BTC price slumps to $62K as Bitcoin bulls bet on M2 money supply

Bitcoin’s price briefly rebounded to $62,000 on August 3rd, following a significant dip towards $60,000, mirroring global stock market trends. Data from major crypto monitoring platforms indicated a 3% recovery in BTC’s price after it hit multi-week lows of $60,435 on Bitstamp. This rebound occurred amidst a broader market sell-off, initiated by a 6% drop in Japan’s Nikkei index, which set the tone for further declines on Wall Street.

U.S. employment data, which fell significantly short of expectations, added fuel to the market’s anxiety. Bitcoin alone shed nearly $5,000, crossing several crucial support levels, including the short-term holder cost basis. This triggered a wave of liquidations, with monitoring resource CoinGlass reporting a total wipeout of $230 million in crypto longs over August 1st and 2nd.

“The Yields are falling off a cliff in the U.S. markets as the job reports came in astonishingly bad,” stated Michaël van de Poppe, founder and CEO of trading firm MNTrading, in a reaction on X. “Slight panic across the board, as the markets are pricing in a substantial recession for the U.S.”

Van de Poppe speculated that these developments might have solidified the likelihood of the Federal Reserve cutting interest rates—a key bullish catalyst for cryptocurrencies and risk assets—at its upcoming meeting in September. “One thing is for certain: Rate cuts for September are confirmed,” he concluded.

The trading resource The Kobeissi Letter also summarized the macroeconomic landscape as being filled with mixed signals. “Yesterday, the discussion was whether a September rate cut was coming or not. Today, the discussion is whether the rate cut will be 25 basis points or 50 basis points,” part of its latest coverage stated. Data from CME Group’s FedWatch Tool reflected that market odds of a smaller 0.25% cut stood at 78% on the day.

Bullish perspectives on Bitcoin remained resilient despite the market turbulence. Jeff Ross, founder and managing director of hedge fund Vailshire Partners, suggested that increasing global liquidity would support BTC price action in the future. Ross shared a chart on X comparing the global M2 money supply to BTC/USD and the latter’s 50-week and 200-week simple moving averages (SMAs). “A reverse head-and-shoulders forming for bitcoin (on the weekly chart) in the setting of increasing global M2 money supply? Would be uber bullish from a combined TA and liquidity perspective,” part of his commentary noted.

Even before the sharp downturn, there were rising expectations among traders that Bitcoin might retest the lower boundary of its long-term trading range. “Bitcoin Has now been trading in this range for more than 5 months,” observed popular trader Daan Crypto Trades. “We’ve been seeing lower lows and lower highs as the range has been going on. Key levels remain $59K & $74K for the lows and highs.”

This article is not intended to provide investment advice. Every investment and trading move involves risk, and readers should conduct their own research when making decisions.

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