While Bitcoin and top altcoins are stable at press time, the sharp liquidation from the weekend to August 5 led to a serious shakeout. Billions of leveraged positions were liquidated, and costs are technically under pressure despite the present stability.
Global Liquidity Set To Rapidly Rise: Will Bitcoin Profit?
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 USA Federal Reserve, the central bank, plans to vary its monetary policy in the approaching weeks, which might robotically mean the beginning of cash printing.
While the crypto community expected the Federal Reserve to start slashing rates of interest, that are currently at multi-year highs, the choice to postpone means rates are still higher than anticipated.
For now, the USA central bank will likely slash rates to five% in the following FOMC meeting, which is ready for September. The analyst also said the Federal Reserve will initiate a Treasury Buyback operation when this happens. Through this initiative, the federal government will inject roughly $30 billion into the economy monthly.
The drop in rates of interest and the buyback program will significantly boost global liquidity. Historically, and particularly within 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 proceed to rise, a net positive for Bitcoin and liquid but deflationary digital assets.
Caution Must Prevail: BTC Finds Support At $50,000
Still, traders have to be cautious. Bitcoin stays volatile, and no tool can predict precisely when prices will decrease.
The immediate support is at $50,000, a round number. Nevertheless, if there’s a recovery and costs spike above $60,000, bulls may 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 value of Bitcoin on August 5. The firm has owned 929 BTC because it began buying in May 2024.
Feature image from Canva, chart from TradingView