Bitcoin Price Momentum Could Be Tied to China, but Will Markets Follow Through?

Bitcoin price is often linked to U.S. interest rates, inflation, or Wall Street demand. But another factor has quietly shaped many of its rallies: money printing in China.

Data shows that when China increases its money supply, Bitcoin often climbs weeks later. This link is not new, but with the latest surge in Chinese liquidity, traders are again asking if the next wave of bullish momentum for Bitcoin could be made in China.

China’s Liquidity Push and Bitcoin’s Reaction

The People’s Bank of China (PBoC), which is China’s central bank, controls the supply of money in the economy. One key measure is called M2.

This includes cash, checking deposits, and savings accounts. It is basically the broad money supply available in the economy.

Over the last decade, China’s M2 has expanded from about ¥3 trillion in 2010 to more than ¥6.6 trillion in 2025.

Each time the PBoC increased liquidity in a major way, Bitcoin prices tended to rise in the following weeks.

For example, after the 2015 liquidity push, Bitcoin began a steady climb from the hundreds of dollars.

In late 2020, when China added more liquidity, Bitcoin went on to break past $60,000 in the months that followed.

Charts show that the present scenario looks similar. PBoC levels have been higher again, and the Bitcoin price is already holding strong above the $100,000 range.

Traders believe this may not be a coincidence. More money in the system often means more risk-taking, and Bitcoin can benefit from that flow.

China-US M2 Ratio and Dollar Weakness

Another way to look at liquidity is by comparing China’s M2 to the U.S. M2. When the China/US M2 ratio rises, it means China is expanding its money supply faster than the U.S. In most cases, this has lined up with bullish cycles for the Bitcoin price.

In 2013, when the ratio crossed above 1.6, Bitcoin entered one of its earliest bull runs, climbing from hundreds to over $1,000. In 2017, when the ratio again accelerated, Bitcoin surged to nearly $20,000.

Now, in 2025, the ratio is above 1.8, suggesting China’s money supply growth is once again outpacing the U.S.

On the other hand, when U.S. M2 dominance, the share of global liquidity controlled by the U.S., fell sharply, Bitcoin also gained.

Between 2022 and 2025, U.S. dominance dropped from nearly 19.5 to 14.6. During similar drops in the past, Bitcoin rallied strongly.

Some analysts think this is because less dollar dominance gives room for alternative assets, like Bitcoin, to absorb new demand.

These are not strict rules, but the repeated patterns suggest a connection.

What It Means for Bitcoin Price Action

The charts point to one clear idea: China’s liquidity policies have a massive effect on the Bitcoin price.

When the PBoC adds money into the economy and when China’s M2 growth overtakes the U.S., Bitcoin has historically rallied.

Why might this be happening?

One explanation is that Chinese liquidity, while aimed at supporting local businesses and banks, creates global spillovers.

Traders, companies, or wealthy individuals may direct some of that excess money into assets like Bitcoin.

Another theory is that when the U.S. is tightening and China is easing, Bitcoin acts like a release valve, soaking up cross-border flows.

Now the entire setup looks familiar. PBoC liquidity is rising, the China/US M2 ratio is at its highest in years, and U.S. M2 dominance is falling.

Together, these trends hint that Bitcoin could once again benefit from China’s moves.

That does not mean the outcome is guaranteed. Bitcoin’s price still depends on many factors, including U.S. regulation, investor appetite, and global risk sentiment.

But if past cycles are to be considered, the next leg of the Bitcoin price momentum might be driven by the Chinese macroeconomic forces.