Global Liquidity Set To Rapidly Rise: Will Bitcoin Benefit?

While Bitcoin and top altcoins are stable at press time, the sharp liquidation from the weekend to August 5 led to a major shakeout.

Bitcoin and top altcoins showed little movement over the past day, with most cryptocurrencies either trading flat or posting gains of less than 2%.

The sharp sell-off that took place from the weekend and into August 5 led to a major shakeout. Billions of dollars’ worth of leveraged positions were liquidated, and prices are technically under pressure despite the current stability.

Global Liquidity Set To Rapidly Rise: Will Bitcoin Benefit?

However, one analyst on X believes the market is ripe for a rebound, even with the risks of BTC, SOL, ETH, and others dropping to multi-week support levels.

In a recent post, the analyst explained that the U.S. Federal Reserve, being the central bank, is set to change its monetary policy in the coming weeks, which would automatically lead to money printing.

While the crypto community largely expected the Fed 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 U.S. central bank will likely slash rates to 5% in the next FOMC meeting, which is set for September. The analyst also said the Fed will initiate a Treasury Buyback operation when this happens.

Through this initiative, the government will inject approximately $30 billion into the economy on a monthly basis.

The combination of lower interest rates and the buyback program will lead to a significant increase in 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 also rose to multi-year highs.

Specifically, investors flocked to BTC during that run, citing its inherent scarcity and the high probability of the coin preserving value.

Currently, global liquidity is already at over $106 trillion. It is set to continue rising, a net positive for Bitcoin and other liquid but deflationary digital assets.

Caution Must Prevail: BTC Finds Support At $50,000

While the outlook is largely positive for Bitcoin, traders must be cautious. The flagship cryptocurrency remains volatile, and no tool can predict precisely when prices will pivot to the downside.

The immediate support is at $50,000, a round number that has historically attracted both buyers and sellers. However, if there is a wick recovery and prices spike above $60,000, bulls might be encouraged to double down, recharging exhausted buyers.

Even amid this turbulence, institutions are showing confidence in Bitcoin’s prospects. Following MicroStrategy’s footsteps, Semler Scientific also purchased $6 million worth of BTC on August 5.

The firm has owned a total of 929 BTC since it began buying in May 2024.

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