While previous crypto bull cycles were driven by base money — central bank balance sheet expansions and reserve injections — this cycle has primarily been supported by broad money. It’s crucial to understand exactly what’s happening beneath the surface. Many have pointed to China’s liquidity injections as the heavyweight behind this rally, but that attribution misses the mark. The mechanism from base money to broad money needs to be demystified, and in our view, the bulk of the current move stems from U.S. and European banks expanding credit quietly but meaningfully.

Let’s begin with the U.S. and Eurozone. Base money has not moved up in our nowcast. Both the ECB and the Fed are still engaged in quantitative tightening—albeit at a reduced pace. There’s been no net increase in reserves. The ON RRP facility is nearly depleted, and while we might see some TGA-driven tailwind following April’s tax receipts, our framework shows no sustained impulse from traditional monetary aggregates. If this were a base-money-led cycle, we’d see clear evidence of central banks expanding their balance sheets again—but that’s simply not what the data shows.

Chart 1.a: Base Money Remains Flat in the U.S.