheet has expanded by approximately $141 billion over the past year.
Historical analysis shows that Bitcoin prices often correlate with the pace of money growth rather than the absolute supply level. A 2024 study by Lyn Alden revealed that Bitcoin tracked the direction of global M2 in 83% of 12-month periods. Currently, the cooling trend in M2 growth aligns with recent market performance, as Bitcoin trades near $84 650.
Macroeconomic factors are influencing asset performance, as the Federal Reserve raised interest rates to a range of 3.75% to 4% on September 16. The 10-year Treasury yield reached 5.225%, the highest level since 2007. Meanwhile, August CPI inflation remained at 3.4%, and oil prices approached $100 per barrel, impacting non-yielding assets like gold.
