As of now, Bitcoin and major altcoins exhibit stability, yet the aftermath of the weekend's sharp liquidation has left a significant impact on the market. The recent wave of liquidations, which saw billions in leveraged positions wiped out, has created a technical pressure on prices, even though the market seems stable at press time.
Global Liquidity and Its Impact on Bitcoin
Amidst these developments, a new analysis suggests a potential rebound for the cryptocurrency market, driven by changes in U.S. monetary policy. According to a recent post on X, the United States Federal Reserve is expected to adjust its monetary policy in the coming weeks, a move that could significantly affect global liquidity and, by extension, Bitcoin’s performance.
The Federal Reserve's anticipated decision to lower interest rates, currently at multi-year highs, could trigger a series of events favorable to cryptocurrencies. The analyst noted that while a rate cut is expected, it has been delayed, keeping rates higher than many had anticipated. The next Federal Open Market Committee (FOMC) meeting, scheduled for September, might see rates reduced to 5%.
Additionally, the Federal Reserve is expected to initiate a Treasury Buyback operation, injecting approximately $30 billion into the economy on a monthly basis. This measure aims to boost global liquidity, a strategy reminiscent of the 2020-2021 period when government interventions led to a significant rise in liquidity and, consequently, a surge in Bitcoin and other crypto assets.
Currently, global liquidity stands at over $106 trillion and is projected to increase. Historically, rising liquidity has positively influenced Bitcoin and other digital assets, with investors seeking out Bitcoin due to its scarcity and value preservation characteristics.
Bitcoin’s Immediate Support and Market Sentiment
Despite the positive outlook from increased liquidity, caution is advised. Bitcoin remains volatile, and precise predictions regarding price movements are challenging. The immediate support level for Bitcoin is around $50,000. If the cryptocurrency manages to recover and surpass the $60,000 mark, it could signal renewed bullish sentiment, potentially encouraging further investment.
Institutional confidence in Bitcoin remains robust. For instance, Semler Scientific made headlines by purchasing $6 million worth of Bitcoin on August 5, following in the footsteps of MicroStrategy’s investment approach. Since May 2024, Semler Scientific has accumulated a total of 929 BTC, highlighting ongoing institutional interest in Bitcoin despite market fluctuations.
Conclusion
The current stability of Bitcoin and other major cryptocurrencies is overshadowed by the recent liquidity-driven shakeout and technical pressures. However, the anticipated increase in global liquidity, coupled with potential rate cuts and Treasury Buyback operations, could set the stage for a market rebound. Investors should remain cautious but optimistic, as these developments could enhance Bitcoin’s appeal and drive future growth.
August 2024, Cryptoniteuae