China's Surge in Money Supply Transforms Global Liquidity and Cryptocurrency Markets

Global Liquidity Shift: Global narrow money (M1) has reached approximately $45 trillion, with China holding the largest share at about $16.5 trillion, marking a significant shift in global liquidity creation away from the U.S. and traditional Western economies.

China's Dominance: Over the past fifteen years, China's money supply growth has outpaced that of the U.S. and the G10, establishing it as the primary driver of global narrow money expansion, particularly through aggressive domestic liquidity support and policy-driven stimulus.

Impact on Financial Markets: The increase in global M1 typically leads to higher asset valuations and speculative activity, influencing capital flows and market behavior, especially in liquidity-sensitive markets, regardless of uneven economic growth.

Implications for Crypto and Risk Assets: The expansion of global liquidity, particularly from non-U.S. economies, is crucial for crypto markets, as it raises the likelihood of demand for scarce assets, while also introducing potential volatility due to uneven liquidity distribution across regions.