Bitcoin is trading at $104,376 as of this writing, extending losses from the weekend after hitting highs of $111,190 on Friday and $111,250 by Sunday.
The pullback comes even as global liquidity surges to levels unseen since the pandemic, with the US Federal Reserve injecting $125 billion into the banking system over the past five days and China’s money supply topping $47 trillion. More money is flooding the system, yet Bitcoin isn’t responding.
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$47 Trillion in China, $125 Billion from the Fed — Yet Bitcoin Isn’t Moving
Liquidity, the amount of money or credit circulating in an economy, is often seen as the tide that lifts all boats. When central banks inject cash through quantitative easing (QE), repo operations, or credit expansion, it tends to drive up asset prices from equities to crypto. But that relationship is showing cracks.
Carlasare’s point speaks to the heart of the current disconnect. The Fed’s latest injections, overnight repos totaling $125 billion, are designed to stabilize short-term funding markets, not to stimulate broad risk-taking.
They boost systemic liquidity, not market liquidity that flows directly into risk assets such as Bitcoin.
China’s $47 Trillion Shadow
While US liquidity injections grab headlines, the bigger story may lie in China. BeInCrypto reported that China’s M2 money supply has reached $47.1 trillion, surpassing that of the US by more than 2x. This marks the widest liquidity gap in modern history.
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China’s long-term credit expansion, which began after the 2008 financial crisis, has fueled growth through infrastructure and exports rather than speculative markets.
That helps explain why global liquidity can rise, yet crypto doesn’t necessarily follow.
The catch is that much of this liquidity remains trapped within China’s domestic system, limiting its impact on global assets, such as Bitcoin. Even where liquidity is reaching markets, Bitcoin isn’t first in line.
That rotation is visible across capital flows. AI and semiconductor stocks have absorbed much of the speculative bid that once powered Bitcoin.
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BeInCrypto also reported Korean retail traders swapping crypto charts for Nvidia stock. Until those trades subside, macro liquidity may continue to bypass crypto.
System Under Strain Because Liquidity Is Energy, Not Direction
Meanwhile, the broader US system shows mounting stress. As The Kobeissi Letter reported, the government has borrowed $600 billion in just 30 days amid a prolonged shutdown, averaging $19 billion per day.
Air travel disruptions, falling labor data, and a rate-cutting Fed underline how fragile the current environment is.
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Against that backdrop, Bitcoin’s sideways move may reflect caution, not apathy. Liquidity builds potential, not inevitability.
In other words, liquidity creates the capacity for price movement, but psychology determines when that movement happens.
Against these backdrops, analysts like James Thorne point to the end of quantitative tightening (QT) in December 2025 as the next major liquidity inflection.
When QT ends, the Fed is expected to reinvest $60–70 billion per month in Treasuries, a sustained flow that could finally drive Bitcoin’s price higher. Until then, markets remain in a holding pattern.
Source: https://beincrypto.com/bitcoin-liquidity-disconnect-2025/
