According to financial analysts, the money supply has seen a 26% increase since February 2020. The last time that level of increase transpired was over 70 years ago.
Facing Unique Financial Times
Bitcoin, which several analysts term as a ‘speculative asset’, has recently had price surges, reaching new all-time highs in just a couple of weeks. This price boost in digital assets like BTC coupled with the now common economic trends including inflation might possibly be the catalyst behind the money supply increase.
Cryptocurrency adoption is one factor that businessmen like Warren Buffet are very hesitant about. However, Hip-hop artists like Snoop Dogg and multi-billionaire businessmen like Elon Musk are driving the public to take the so-called ‘leap of faith’. These individuals have somewhat created a market manipulation illusion that has driven many into investments. The money supply is bound to grow when people decide to go beyond their comfort zones.
It hasn’t been a pretty ride for the monetary markets over the last year.
Each and every trend of monetary exchanges that follow the US dollar was predictable. It resulted in the increased price of raw materials, commodities, food commodities, fuel, and transportation products that consumers are used to and need, thus stimulating a boom or a double boom and subsequent price increases. The COVID-19 pandemic hasn’t been merciful either, almost forcing a large percentage of the population worldwide to make digital transactions.
Money In, Money Out
Financial speculators could argue that the increase in M2 supply would most certainly guarantee an inflation percentage increase. In the last decade, China’s monetary-supply growth averaged a 23% increase annually. Nonetheless, the inflation rates have hopped from negative percentages 10 years ago to about 2.6% currently.
Technology has changed many financial sectors positively. Capital markets have grown with massive investment, advanced and automated trading systems have sped up execution, firms have become more efficient and knowledge has been acquired at a faster rate than before. This results in additional cash flow and more money.
Crypto-verse Grows, Money Boom Looms
The BTC market cap recently surged past $1T and attained a new ATH, recording a $56K price valuation. Several other crypto prices such as Polkadot and BNB are on the rise and the much-awaited ETH2.0 network has seen many Ethereum investors go bullish rather than bearish. As digital asset prices fluctuate, the value of these assets has meant nothing short of increased volatility.
Safe to say, more people every day want a piece of the cryptocurrency cake, though, institutional investors are not exactly excited at the prospect of incorporating crypto in their portfolio. Bitcoin is quickly becoming one of the most well-known and fully utilized forms of currency. As more people discover the virtual collectible that has attracted a growing number of serious investors, the price of Bitcoin will continue to climb.