Bitcoin News Today: China and U.S. Fed's Liquidity Surge Sends Bitcoin to $62K

Bitcoin surged to $62,400 on May 8, 2025, liquidating approximately $330 million in short positions amid a coordinated global liquidity expansion led by China and the U.S. Federal Reserve. The People's Bank of China (PBoC) injected $138.5 billion in liquidity and cut interest rates, while the Fed expanded its bond-buying program, creating a competitive environment for capital flows into risk assets like Bitcoin. By 2:00 PM UTC, Bitcoin had climbed 3.2%, with trading volumes for BTC/USD pairs spiking 18% on platforms like Coinbase, indicating heightened speculative activitytitle1^[1].

The liquidity injection followed a historical pattern: large-scale monetary stimulus in China has often preceded Bitcoin rallies. For instance, during China's 2015 and 2020 liquidity surges, Bitcoin prices rose weeks later. In 2025, the PBoC's actions coincided with a 25% increase in Bitcoin wallet addresses holding over 1 BTC, signaling accumulation by larger players. On-chain data also showed a 17% rise in Ethereum transaction volumes, reflecting broader crypto market participationtitle1^[1].

Global liquidity dynamics were further amplified by a decline in U.S. M2 dominance, which dropped from 19.5 in 2022 to 14.6 by mid-2025. Analysts noted that when China's M2 growth outpaces the U.S., Bitcoin historically enters bullish cycles. The China/US M2 ratio reached 1.8 in August 2025, its highest in years, reinforcing expectations of capital inflows into alternative assets like Bitcoin. This trend aligns with Bitcoin's 70-day lag correlation to M2 growth, a metric that has consistently predicted price surges since 2020title3^[3].

Technical indicators underscored the momentum. Bitcoin's 4-hour RSI approached overbought levels at 68, while its 50-day moving average at $58,500 provided critical support. Institutional inflows into Bitcoin-focused funds, such as Grayscale's GBTC, surged 12% in a single day, reaching $1.8 million shares traded. Meanwhile, cross-market correlations tightened, with the S&P 500 and Nasdaq Composite rising 1.5% and 1.8%, respectively, as equity gains spilled into crypto marketstitle1^[1].

The liquidity-driven rally faced scrutiny from economists warning of China's economic fragility. A leaked report cited by Forbes highlighted China's 10-year bond yield hitting record lows, signaling desperation to stabilize markets. However, analysts like Arthur Hayes of Maelstrom argued that China's "bazooka" stimulus would force capital outflows into Bitcoin as investors sought higher returns amid yuan devaluation risks. This dynamic was evident in Q3 2025, when PBoC's ¥1.5 trillion liquidity injection pushed the US Dollar Index to a two-year low, further boosting Bitcoin's appealtitle4^[4].

While Bitcoin's trajectory remains tied to macroeconomic forces, risks persist. U.S. regulatory uncertainty, including potential changes to Fed independence under a Trump administration, could disrupt market confidence. Additionally, overvaluation metrics like Bitcoin's MVRV Z-score, currently at 2 (below historical extremes), suggest room for further gains but caution against complacency. Analysts project Bitcoin could test $150,000 in late 2025 if liquidity expansion continues, though volatility and regulatory headwinds remain critical variablestitle6^[6].