US Money Supply Hits Record High, Bitcoin Faces Liquidity Test
The US money supply reached a record high of $23.34 trillion in August, according to the Federal Reserve's seasonally adjusted M2 measure. This marks the 28th consecutive monthly increase, totaling approximately $2.61 trillion.
The M2 measure includes currency and bank deposits, as well as small time deposits and retail money market funds. From July to August, demand deposits rose by about $40.2 billion, while other liquid deposits increased by approximately $58 billion. Retail money market fund balances also climbed, by around $21.1 billion.
The growth in M2 has accelerated from 2% annual growth in August 2024 to 5.7% in August 2026. This expansion of the money supply can give households, companies, and investors more capacity to buy assets, but it is not a direct indicator of where that money will go.
The Federal Reserve raised its target interest rate range by a quarter percentage point to 3.75%-4% on September 16. This decision means Bitcoin faces a backdrop of faster broad money growth alongside higher borrowing costs. The forces can pull investors in different directions, with money supply growth potentially strengthening Bitcoin's long-term appeal, while higher rates make yield-bearing alternatives more attractive.