As a seasoned crypto investor with a decade of experience navigating market highs and lows, I find myself cautiously optimistic about the current state of the market, especially in light of the recent liquidation events and subsequent price drops. However, the potential rise in global liquidity due to the Federal Reserve’s anticipated monetary policy changes has me intrigued.
Currently, Bitcoin and leading altcoins appear steady; however, a significant sell-off between the weekend and August 5 resulted in a substantial market correction, often referred to as a “shakeout.” This sell-off caused numerous leveraged positions to be liquidated, and although prices are stable at present, they remain technically vulnerable due to this recent pressure.
Global Liquidity Set To Rapidly Rise: Will Bitcoin Benefit?
Despite the recent drops in Bitcoin, Solana, Ethereum, and other cryptocurrencies reaching their multi-week support levels, one expert at X believes that the market conditions are favorable for an imminent recovery.
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.
Despite the cryptocurrency community anticipating that the Federal Reserve would lower interest rates, which have been at their highest in years as of now, the choice to delay this action indicates that the rates remain higher than initially expected.
In the upcoming FOMC meeting scheduled for September, it’s expected that the U.S. central bank will lower interest rates to around 5%. This move could also trigger a Treasury Bond Purchase Program by the Federal Reserve, which would infuse about $30 billion into the economy each month.
Lowering interest rates and implementing a buyback program will substantially increase the amount of money circulating globally. In fact, as governments worldwide took action to mitigate the effects of the COVID-19 pandemic from 2020 to 2021, global liquidity experienced a dramatic surge.
During this period, both Bitcoin’s and other digital currencies’ prices climbed to unprecedented heights. Notably, investors opted for Bitcoin, recognizing its unique scarcity and the potential for it to retain value.)
At the moment, worldwide liquidity exceeds $106 trillion and is expected to increase further. This trend could be beneficial for Bitcoin and other liquid, yet 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.
Initial backing is set at $50,000, which is a neat figure. But should the market recovers and costs surge beyond $60,000, aggressive investors could feel empowered to invest more, revitalizing tired buyers.
Despite the current unrest, institutions remain optimistic about Bitcoin’s future. Similar to MicroStrategy’s approach, Semler Scientific purchased $6 million in Bitcoin on August 5th. Since they started investing in May 2024, the company has held 929 Bitcoins.
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2024-08-07 07:13