Global Liquidity Hits Record High as Bitcoin Price Trades 30% Below Peak

Key Insights

• Bitcoin price remains in a technical bear market after falling by 30% from the year-to-date high.
• The global M2 money supply has been in a strong uptrend in the past few months.
• Bitcoin will need to overcome some major issues to bounce back in 2026.

Bitcoin price has crashed by over 30% from its highest point on record despite having some major macro tailwinds. The coin was trading at $88,000 on Tuesday, and technical analysis points to more downside despite the rising liquidity.

Global Liquidity Surge Fuels Optimism for Bitcoin Price Rebound

Bitcoin price has remained under pressure this month, even as global liquidity continued its strong uptrend. Data shows that the M2 money supply has continued rising in the past few months and is now at a record high.

The US money supply has jumped to over $22 trillion, while China’s figure has jumped to over $46 trillion. More data shows that Japan’s and Europe’s M2 money supply jumped to over $8 trillion and $16.7 trillion, respectively.

These numbers mean that the global liquidity is soaring, a trend that may continue in the coming year.

Most of this growth will likely come from the United States. The Federal Reserve delivered three interest rate cuts this year, ended quantitative tightening, and started quantitative easing.

It is also actively injecting billions of dollars into the financial system. Its current QE policy involves the bank pumping about $40 billion a month into the financial system.

Donald Trump promised to implement the biggest tax refund in U.S. history. He pledged to issue stimulus checks using tariff revenue. These policies would put more money into circulation.

They could boost household spending and liquidity. Some of that money may flow into the crypto market.

A recent Bloomberg report noted that Beijing was considering more interest rate cuts in 2026. It said the government planned stimulus to boost domestic consumption as the country pivots away from exports.

Japan is implementing stimulus packages. The European Central Bank plans to keep interest rates unchanged as inflation stays near its 2% target.

All these measures are highly bullish on risky assets. This explains why global stocks continued rising, with the S&P 500, Nasdaq 100, and the TSX Composite hovering at their ATHs. It also explains why gold and silver prices soared to their record high.

Some analysts believe the Bitcoin price will rebound. They expect the recovery as the money supply rises and interest rates fall.

Bitcoin Price Will Need to Overcome Key Headwinds

BTC price will need to overcome major headwinds to confirm the bullish outlook. One of these challenges is the ongoing dumping of spot Bitcoin ETFs. Data shows that spot BTC ETFs shed over $19.2 million in assets on Monday, the seventh consecutive day in the red.

These funds have now shed over $1.2 billion in assets after shedding $3.4 billion in the previous month. Falling outflows is a sign of weak demand from American investors.

Bitcoin price will also need to overcome major technical headwinds on the daily and weekly timeframe charts.

The daily timeframe chart shows that the careoin is now in the process of forming a bearish pennant pattern. That’s made up of a flagpole and a symmetrical triangle. The two lines of this triangle are nearing their confluence, meaning that a bearish breakdown is about to happen

A bearish breakout will push it to the next key support level at $80,500, its lowest level in November this year. A move below that level will point to more downside, potentially to the April low of $74,500.

Bitcoin price has numerous bullish catalysts in the coming year, including the growing global M2 money supply. Historically, the coin rises whenever this supply is in a strong uptrend.

For the rebound to happen, the coin must overcome key challenges. It faces a bearish pennant pattern and falling Bitcoin ETFs. It also struggles with weak futures open interest.

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