The rapid drop of Bitcoin to the $113,000 range may have raised concerns among many investors, but the spot market data tells a different story: the drop seems to have been accompanied by strong intervention from large cash flows.
Massive trading volume: What are the whales doing?
On August 1, Binance recorded a spot trading volume of Bitcoin worth $7.6 billion - an unusually high figure considering the price drop from over $118,000 to nearly $113,000.
Source: CryptoQuant
This massive volume indicates not only panic selling but also heavy buying by institutional investors or whales, a pattern similar to what happened on June 22, when Bitcoin reached a local bottom before recovering.
At the time of writing this report, the price of Bitcoin hovered around $114,000, with a gradual decline in trading volume. This drop in volume may indicate a slowdown in volatility, and the end of the most intense period.
Source: CryptoQuant
Sharp rise in Federal Reserve liquidity - a lever for risky markets
Meanwhile, the net liquidity of the US Federal Reserve rose to $6.17 trillion - its highest level in several months.
In the context of macroeconomics, injecting additional liquidity means more cash circulating in the system, which typically leads to increased demand for riskier assets, including cryptocurrencies.
Indeed, similar liquidity spikes in late 2023 and early 2024 coincided with strong rises in Bitcoin prices. If history repeats itself, this could be a catalyst for a new rise in Bitcoin prices.
Source: CryptoQuant
More than 90% of the Bitcoin supply is still profitable
Another positive sign: 91.6% of the Bitcoin (BTC) supply is currently making a profit. Historically, a reading above 90% has indicated market stability before major price increases. This suggests that the recent correction has not shaken long-term investor confidence.
Source: CryptoQuant
The combination of massive trading volumes on Binance, rising Federal Reserve liquidity, and increasing yield ratios creates a favorable environment for Bitcoin. While Bitcoin prices may continue to fluctuate in the short term, on-chain data and macroeconomic factors suggest that the market is likely to see stability rather than brace for a sharp decline. If this trend continues, Bitcoin may not only recover but also head towards a new breakout.
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