On Friday, August 1, the price of Bitcoin dropped below the $115,000 level, setting the worst possible tone for the weekend and the new month. Following US President Trump's latest nuclear warning, the leading cryptocurrency is already trading below the $113,000 mark, and the price drop seems to be getting worse.
This new development has ignited speculation throughout the market that Bitcoin's price may have already reached its peak for this cycle. The general opinion, however, seems to be that Bitcoin's price may still experience a further surge before hitting its cycle top.
Bitcoin Could Return to Previous Highs Soon
Following recent changes in the Bitcoin market and the larger macro dynamics, on-chain analyst Amr Taha made an optimistic argument for the price of Bitcoin in a Quicktake article on the CryptoQuant platform. The crypto analyst focused on volatility in Bitcoin's spot volume on Binance, the most active cryptocurrency exchange in the world, while discussing the market for this coin.
One of the most notable rises in recent weeks was Binance's $7.6 billion BTC spot volume, according to data from CryptoQuant. But this dramatic rise in trades happened at the same time as Bitcoin's price fell from over $118,000 to over $113,000, indicating more volatility and traders shifting their positions.
Spot volume surges of this kind, such as the $7 billion rise on June 22, have historically been linked to local bottoms or significant price reversals, as pointed out by Taha. Therefore, the most recent increase in Bitcoin spot volume may indicate a return of investor interest, which would be good news for the market leader.
Taha brought attention to the fact that, in a macroeconomic context, the net liquidity of the US Federal Reserve also saw a notable rise on Friday, rising from $6 trillion to $6.17 trillion. To put it in perspective, net liquidity is often thought of as a major macro driver for risk assets such as Bitcoin.
Therefore, an increase in the net liquidity of the financial system means that more fiat money is flowing into risky assets like stocks, cryptocurrencies, and the like. Therefore, market positive movements have traditionally occurred in tandem with rises in the Federal Reserve's net liquidity, as was seen in late 2023 and early 2024.
In the end, Taha came to the conclusion that the rising Bitcoin spot volume on Binance, together with the Fed's net liquidity, would pave the way for the flagship cryptocurrency to continue its upward trend.
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