Central banks worldwide have unleashed an unprecedented wave of monetary easing, the most aggressive in 35 years.
Over 90% of global central banks have either cut rates or held them steady for 12 consecutive months, resulting in 316 rate cuts from 2023 through early 2025—surpassing the 313 cuts during the 2008–2010 financial crisis.
This liquidity injection has expanded the global M2 money supply by about 8% year-to-date, reaching nearly $140 trillion, with the U.S. M2 alone hitting a record $22.21 trillion.
Factors driving this include cooling inflation now slowing in 17 G20 countries, resilient growth projections, and policy pivots like the Fed ending quantitative tightening (QT) on December 1, injecting $50 billion into repo markets last week alone. Additional boosts come from China’s $900 billion yuan stimulus, Japan’s $100 billion yen package, and Europe’s easing via the ECB.
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Historically, such coordinated easing floods risk assets like stocks and cryptocurrencies, with Bitcoin showing a 0.94 correlation to global M2 growth from 2013–2024.
Yet, as of November 29, 2025, Bitcoin trades flat around $91,000–$92,000, up just 1% year-to-date—its least volatile year ever, with compressed price action and a four-year CAGR at an all-time low.
Why Bitcoin Remains Flat Amid the Liquidity Boom
This apparent disconnect isn’t a sign of weakness but a structural evolution in Bitcoin’s market dynamics. Bitcoin doesn’t react instantly to liquidity surges; it typically trails global M2 increases by 60–70 days as capital filters through traditional systems before reaching high-risk assets like crypto.
In 2020, M2 surged in March, but Bitcoin’s breakout came in December. Current decoupling began mid-2025, suggesting a rally could materialize by late 2025 or early 2026. Analysts like those at CryptoQuant note this lag aligns with past cycles.
Overbuilt leverage $94 billion in futures open interest amplified a narrative-driven selloff when Fed expectations shifted from aggressive cuts 90% probability for December to caution now ~40%. This triggered $20 billion in liquidations, cascading into ETF outflows and long-term holder (LTH) distributions.
$1.8 billion in Bitcoin ETF outflows since November 12; LTHs offloaded 815,000 BTC in 30 days profits from $40K–$80K buys. Open interest dropped to $68 billion, but more needs to clear for stabilization. With real yields positive short-term Treasuries at 4–5%, capital prefers “safe” yields over Bitcoin’s zero-yield profile. Government debt rollovers U.S. trillions due and regulatory nudges toward safe assets act as a liquidity “tax,” soaking up marginal dollars.
U.S. debt exceeds $35 trillion; institutions 71% owning crypto treat BTC lending yields as riskier than T-bills post-FTX/Celsius. This shifts Bitcoin from “leveraged liquidity bet” to macro hedge correlation to SOFR: 0.52; to global M2: -0.046.
ETFs brought $61.9 billion in inflows YTD, but they enable quick exits during uncertainty like U.S.-China tensions, government shutdown draining $85 billion from GDP. This creates “institutional-scale sell liquidity,” but also absorption—preventing 80% crashes like 2018/2022.
Bitcoin’s ETF era killed the boom/bust cycle; volatility is structurally lower as retail speculation yields to global institutions. On-chain HODL waves at ATH, illiquid supply up, hashrate robust. Pi Cycle and MVRV indicators show mid-cycle, not top.
Macro Narrative Repricing
Bitcoin’s 215% rally to $126K in 2025 was fueled by easing + ETF hype, but stubborn inflation September CPI at 3.0% and a strong dollar environment repriced it downward. Geopolitics adds risk-off sentiment.
November’s 20% drop erased YTD gains, mirroring growth-sensitive assets. Yet, shutdown correlation to BTC is -0.4; resolution could spark $112K rebound if CPI stays below 3.2%.
In essence, this isn’t a “systems failure” but a healthy reset: leverage unwinds, weak hands exit, and Bitcoin consolidates in a maturing market. Sentiment is at “extreme fear,” but fundamentals scream strength—Bitcoin now acts as a liquidity exhaust valve, decoupled from equities and primed for when easing truly flows into risk assets.
The four-year halving cycle is obsolete; this is now a liquidity-driven regime. With QT ending, stablecoin supply poised to expand, and tokenized assets drawing institutional flows, 2026 could see a “melt-up” as macro expansion unleashes parabolic moves.
Favorable setups include: CPI <3.0% + shutdown resolution ? $112K by December. Neutral (50%): Consensus 3.1% CPI ? $100K–$105K range. Bear (15%): CPI >3.2% + extension ? $95K test.
Bitcoin’s “boring” phase is the calm before the storm—institutional plumbing is built, liquidity is turning, and history shows it always wins. As one analyst put it: “Bear markets don’t start on the precipice of global liquidity expansion.” Position for the expansion, not the noise.