China's money supply has soared to $52.2 trillion: 2.3 times that of the United States — what does this mean for Bitcoin?
China's economy continues to increase liquidity at a record pace. Analysts have recorded that the M2 money supply in dollar terms has reached $52.2 trillion. This is 2.3 times higher than the comparable figure for the United States. However, this growth is not a signal for an immediate rally in the markets.
It is important to understand the structure of this liquidity influx. Most of the newly created money remains within the banking system — in deposits, debt refinancing, and money market instruments. It does not transform into consumer demand, does not spur inflation, and does not flow directly into risky assets, whether stocks or cryptocurrency.
Liquidity Locked in the System
Data shows that the correlation between China's money supply and key stock indices — the Hang Seng, Shanghai Composite, and Shenzhen Component — remains weak. The main flow of liquidity has not yet reached the real economy and the stock market. This means that the "money printing" mechanism is not yet working to boost traditional assets.
Observations of charts for China's M2 and Bitcoin's price since 2012 also do not demonstrate a direct and immediate dependency. Chinese liquidity is a potential driver, but it is currently in "sleep" mode in terms of its impact on markets.
Bitcoin Loses Connection with the Tech Sector
In parallel, a curious desynchronization is occurring at the level of global markets. The correlation between Bitcoin and the iShares Expanded Tech-Software ETF, which was strong until 2025, is now noticeably weakening. Essentially, no sector of the traditional market any longer has a strong correlation with the first cryptocurrency. The digital coin moves in its own direction, while stocks move in another.
These two observations — the growth of "locked" liquidity in China and the weakening of BTC's link with the tech sector — may be interconnected. If Chinese money remains within the banking system and does not enter the markets, its growth does not translate into demand for either stocks or Bitcoin. This explains why Bitcoin is increasingly reacting to global liquidity flows rather than the behavior of stock indices.
Analytical conclusion: China's record money supply represents colossal potential that has not yet been realized. For the crypto market, this means the "Chinese trump card" remains up its sleeve. As soon as Beijing decides to redirect this liquidity into the real economy or allows freer capital movement, we could see a powerful influx of funds into global assets, including Bitcoin. For now, the market will look for other catalysts.