Bitcoin\u2019s 50% decline from all-time highs in just four months comes at a time when global liquidity has increased, which counters the common premise that the price follows liquidity.<\/p>\n
\u201cThe divergence is striking, and it demands explanation,\u201d said Chris Tipper, chief economist and strategist at the Ainslie Group.\u00a0Global liquidity has climbed around $5 trillion since Bitcoin\u2019s peak in October and is now almost $190 trillion, according to Ainslie Wealth.<\/p>\n
However, this is being driven by the People\u2019s Bank of China, which added $1 trillion in 2025 and likely another trillion this year, said<\/a> Tipper.<\/p>\n Chinese liquidity doesn\u2019t flow into Bitcoin (which is banned), it flows into gold reserves, domestic infrastructure, and the real economy, he added.<\/p>\n \u201cSo when you strip out the Chinese contribution and look only at the Western liquidity that Bitcoin actually responds to, momentum peaked in October and has been decelerating since.\u201d<\/p>\n Gold markets reacted to this and reached all-time highs in late January, with the precious metal trading just 5% down from that peak today. Bitcoin responded to the Western component and corrected.<\/p>\n \u201cTwo assets, same headline liquidity number, opposite performance, entirely explained by the bifurcation.\u201d<\/p>\n The economist concluded that when Western liquidity momentum re-accelerates, whether from a Federal Reserve response to market stress, dollar weakness, or a \u201cdisorderly event that forces intervention,\u201d Bitcoin has significant ground to recover.<\/p>\n The US Dollar Index (DXY), as a \u201crough proxy for Western liquidity, seems to support your argument,\u201d commented<\/a> Abra CEO and Algorand chairman, Bill Barhydt.<\/p>\n The DXY has recovered in recent days following the escalation of military strikes in Iran. From a low of 97.5 in late February, it climbed to 99.6 on Tuesday as the dollar strengthened, according<\/a> to TradingView.\u00a0A stronger dollar is also bad news for Bitcoin markets.<\/p>\n At the same time, Bitcoin tanked below $67,000 again in late trading on Tuesday but managed to recover to $68,500 by Wednesday morning in Asia.<\/p>\n The asset has seen heavy resistance<\/a> at $70,000 and is unlikely to break above it until Western liquidity improves through Fed rate cuts or more money printing.<\/p>\n The post Why Has Bitcoin Dumped 50% When Global Liquidity Has Increased?<\/a> appeared first on CryptoPotato<\/a>.<\/p>","protected":false},"excerpt":{"rendered":" Bitcoin\u2019s 50% decline from all-time highs in just four months comes at a time when global liquidity has increased, which counters the common premise that the price follows liquidity. \u201cThe divergence is striking, and it demands explanation,\u201d said Chris Tipper, chief economist and strategist at the Ainslie Group.\u00a0Global liquidity has climbed around $5 trillion since […]<\/p>\n","protected":false},"author":0,"featured_media":139576,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-139575","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-discovery"],"_links":{"self":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts\/139575"}],"collection":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=139575"}],"version-history":[{"count":0,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts\/139575\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/media\/139576"}],"wp:attachment":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=139575"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=139575"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=139575"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Chinese Favor Gold Over Bitcoin<\/h2>\n
BTC Price Outlook<\/h2>\n