Bitcoin rebounds 13% thanks to support from the US market and increased purchases on Coinbase

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Bitcoin has rallied 13%, thanks to critical support and liquidity provided by the US market, with strong spot buying seen on Coinbase order books, according to QCP Capital, a Singapore-based trading firm.

Yesterday, Bitcoin briefly dipped below $50,000 for the first time in six months, resulting in a loss of over $250 billion in market capitalization in a single day. However, as of today, Bitcoin has shown signs of recovery, rebounding to around $56,800.

Coinbase, the largest U.S.-based cryptocurrency exchange, saw its trading volume skyrocket to $8.1 billion, the highest since March 14, 2024, according to data from CoinGecko.

On August 5, the cryptocurrency market saw Bitcoin open at a price close to $58,110, hit a low of $49,781 and close at $55,800, as reported by CoinGecko. This volatility has created a risk-averse mood among investors, leading to widespread selling across the cryptocurrency market.

Experts are cautiously optimistic about the recent price movements. Matt Hougan, chief investment officer at Bitwise Asset Management, described the current situation as a buying opportunity and stated that the fundamental factors supporting Bitcoin remain intact despite the recent drop.

1/ History suggests this weekend's sell-off is a buying opportunity.

A thread about why.

(Note: This is not investment advice. Just my opinion.)

—Matt Hougan (@Matt_Hougan) August 5, 2024

Macro markets have also shown signs of recovery. Japan's stock market rebounded with a 9% rise today after a 12% drop yesterday. US futures indicate a possible rebound, boosted by US ISM data showing an expansion in the services sector in July.

While the VIX has fallen from its peak of over 65, it remains above 30, indicating that the market remains volatile. Asset prices are expected to remain volatile until there is more clarity on the policies of the Federal Reserve and the Bank of Japan. Key updates are expected from Bank of Japan Deputy Governor Uchida on Wednesday and from the Fed conference at Jackson Hole scheduled for August 22-24.

There is speculation about a possible emergency rate cut, although it is considered unlikely as it could undermine the Fed's credibility and further fuel market panic, potentially reinforcing fears of an impending recession.

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