Global liquidity reaches record levels in 2026, reaching around $123-130 trillion.
This increase is mainly due to the acceleration of M2 expansion in China. However, Bitcoin (BTC) continues to lag behind gold and silver.
The divergence does not imply weakness but a potential delay in Bitcoin’s liquidity response.
Macroeconomic conditions became stable and risk appetite began to gradually recover as liquidity was restored. But first, capital was invested in traditional hedges.
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Gold gained almost 70% and silver gained about 150%. In contrast, Bitcoin underperformed, falling around 6-7%, but this does not indicate poor performance.
Traditionally, higher beta securities undergo more aggressive rerating after these stages. Investors continue to be patient and optimistic.
In the short term, reactions may remain moderate. However, in the long term, increased liquidity has consistently contributed to the rise of cryptocurrencies.
Chinese M2 discreetly supports the rise of Bitcoin
Between 2024 and 2025, M2 in China increased steadily from around 45 trillion to 48 trillion, with annualized growth controlled between 8 and 8.5% until December 2025.
This rate indicates stability rather than growth due to stimulus measures. In 2026, M2 reached around 49 trillion, continuing the same structural trend.
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The price of Bitcoin has improved over this period, even as the connection has weakened.
After mid-2025, price action was more independent based on risk appetite and market positioning than immediate liquidity flows.
In simpler terms, M2 is a macroeconomic and favorable long-term environment, while Bitcoin’s short-term momentum indicates divergence rather than liquidity transmission.
ETF Flow Volatility Shapes Bitcoin’s Short-Term Price Action
According to CoinGlass data, spot flows turned decidedly positive in mid-2025 and recurring green spikes of over $300 million aligned with Bitcoin’s price trend toward the $120,000-$130,000 zone.
With the increase in capital flows, the trend increases and volatility contracts. However, the momentum ran out of steam at the end of 2025.
Source: CoinGlass
The red bars strengthened, some daily outflows exceeded 800 million and one was close to 1.2 billion, as Bitcoin fell significantly below $100,000.
Flows remained volatile through January 2026. The net monthly movement was close to $1.2 billion, but red days prevailed.
All this combined, market sentiment remains volatile. Bitcoin benefits from a structural wind of liquidity across cycles, but short-term price action primarily responds to changes in risk appetite and institutional positioning.
Final Thoughts
- Global liquidity and steady M2 growth in China provide a long-term tailwind for Bitcoin, even if capital initially turns to traditional hedges.
- Short-term Bitcoin price action has become decoupled from immediate liquidity flows since mid-2025, with ETF risk appetite, positioning, and flow volatility dominating market behavior.
