- PBOC injected over 2.5T RMB in early 2025, marking the largest liquidity surge in years.
- Crypto Rover suggests Chinese liquidity injection could boost capital flows into crypto.
- The latest US-China trade deal features rare earth supplies and a US tariff rate of 55%.
China’s central bank is flooding its economy with liquidity, with monthly stimulus injections in the first half of 2025 reaching historic levels, a turning point for global financial markets. Data shows the People’s Bank of China (PBOC) injected over 2.5 trillion RMB in February alone as part of this sustained, large-scale effort.
PBOC data from 2021 to 2024 reveal that liquidity adjustments were carefully managed, rarely exceeding 800 billion RMB per month. While there were occasional contractions, the overarching policy aimed to stabilize China’s economy in the face of inflation, real estate fluctuations, and global uncertainty.
Market analysts have drawn connections between this surge in Chinese liquidity and rising interest in cryptocurrencies like Bitcoin. Crypto Rover, a market analyst, suggested on social media that an increase in the Chinese money supply could flow into Bitcoin and digital assets. Conversely, the initial months of 2025 have experienced liquidity injections ranging from two to five times above the recent average.
Bitcoin, Risk Assets React to Monetary Expansion
Analysts have highlighted the global impact of China’s bold liquidity injection measures, particularly on alternative assets. Crypto market analyst Crypto Rover remarked that these stimulus periods have typically coincided with increases in Bitcoin and other digital currencies. Significant rallies in cryptocurrencies and commodities occurred in previous cycles, notably in 2015, 2019, and 2020, whenever China expanded its money supply. The capital influx may also have a positive impact on Chinese stocks, bonds, and key industries such as technology and infrastructure.
This trend is highlighted in the current weekly Bitcoin chart, which indicates prices have hit a new all-time high above $110,000. For technical analysts, there have been four distinct bull flag formations since 2022, each followed by sharp breakouts and sustained gains. If liquidity conditions persist, traders expect Bitcoin to challenge resistance at $116,000 and $128,000 in the coming months.
Source: X US-China Trade Agreement Adds Market Uncertainty
At the same time, the US and China have announced a new trade framework. President Donald Trump stated that the deal, pending final approval, will ensure immediate Chinese supply of rare earth minerals and ongoing access for Chinese students at American universities.
The agreement outlines a US tariff rate of 55% on Chinese goods, a figure derived from multiple policy layers. While the White House confirmed these details, some of the terms described by President Trump were not specified in the public negotiation documents. “Our deal with China is done, subject to final approval with President Xi and me,” Trump said.
Financial markets responded to these developments with volatility. US equity futures initially had losses but quickly reversed as traders tried to comprehend the implications of both the trade framework and China’s monetary pivot. Currency strategists are also cautioning that the rise in the RMB supply could pressure the yuan, which could result in greater fluctuations in the foreign exchange markets, particularly if other central banks maintain tighter monetary policies.
Related: China Injects $139B Into its Economy; James Wynn Calls—Bitcoin is The King
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