China’s massive liquidity could be the next driving force for Bitcoin (BTC). While Bitcoin’s price has stabilized around $110,000, the decline in trading leverage and the increase in stablecoin supply suggest that capital is waiting to enter the market and that the global money flow is changing. These changes may determine Bitcoin’s next move.
Since September, the Bitcoin futures trading range on the largest exchanges has narrowed, as have trading leverage, meaning that sales have occurred without causing a sharp price drop.
The Spent Output Profit Ratio (SOPR) is also close to 1.0, indicating that traders have been selling at base prices and avoiding emotional behavior. Meanwhile, the stablecoin supply has reached $158.8 billion, with the accumulated liquidity ready to be invested.
The key point is that China’s M2 liquidity is now at $47 trillion, while the US is around $22 trillion; a gap of $25 trillion that has persisted since 2009, showing that global markets, especially Bitcoin, are more influenced by the flow of liquidity from the East than ever before.
Now, if the next wave of liquidity comes in from Beijing, the direction of the crypto and Bitcoin markets may change.
