Heading into 2026, liquidity signals are starting to lean bullish.
Beyond the three consecutive rate cuts in the second half of the year that marked the start of the easing cycle, the broader liquidity backdrop continues to improve, putting a supportive tailwind behind risk assets.
From a macro perspective, when global liquidity metrics like Global M2 start trending higher, risk assets often follow as investors move further out on the risk curve. Notably, a similar pattern appears to be emerging now.
According to Alphactral data, Global M2 Supply has reached new all-time highs, now approaching $130 trillion.
At the same time, this expansion has been uneven across regions, with China emerging as the primary driver.
Data showed China accounting for roughly 37% of the total, with M2 standing at USD 47.7 trillion. However, several other economies are experiencing M2 contraction, including Japan, India, Argentina, Israel, and South Korea.
Against this setup, the U.S. government’s $40 billion Treasury plan doesn’t look like a one-off.
Instead, major economies appear to be competing on liquidity provision, setting the stage for risk assets heading into 2026.
Liquidity is building, but risk assets stay cautious
Across the globe, liquidity easing seems to be moving in sync.
In the U.S., the $40 billion Treasury plan is designed to inject cash into the banking system by issuing government debt. In turn, this move helps keep funding conditions smooth, indirectly providing a tailwind for risk assets.
Combined with Global M2 hitting ATH and the Fed easing through rate cuts and Treasury measures, the macro setup is clearly favoring risk assets. That said, how much upside we see will depend on investor appetite.
Notably, the macro tailwinds haven’t yet supported gains in this space.
Despite three rate cuts, the TOTAL crypto market cap is down 21% for the quarter, ending 2025 on a bearish note. As a result, risk assets remain well below late-Q3 peaks, keeping investors cautious heading into 2026.
Against this backdrop, the impact of liquidity growth on risk assets isn’t easy to predict. That said, with global money supply rising, it could set the stage for a rebound, making it a key metric to watch in the months ahead.
Final Thoughts
- Global M2 hits a record, led by China, while major economies ease funding conditions through rate cuts and Treasury measures.
- Despite easing, crypto is down 21% for Q4 2025, keeping investors cautious, but liquidity trends could set the stage for a rebound in 2026.
