Fed’s Liquidity may boost Bitcoin price

NAIROBI (CoinChapter.com) — Bitcoin shows signs of a potential rally following a significant spike in the Fed’s liquidity rate of change. As of June 19, the Fed’s net liquidity reached $61.53 million, reflecting its highest rate-of-change increase in fifteen months. Historically, such spikes have correlated with volatile Bitcoin price movements.

Source: Cole Garner

In March 2023, a similar liquidity surge preceded a 40% increase in Bitcoin’s price within a week. Cole Garner highlighted this correlation, suggesting the potential for another price uptick, stating:

“Biggest Fed net liquidity rate-of-change spike in 15 months. Last time, Bitcoin rose ~40% in one week.”

Bitcoin Breakout Next? Market Analysts Weigh In

Bitcoin’s current market behavior is showcasing more signs of a potential price rally. For instance, the formation of an ascending triangle—a bullish continuation pattern when occurring during an uptrend—suggests an imminent upward movement, according to crypto analyst Titan of Crypto.

Source: Titan of Crypto

At present, Bitcoin is stabilizing around the $60,600 mark, seen as a critical support level. Titan of Crypto predicts that overcoming this threshold could propel the currency towards a target of $71,500. This pattern, combined with the recent spike in the Fed’s liquidity, crafts a favorable scenario for Bitcoin’s ascent.

Moreover, the Fed’s liquidity metrics, traditionally seen oscillating between 3 and 6 with a median of $40.30 million, show a slight year-over-year decline by 0.37%, underscoring the impacts of the Fed’s monetary strategies on the broader financial landscape, including cryptocurrencies.

Source: Rekt Capital

Rekt Capital adds to the optimistic outlook, noting, “Bitcoin is doing all the right things to form a cluster of price action at this range low.”

Retail Investors Drive Market Sentiment

The resurgence in Bitcoin’s market activity accompanies an uptick in new Bitcoin addresses, which reached a four-month high of 432,026 as of July 1.

New Bitcoin addresses reaches news highs. Source: Ali Chart
New Bitcoin addresses reaches news highs. Source: Ali Chart

The notable increase in Bitcoin address creation correlates with a recovery in Bitcoin’s price, which has seen an upward trajectory from lows around $32,000 to current levels above $62,000. This pattern suggests a return of retail investors.

Source: Sanbase

Simultaneously, there has been a notable increase in both the total number of Bitcoin holders and the volume of large-scale transactions exceeding $100,000. According to Santiment data, the total number of Bitcoin holders has surpassed 54 million.

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