Bitcoin (BTC) continues to face market headwinds, with the price sliding 13.3% over the past week and losing key support levels.
However, recent analysis suggests that China’s expanding liquidity — rather than that of the United States — could soon emerge as the driving force behind Bitcoin’s next major rally.
SponsoredBitcoin Faces Pressure, but China’s Expanding Liquidity Could Fuel the Next Rally
BeInCrypto reported that last week’s crypto market crash saw BTC dip to a low of around $107,000. While a modest rebound followed, the momentum has died down once again.
In fact, over the past 24 hours, the largest cryptocurrency has depreciated 4.85%. At the time of writing, it traded at $105,317.
At the same time, the US M2 money supply has remained sideways for several weeks. Historically, Bitcoin’s price has shown a correlation with M2 growth — when liquidity expands, BTC often benefits. However, with the current stagnation, the short-term outlook for Bitcoin looks subdued.
Despite this, Joao Wedson, founder of Alphractal, suggested that Bitcoin could gain momentum from the East, where China’s liquidity continues to surge. He noted that China’s M2 money supply has ballooned to more than twice the size of the US equivalent, widening the gap to an astonishing $24.9 trillion.
Sponsored“Right now, China’s M2 money supply is 2.1x larger than that of the United States. While the US M2 has been moving sideways for weeks, China’s keeps climbing nonstop — now $24.9 trillion higher than the US,” he wrote.
According to Wedson, historical patterns show a clear correlation. Whenever China’s M2 overtakes its US counterpart, Bitcoin’s price ascends.
Furthermore, stabilization in the ratio has corresponded to sideways movement in the asset. This sign, which the executive dubbed a ‘macro alpha’ signal, has recurred across market cycles, suggesting Chinese capital flows could inject structural demand into Bitcoin markets.
“Remember, China used to dominate Bitcoin mining until 2021, when the ‘ban’ happened — which, let’s be honest, was never that absolute. There are still many Chinese miners and OG whales active in the market. As long as China’s M2 keeps increasing, global liquidity will likely continue to favor Bitcoin,” Wedson added.
Meanwhile, analyst Shanaka Anslem Perera also stressed that Bitcoin has entered a new phase. Its price action is increasingly tied to macroeconomic liquidity cycles, not its programmed halving schedule.
“Bitcoin has flipped from halving beta → liquidity beta. BTC no longer trades the block clock … it trades the liquidity curve. Tops and bottoms aren’t set by halvings; they’re set by central banks. The next supercycle ends not when supply halves…but when liquidity does,” he stated.
Thus, with China’s liquidity expanding, the center of gravity for Bitcoin’s next move could be shifting eastward. If historical correlations hold, China’s rising M2 and looser credit conditions may lay the groundwork for Bitcoin’s next major rally, indicating that the key to understanding BTC’s future lies not in its code, but in the flow of global capital.
