Crypto Assets market long positions lost over 1 billion USD this week, and the US M2 supply reached a historical high!

As the bullish momentum fades, the total market capitalization of Crypto Assets has dropped by nearly 3% so far this week. In the derivatives market, over 1 billion dollars in long positions have been wiped out in the past three days, with the liquidation rate surpassing that of short positions.

However, macroeconomic conditions, such as the historic high of the US M2 money supply, combined with President Donald Trump's call for the Federal Reserve to cut interest rates, may spark interest in Bitcoin (BTC), the largest crypto asset with a market capitalization of $2.30 trillion, which can serve as a hedge against inflation and the erosion of the dollar's global dominance.

The recent fluctuations in the Crypto Assets market have shaken $1 billion in bullish positions

As of Friday's press release, the total market capitalization of crypto assets has fallen by nearly 2%, to $3.75 trillion, marking the third consecutive day of decline. The market pullback has dragged down the much-anticipated altcoin market, while also increasing the risk of new local peaks.

(Source: Trading View)

CoinGlass data shows that the recent pullback has resulted in a total liquidation of 727 million USD in the past 24 hours, eliminating most bullish positions, evidenced by 581 million USD in long positions liquidated compared to 146 million USD in short positions.

(Source: Coinglass)

Interestingly, during three days of losses, long positions worth $1.23 billion were liquidated, while short positions totaled nearly $280 million, indicating that the market is experiencing bullish chasing.

(Source: Coinglass)

The M2 money supply in the United States has reached a new high, and the Crypto Assets market may benefit.

Since the quantitative tightening policy cooled in May 2022, as of the time of writing on Friday, the M2 money supply in the United States (including cash, savings, and other liquid assets) has reached a historic high of $22.02 trillion. However, the inflation rate remains at 2.7%, above the Federal Reserve's target of below 2%.

(Source: Trading View)

In general, an increase in the M2 money supply indicates an increase in market liquidity, which may boost demand for speculative risk assets such as Bitcoin (BTC). However, due to worsening inflation, the rising supply risks will weaken the purchasing power of the dollar.

Against the backdrop of increasing liquidity, escalating inflation, and the precarious global dominance of the dollar, turning to alternative assets seems to be the future development direction. Numerous investment institutions and companies are working towards this goal, establishing Bitcoin reserves and supporting the concept of viewing Bitcoin as "digital gold."

Trump continues to speak about Powell and interest rate cuts

On Thursday, U.S. President Trump, accompanied by Federal Reserve Chairman Powell and Senator Tim Scott, inspected the renovations and new facilities at the Federal Reserve building. Trump emphasized that costs were significantly over budget, but he remained optimistic, stating, "Our country is doing very well and can almost afford any expense."

In addition to the renovation project, Trump also advocated for "lowering interest rates," while the Federal Open Market Committee (FOMC) indicated that there will be two rate cuts later in 2025, totaling 50 basis points.

In general, interest rate cuts increase the inflow of speculative and risk assets, as investors can obtain liquidity at lower interest rates, which may raise the valuation of the Crypto Assets market.