While Bitcoin and top altcoins are stable at press time, the sharp liquidation from the weekend to August 5 led to a major shakeout. Billions of leveraged positions were liquidated, and prices are technically under pressure despite the current stability.
Global Liquidity Set To Rapidly Rise: Will Bitcoin Benefit?
Still, even with the risks of Bitcoin, Solana, Ethereum, and others dropping to multi-week support levels, one analyst on X thinks the market is ripe for a rebound.
In a post, he explained that the United States Federal Reserve, the central bank, plans to change its monetary policy in the coming weeks, which would automatically mean the start of money printing.
While the crypto community expected the Federal Reserve to begin slashing interest rates, which are currently at multi-year highs, the decision to postpone means rates are still higher than anticipated.
For now, the United States central bank will likely slash rates to 5% in the next FOMC meeting, which is set for September. The analyst also said the Federal Reserve will initiate a Treasury Buyback operation when this happens. Through this initiative, the government will inject approximately $30 billion into the economy monthly.
The drop in interest rates and the buyback program will significantly boost global liquidity. Historically, and especially in the events from 2020 to 2021, when governments across the globe intervened to curb the impact of the COVID-19 virus, global liquidity rose sharply.
Rising in tandem, Bitcoin and crypto prices rose to multi-year highs. Specifically, investors shifted to Bitcoin during that run, citing its inherent scarcity and the probability of the coin preserving value.
Currently, global liquidity is now at over $106 trillion. It will continue to rise, a net positive for Bitcoin and liquid but deflationary digital assets.
Caution Must Prevail: BTC Finds Support At $50,000
Still, traders must be cautious. Bitcoin remains volatile, and no tool can predict precisely when prices will decrease.
The immediate support is at $50,000, a round number. However, if there is a recovery and prices spike above $60,000, bulls might be encouraged to double down, recharging exhausted buyers.
Even amid this turbulence, institutions are confident in Bitcoin’s prospects. Following MicroStrategy’s methods, Semler Scientific bought $6 million worth of Bitcoin on August 5. The firm has owned 929 BTC since it began buying in May 2024.
Feature image from Canva, chart from TradingView
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