The Hidden Sellers Driving Bitcoin's 2025 Volatility: Chinese Authorities and the PlusToken Liquidation

Bitcoin's 2025 price trajectory has been a rollercoaster, marked by sharp rallies and brutal corrections. While much of the narrative has centered on institutional adoption and macroeconomic tailwinds, a critical but underappreciated driver of volatility has emerged: the systematic liquidation of PlusToken-linked Bitcoin by Chinese authorities. This on-chain activity, combined with broader regulatory shifts in China, has created a unique confluence of selling pressure and macroeconomic uncertainty, reshaping Bitcoin's role in global markets.

The PlusToken Liquidation: On-Chain Evidence of Systematic Selling

In 2019, Chinese authorities seized approximately 194,000 Bitcoin from the collapsed PlusToken Ponzi scheme, a $2.2 billion fraud that defrauded over 2.6 million users. By 2025, evidence suggests these assets are being liquidated to bolster local government finances amid China's economic slowdown. On-chain analysts have identified transactions routing these assets through offshore brokers and private over-the-counter desks, with Hong Kong-based intermediaries playing a key role.

The scale of this liquidation is staggering. Over $445 million in Ethereum from PlusToken-linked addresses moved in 2024, signaling a pattern of redistribution or sale. While Bitcoin-specific data remains opaque, the consistent sell pressure from low-cost holders-likely tied to these seized assets-has contributed to Bitcoin's struggles despite robust institutional buying. For instance, in October 2025, a single day of market panic triggered by U.S. President Donald Trump's tariff threats saw $19 billion in crypto liquidations, with PlusToken-linked sales exacerbating downward momentum.

Macroeconomic Implications: China's Regulatory Shift and De-Dollarization

China's 2025 regulatory actions extend beyond PlusToken. The country's $71.5 billion reduction in U.S. Treasury holdings between September 2024 and September 2025 reflects a strategic pivot toward de-dollarization, aligning with BRICS nations' broader efforts to diversify reserves. This shift has amplified Bitcoin's narrative as a hedge against fiat instability, yet central banks remain skeptical. The Swiss National Bank's April 2025 rejection of Bitcoin as a reserve asset underscores the gap between crypto's speculative appeal and institutional caution.

Meanwhile, China's crackdown on U.S. dollar-backed stablecoins-driven by the GENIUS Act-has further complicated its monetary strategy. These stablecoins threaten Beijing's control over capital flows, prompting regulatory measures that indirectly impact Bitcoin's liquidity and price dynamics. Blockchain technology's role in mitigating supply chain risks for Chinese enterprises adds another layer of complexity, as global trade tensions and macroeconomic uncertainties reshape demand for digital assets.

Bitcoin's Price Correlation: From Speculative Asset to Macro Risk Proxy

Bitcoin's 2025 volatility is not solely a function of on-chain selling. Its growing correlation with equities-particularly the NASDAQ 100-has made it a barometer for broader market sentiment. By 2025, Bitcoin's average correlation with the S&P 500 reached 0.5, up from 0.29 in 2024. This shift reflects increased adoption by both retail and institutional investors, who now treat Bitcoin as a high-beta speculative asset rather than an alternative to traditional markets. This shift reflects increased adoption.

The October 2025 sell-off, triggered by Trump's tariff announcement, exemplifies this alignment. Bitcoin's price plummeted alongside equities, with leveraged positions and risk-off sentiment amplifying the downturn. Analysts now assign a 15% probability that Bitcoin will close 2025 below $80,000, a stark contrast to its $126,000 all-time high in October.

Conclusion: Navigating the 2025 Crypto Landscape

The interplay of PlusToken liquidation, Chinese regulatory actions, and macroeconomic trends has created a volatile environment for Bitcoin. While institutional adoption and ETF approvals have driven a bull market, the persistent selling pressure from seized assets and geopolitical risks suggests a precarious balance. Investors must weigh Bitcoin's dual role as both a speculative play and a macroeconomic proxy, recognizing that its future trajectory will depend on regulatory clarity, institutional confidence, and the resolution of global liquidity dynamics.

For now, the market remains in a "shoulder" phase, with limited upside potential and heightened correction risks. As Chinese authorities continue to monetize PlusToken-linked assets and recalibrate their approach to digital currencies, Bitcoin's price will likely remain tethered to the whims of macroeconomic forces and regulatory arbitrage.