Bitcoin Surges 6.5% to $103,900 on China Liquidity Boost

Bitcoin's price surged past $100,000 on May 9, 2025, generating significant excitement within the cryptocurrency community. The digital currency climbed from $97,200 in the early Asian trading hours to a peak of $99,050 before stabilizing around $103,900. This surge occurred amidst a series of macroeconomic developments that influenced market sentiment.

One of the key factors driving this rally was the liquidity boost from China. The country's central bank reduced its one-year lending rate by 15 basis points and cut the reserve requirement ratio by half a percentage point. These measures injected an estimated $100 billion of liquidity into the market, marking the first easing since December 2024. The timing of these actions, just hours before Bitcoin broke the $99,000 mark, was noted by traders as a potential catalyst for the price surge.

Across the Pacific, the U.S. Federal Reserve paused its tightening cycle, keeping the federal funds target at 5.25 percent. The Fed cited mixed growth signals and cooling inflation as reasons for the pause. This decision contrasted with China's easing measures, highlighting the divergent policy paths of the two economic giants. Additionally, diplomatic talks between the U.S. and China on May 2 resulted in an agreement to start formal trade negotiations on May 16, which traders interpreted as a sign of reduced friction in goods and capital flows.

Despite the positive macroeconomic developments, not all market indicators supported the rally. On Coinbase Pro, Bitcoin's price premium versus global benchmarks slipped into negative territory on May 9, indicating that U.S. traders were paying a slight discount. This marked the first negative premium in six weeks. Additionally, CryptoQuant reported record-high short interest among institutional funds on the same day, with funds increasing bearish positions as prices climbed. This setup resembled prior short squeezes, where forced buy-ins accelerate rallies.

Bulls in the market pointed to China's liquidity surge and the Fed's hold as catalysts for the rally. They also saw the thaw in U.S.–China ties as a further catalyst, arguing that cross-border flows may increase with formal trade talks slated for May 16. They added that record shorts on major funds set the stage for a short squeeze, which could propel Bitcoin past $100,000 if those bets unwind quickly.

However, bears urged caution, noting the negative Coinbase Pro premium as a warning sign. They argued that U.S. demand may lag overseas buying and that heavy short positions reflected more profound skepticism. They also flagged lower Asian volume during Golden Week from May 10 to May 16, warning that thin liquidity could exaggerate price swings in either direction. Whether FOMO will push Bitcoin towards a new all-time high remains open. Traders will watch for forced short-covering and volume shifts as Asia reopens after Golden Week. They will track updates from Beijing, the Fed, and USTR announcements.

At the time of writing, Bitcoin’s price is $103,782, having dropped 0.65% over the last 24 hours. The next moves may hinge as much on policy headlines as on trader psychology. The market is caught between fresh liquidity, steady U.S. rates, and record bearish bets, making the future trajectory of Bitcoin uncertain but highly anticipated.