In a significant event on July 24, 2025, U.S. President Donald Trump, alongside Federal Reserve Chair Jerome Powell, unveiled the Federal Reserve’s newly renovated headquarters in Washington, D.C., a project costing taxpayers an estimated $2.5 billion. The renovation sparked criticism from the Trump administration, which has voiced concerns over both the extravagance of the project and Powell’s leadership during a time of economic uncertainty.
Amidst these developments, major central banks around the globe are responding to mounting economic challenges by injecting unprecedented amounts of liquidity into the financial system. As the global economy grapples with pressures ranging from banking crises to the lingering impacts of the COVID-19 pandemic, central banks have resumed the familiar tactic of cutting interest rates and increasing the money supply. This strategy echoes the initial creation of Bitcoin, which was influenced by the reactions to the 2008 financial crisis and the subsequent bailouts, particularly highlighted in Bitcoin’s Genesis Block that referenced a substantial government bailout.
As of early 2025, global money supply, measured by the M2 monetary aggregate, has surged by approximately 8% since the beginning of the year, although recent growth rates have been below historical averages. During this three-month period, money supply expansions were noted in key economies like Japan, the Eurozone, the United States, and China. Despite a temporary slowdown expected in September 2025, the overarching trend indicates a continual increase in money supply, particularly after earlier retrenchments prompted by inflation concerns and geopolitical tensions following Russia’s invasion of Ukraine in 2022.
In the U.S., the Federal Reserve faces growing pressure to reverse its quantitative tightening measures that aimed to curb the inflation spike experienced in 2022. Even as inflation levels remain above the targeted 2% baseline, expectations within financial markets lean towards further rate cuts and enhancements in liquidity. This results in a stark contrast to the tightening measures applied until mid-2024, with the M2 measure having risen by about 5% since October of the previous year, surpassing levels seen prior to the Federal Reserve’s tightening phase.
China is currently navigating a deflationary environment with alarming youth unemployment rates, presenting potential political instability akin to recent events in countries like Nepal and Bangladesh. The M2 growth in China has been about 8.5% from August 2024 to August 2025, reflective of efforts to bolster the economy amidst difficult circumstances.
Europe, too, continues to contend with sluggish growth, prompting the European Central Bank to increase the money supply in a manner similar to that of the Federal Reserve. Year-over-year increases in the M2 base are evident as the European economy struggles to regain momentum.
However, despite these fundamental supports for liquidity, Bitcoin has faced price drops in recent days. Following a record high of over $124,000 in mid-August, its value has been in decline, partially due to market adjustments in response to Powell’s remarks indicating expectations for interest rate cuts should be tempered.
As these trends unfold, it is evident that policymakers globally are defaulting to loosening monetary strategies in the face of economic adversity—a response shaped by lessons learned through various crises over the past two decades. Analysts suggest that while short-term volatility in Bitcoin’s price remains a concern, the long-term outlook may continue to favor upward movements, supported by the ongoing influx of money that is proving difficult to regulate.
