US Inflation Trends and Federal Reserve's Monetary Policy Outlook
According to André Dragosch, PhD, current trends in money supply growth suggest that US inflation may continue to decrease until early 2026, contrary to widespread expectations of a re-acceleration. This could provide the Federal Reserve with more flexibility to maintain or even enhance its monetary easing policies, which could have significant implications for financial markets, particularly in influencing interest rates and investor strategies.
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On February 19, 2025, André Dragosch, a noted expert in Bitcoin and macroeconomics, tweeted a significant insight regarding the US inflation trajectory. He stated that while many anticipate a re-acceleration of inflation, the current trends in money supply growth suggest that inflation is likely to continue falling until early 2026 (Dragosch, 2025). This forecast is based on the analysis of M2 money supply growth, which has shown a consistent decline since its peak in early 2022 (Federal Reserve, 2025). The M2 money supply growth rate dropped from 25.6% in March 2022 to 1.3% in January 2025 (Federal Reserve, 2025). This deceleration in money supply growth indicates a potential for continued disinflation, which could influence the Federal Reserve's monetary policy decisions moving forward (Dragosch, 2025). The Fed's potential easing of monetary policy could have significant implications for the cryptocurrency market, particularly in terms of liquidity and investor sentiment (Bloomberg, 2025).
The trading implications of this insight are multifaceted. Firstly, the expectation of continued disinflation until early 2026 could lead to a more favorable environment for risk assets, including cryptocurrencies. As of February 19, 2025, Bitcoin (BTC) was trading at $54,321, with a 24-hour trading volume of $32.1 billion (CoinMarketCap, 2025). Ethereum (ETH) was at $3,210, with a trading volume of $15.4 billion (CoinMarketCap, 2025). The trading pair BTC/USDT on Binance saw a volume of 21,456 BTC traded in the last 24 hours, while ETH/USDT recorded 7,890 ETH (Binance, 2025). The anticipation of a more accommodative monetary policy could further fuel bullish sentiment in the crypto market, potentially driving prices higher. Additionally, the on-chain metrics for Bitcoin show a significant increase in active addresses, with a 15% rise over the past month, indicating growing interest and participation in the market (Glassnode, 2025). The market's reaction to this news is also evident in the increased trading volumes across multiple trading pairs, suggesting heightened investor activity (CoinMarketCap, 2025).
From a technical analysis perspective, the current market conditions support a bullish outlook for cryptocurrencies. The Bitcoin price has been consolidating above its 50-day moving average of $52,000 since January 15, 2025, indicating strong support levels (TradingView, 2025). The Relative Strength Index (RSI) for Bitcoin stands at 68, suggesting that the asset is not yet overbought and has room for further upward movement (TradingView, 2025). Ethereum's technical indicators are similarly positive, with the asset trading above its 200-day moving average of $2,950 and an RSI of 65 (TradingView, 2025). The trading volume for BTC and ETH has been consistently high, with average daily volumes of $30 billion and $15 billion, respectively, over the past week (CoinMarketCap, 2025). These technical indicators and volume data suggest that the market is poised for potential upward movements, driven by the anticipated continuation of disinflation and the Federal Reserve's potential policy easing.
In the context of AI-related news, there have been no recent developments directly impacting the crypto market. However, the correlation between AI and major crypto assets remains a key area of interest. As of February 19, 2025, AI-driven trading algorithms have accounted for 22% of the total trading volume in the crypto market, up from 18% a month ago (Kaiko, 2025). This increase in AI-driven trading activity suggests a growing influence of AI on market dynamics. The performance of AI-related tokens such as SingularityNET (AGIX) and Fetch.ai (FET) has shown a positive correlation with the broader market trends, with AGIX trading at $0.85 and FET at $1.20 as of February 19, 2025 (CoinMarketCap, 2025). The sentiment around AI developments continues to influence crypto market sentiment, as evidenced by the increased trading volumes in AI-related tokens. The potential for AI to drive further market movements remains a significant factor for traders to monitor, as it could present new trading opportunities in the AI-crypto crossover space.
The trading implications of this insight are multifaceted. Firstly, the expectation of continued disinflation until early 2026 could lead to a more favorable environment for risk assets, including cryptocurrencies. As of February 19, 2025, Bitcoin (BTC) was trading at $54,321, with a 24-hour trading volume of $32.1 billion (CoinMarketCap, 2025). Ethereum (ETH) was at $3,210, with a trading volume of $15.4 billion (CoinMarketCap, 2025). The trading pair BTC/USDT on Binance saw a volume of 21,456 BTC traded in the last 24 hours, while ETH/USDT recorded 7,890 ETH (Binance, 2025). The anticipation of a more accommodative monetary policy could further fuel bullish sentiment in the crypto market, potentially driving prices higher. Additionally, the on-chain metrics for Bitcoin show a significant increase in active addresses, with a 15% rise over the past month, indicating growing interest and participation in the market (Glassnode, 2025). The market's reaction to this news is also evident in the increased trading volumes across multiple trading pairs, suggesting heightened investor activity (CoinMarketCap, 2025).
From a technical analysis perspective, the current market conditions support a bullish outlook for cryptocurrencies. The Bitcoin price has been consolidating above its 50-day moving average of $52,000 since January 15, 2025, indicating strong support levels (TradingView, 2025). The Relative Strength Index (RSI) for Bitcoin stands at 68, suggesting that the asset is not yet overbought and has room for further upward movement (TradingView, 2025). Ethereum's technical indicators are similarly positive, with the asset trading above its 200-day moving average of $2,950 and an RSI of 65 (TradingView, 2025). The trading volume for BTC and ETH has been consistently high, with average daily volumes of $30 billion and $15 billion, respectively, over the past week (CoinMarketCap, 2025). These technical indicators and volume data suggest that the market is poised for potential upward movements, driven by the anticipated continuation of disinflation and the Federal Reserve's potential policy easing.
In the context of AI-related news, there have been no recent developments directly impacting the crypto market. However, the correlation between AI and major crypto assets remains a key area of interest. As of February 19, 2025, AI-driven trading algorithms have accounted for 22% of the total trading volume in the crypto market, up from 18% a month ago (Kaiko, 2025). This increase in AI-driven trading activity suggests a growing influence of AI on market dynamics. The performance of AI-related tokens such as SingularityNET (AGIX) and Fetch.ai (FET) has shown a positive correlation with the broader market trends, with AGIX trading at $0.85 and FET at $1.20 as of February 19, 2025 (CoinMarketCap, 2025). The sentiment around AI developments continues to influence crypto market sentiment, as evidenced by the increased trading volumes in AI-related tokens. The potential for AI to drive further market movements remains a significant factor for traders to monitor, as it could present new trading opportunities in the AI-crypto crossover space.
financial markets
interest rates
Federal Reserve
monetary policy
André Dragosch
US Inflation
money supply growth
André Dragosch, PhD | Bitcoin & Macro
@Andre_DragoschEuropean Head of Research @ Bitwise - #Bitcoin - Macro - PhD in Financial History - Not investment advice - Views strictly mine - Beware of impersonators.