China's Central Bank Liquidity Injections Are Fueling Bitcoin's Next Bullish Breakout

China's central bank has been flooding its economy with liquidity, with monthly stimulus injections reaching historic levels in the first half of 2025

China's central bank has been massively injecting liquidity into its economy, with monthly stimulus reaching historic levels in the first half of 2025. This strategy, adopted by the People's Bank of China (PBOC) to mitigate the economic impact of the pandemic, could have significant implications for global financial markets.

According to PBOC data cited by Crypto Rover, adjustments to liquidity were minimal in 2021 and 2022, with monthly changes rarely exceeding 800 billion yuan. However, 2023 saw a substantial increase in liquidity injections, amounting to 1.6 trillion yuan on average over the first six months of the year.

In February alone, the PBOC poured an unprecedented 2.5 trillion yuan into the financial system. To put this in perspective, total liquidity adjustments in 2021 and 2022 rarely went above 800 billion yuan.

Crypto Rover noted that previous instances of cryptocurrency and commodity price rallies occurred in 2015, 2019, and 2020, periods when China was actively increasing its money supply.

This trend is evident in the Bitcoin chart, which has undergone four distinct bull flag formations since 2022, each leading to a strong breakout and sustained gains afterward.

If liquidity infusions continue at the observed pace, traders can anticipate a breakout from the resistance at $116,000 and $128,000 in the ensuing months.

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It's important to note that each Bitcoin rally to a new price high has been met with a period of price decline, a natural market reaction as the market digests the growth.