Bitcoin News Today: Bitcoin's Decentralization at Risk as BlackRock Centralizes Liquidity

Bitcoin Liquidity Soars Amid Federal and Chinese Cash Injections

Global liquidity injections by the U.S. Federal Reserve and China's central bank have reignited speculation that Bitcoin could enter a new bull cycle. The Fed recently added $29 billion in liquidity through repo operations, while the People's Bank of China (PBOC) expanded credit availability to stimulate growth, mirroring their coordinated efforts during the 2020-2021 pandemic-era rally, according to a Yahoo report. These moves, aimed at lowering borrowing costs and boosting risk appetite, have pushed Bitcoin's market structure into a phase of heightened activity.

Data from Coinglass shows Bitcoin's open interest dropped to near 90,000 contracts in early November, signaling caution among derivatives traders. However, spot trading volume surged past $300 billion in October, with Binance alone accounting for $174 billion in Bitcoin trades, according to a TradingView report. Analysts attribute this shift to a broader move away from leveraged speculation following a historic liquidation event on October 10. The trend suggests investors are prioritizing direct Bitcoin exposure over high-risk, leveraged positions, reflecting improved market structure and renewed confidence.

Meanwhile, BlackRock's iShares Bitcoin Trust (IBIT) has emerged as a pivotal player, now holding approximately 3% of the circulating Bitcoin supply, according to an EzBlockchain article. This institutional accumulation has sequestered tradable liquidity into centralized custody, reducing the float of freely tradable Bitcoin on exchanges. The concentration amplifies price sensitivity to large flows, as reduced exchange reserves increase slippage for market takers. For example, a buy order that previously absorbed into exchange order books may now push prices further due to tighter liquidity.

The implications extend beyond price dynamics. BlackRock's scale introduces operational centralization risks, such as counterparty exposure to custodians like Coinbase and regulatory scrutiny over custody transparency. While the protocol remains decentralized, the market infrastructure has become more fragile, with redemption mechanics and custodial failures posing systemic threats. Retail investors benefit from regulated access via IBIT but face higher execution costs in a tighter liquidity environment.

Central banks will remain key drivers of Bitcoin's trajectory in 2025. If the Fed scales back liquidity support or China's stimulus fails to revive growth, risk appetite could wane, dampening speculative assets. Conversely, sustained liquidity expansion may fuel another bull run, particularly as Bitcoin's role as a store of value gains institutional acceptance.