China's central bank is flooding its economy with liquidity

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.

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 that has global financial markets buzzing.

Data reveals that the People's Bank of China (PBOC) injected over 2.5 trillion RMB in February alone as part of this sustained, large-scale effort.

This compares sharply with the usual liquidity adjustments, which saw a net injection of 800 billion RMB in January and varied between 300 billion RMB and 800 billion RMB in the last two years, according to PBOC data from 2021 to 2024. 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.

However, the recent figures for March, April, and May saw even greater injections, ranging from two to five times above the recent average.

This massive liquidity infusion has sparked interest among market analysts, particularly in relation to the recent surge in cryptocurrencies like Bitcoin.

Crypto Rover, a market analyst, drew this connection on social media, suggesting that an increase in the Chinese money supply could flow into Bitcoin and digital assets.

"THIS MONEY WILL FLOW INTO BITCOIN & CRYPTO!" he exclaimed on X (formerly Twitter).

[email protected]

China's central bank continues to inject liquidity into its economy, and the implications are huge for global markets. As the Chinese money printer goes Brrrr, we could see more of the gains flowing into Bitcoin and digital assets.

An increase in the Chinese money supply could flow into crypto.

Crypto, 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 noted that these stimulus periods have typically coincided with increases in Bitcoin and other digital currencies.

"We've seen cycles where they do liquidity injections, and we do see surges in Bitcoin and other risk assets," explained Crypto Rover.

He added that periods of massive 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.

At the same time, the US and China have announced a new trade framework, which will see the return of Chinese students to American universities and the supply of rare earth minerals from China, according to President Donald Trump.

The agreement, still pending final approval, will also set a US tariff rate of 55% on Chinese goods, a figure derived from multiple policy layers, explained Trump. 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 with volatility to these developments. US equity futures initially had losses but quickly reversed as traders tried to integrate 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.