by Coinstrooper Crypto Articles
Quick Take
  • Crypto hedge fund XWIN Finance believes the answer lies in liquidity dynamics.
  • M2 money supply has entered a renewed expansion phase, hitting a record high of approximately $22.2 trillion.
  • Ethereum, by contrast, remains behind, having risen only about 15% during the same period.
  • This gap represents a clear “liquidity lag,” however, on-chain data suggests this gap may be closing.

What Happened

Over the past three years, the U.S. M2 money supply has entered a renewed expansion phase, hitting a record high of approximately $22.2 trillion.

Exchange Supply Shock and M2 Expansion Shows ETH to $10k is Realistic

Exchange reserves have fallen to around 16.1 million ETH, down more than 25% since 2022, indicating a structural decline in selling pressure.

Market Context

Could Ethereum really hit $10,000 this cycle? Crypto hedge fund XWIN Finance believes the answer lies in liquidity dynamics.

Bitcoin has been the first to capture this “liquidity wave,” climbing more than 130% since 2022 and showing an exceptionally high correlation with M2 of around 0.9.

Ethereum, by contrast, remains behind, having risen only about 15% during the same period. This gap represents a clear “liquidity lag,” however, on-chain data suggests this gap may be closing.

Yet when BTC dominance falls below 60%, capital often rotates into the altcoin market, and the ETH/BTC ratio begins to climb.

All of this makes the Q4 target of $10,000 ETH look within range, and if that happens, it would not be the result of speculative excess but a natural outcome of liquidity cycling through the crypto market.

In a July blog post, Hayes laid out his thesis, tying the potential price surge to U.S. President Donald Trump’s economic policies and what he describes as a shift to a wartime economy.

Ethereum has now reclaimed the $4,600 level, gaining 11.34% in the past seven days with a market capitalization of $561.93 billion.

CoinShares’ recent report has shown that U.S. spot Ethereum ETFs, alongside Ethereum digital asset treasuries, have been driving ETH’s price rally.

Why It Matters

As global M2 money supply reaches record highs and exchange reserves plummet, XWIN analysts argue that Ethereum is approaching its “revaluation phase,” a structural shift that could send ETH surging to five figures if current trends hold.

That pattern appears to be emerging again, suggesting that 2025 could mark a shift from a Bitcoin-led phase to an Ethereum- and altcoin-led phase.

Arthur Hayes: Trump’s Wartime Economy Could Push $ETH to $10K by Year-End

That, he argues, will create favorable conditions for risk assets, especially top cryptocurrencies like Bitcoin and Ethereum.

Details

Netflows to exchanges have remained consistently negative, showing that ETH is being withdrawn into self-custody or staking contracts.

Meanwhile, the Coinbase Premium Index has turned positive again, pointing to renewed buying interest from U.S. institutions.

These indicators mirror conditions observed in early 2020 and 2021, both of which were precursors to major Ethereum rallies.

Historically, Ethereum tends to lag behind Bitcoin in the early stages of monetary easing cycles.

Arthur Hayes, co-founder of BitMEX, also believes that $10,000 Ethereum by the end of 2025 seems well within reach.

According to Hayes, the return of Trump has brought in a credit-heavy economic strategy designed to increase industrial output, especially in areas like rare earths and defense manufacturing.

Hayes believes this approach, which mirrors aspects of economic planning in China, will flood the system with credit.

Ethereum saw inflows totaling $1.48 billion last week alone, pushing total year-to-date (YTD) inflows to a record $13.7 billion, close to triple that of last year.

And it’s possible that ETH ETFs will only get busier in the coming months, with major asset manager Grayscale filing today to add staking to its Ethereum ETF.