PANews reported on August 28 that according to Bitcoin.com, Nikolaos Panigirtzoglou, a cross-asset market strategist at JPMorgan Chase, shared his analysis of recent fluctuations in US liquidity or US M2 money supply (including US bank deposits and money market funds) last week. He said: "After contracting in April, US liquidity or M2 money supply, which is the sum of US bank deposits and money market funds (MMFs), has rebounded in recent months; although this rebound challenges our forecast of a mild contraction at least until the end of the year, we believe that our forecast is still reasonable and the latest rebound in US liquidity is likely to be temporary. We believe that there have been two temporary boosts in US liquidity recently, and these temporary boosts are attributed to the US Treasury's general account balance falling below $850 billion and the Fed's reverse repurchase facility falling below $300 billion."
Panigirtzoglou said these factors may be a thing of the past, paving the way for a different liquidity environment, noting: “With these two temporary boosts likely a thing of the past, continued quantitative tightening (QT) by the Fed and a modest expansion in U.S. bank lending will together lead to a trajectory of contraction in U.S. liquidity or money supply, similar to the liquidity backdrop of 2022.” He noted that this expected contraction marks a significant change from the $1.3 trillion increase in money supply between April 2023 and March 2024, which was primarily driven by a $1.8 trillion reduction in the size of the Fed’s reverse repo facility. As these temporary factors fade, Panigirtzoglou expects financial conditions to tighten again.