According to Woofun AI, the crypto market experienced a sharp rebound on August 19 after a few months of silence. Bitcoin's price quickly rose from a low of about $641,000 during the day, once again hitting the key mark of $69,000.
This price level marks the asset's return to this position after a lapse of nearly 3 months, after Bitcoin fluctuated in the $70,000 range for a long time after falling below $70,000 in early June. Along with the recovery of core assets, Ethereum once reached about 8.6% in a single day, and major altcoins such as XRP and SOL all rose by more than 6%. The fear and greed index in market sentiment indicators also rebounded from the extreme fear range to a neutral fear level of around 40, indicating a significant recovery in short-term risk appetite. This rebound is not without signs; it is the result of improved macro-liquidity expectations, clarifying regulatory policies, and the continued accumulation of large capital on the chain. Multiple catalytic factors resonated on the same day, igniting the enthusiasm for a long time to go long in the market.
It is worth noting that despite the increase in bottom signals, the institutional opinion is that this cannot be directly equivalent to the full launch of a new round of bull market, and the market still needs to verify the effectiveness of subsequent support. The more critical variable is whether this rebound is a pulse driven by short-term bears' recovery, or a trend reversal brought about by substantial improvements in fundamentals, which needs to be further deconstructed in combination with more dimensional data.
From a structural point of view, the driving force of the current market shows obvious multi-level characteristics. There are both macro-level policy interventions and changes in financial behavior at the micro level. This multi-dimensional resonance has provided strong short-term momentum for the market, but it has also laid the hidden danger of subsequent intensification of fluctuations. While focusing on price breakthroughs, investors should also examine the sustainability of the driving forces behind them to avoid being misled by short-term sentiment and ignoring potential risks. Overall, the market is currently in a critical turning point. The game of power from all sides will become more intense. Any kind of hustle and bustle may cause sharp price fluctuations, and we need to maintain high vigilance and respond flexibly to market changes.
The primary catalyst at the macro level comes from liquidity interventions in the US Treasury bond market. The US Treasury Department announced an increase in the liquidity support repurchase scale of 10-year to 30-year treasury bonds. The maximum limit for a single operation was raised from US$2 billion to at least US$4 billion. The policy will be officially implemented on September 9.
This move directly led to a rapid decline in US long-term Treasury yields. The 30-year US Treasury yield fell close to 10 basis points in the intraday period, the 10-year yield fell back to around 4.65%, and the US dollar index (DXY) also weakened markedly. Previously, the yield on 30-year US Treasury bonds once climbed to a high of 5.34%, reaching a multi-year high. As a result, global capital was cautious in facing risk-free returns of around 5%, curbing the need for allocation of volatile risk assets such as Bitcoin. As long-term yields fall and the dollar weakens, market concerns about liquidity have temporarily eased, providing breathing space for high-risk assets. Jeremy Stretch, head of foreign exchange strategy at CIBC (CM.US), pointed out that this move by the US Treasury indicates that the policy level has noticed the pressure on the long-term bond market and its spillover effects on other assets.
This policy shift not only relieved the pressure on the bond market, but also sent a signal to the market to maintain financial stability, increasing investors' confidence in the subsequent liquidity environment. Judging from deep logic, the decline in US bond yields has reduced the opportunity cost of holding non-interest-bearing assets, increasing the relative attractiveness of crypto assets such as Bitcoin.
Meanwhile, the weakening of the US Dollar Index (DXY) usually favors higher prices of commodities and crypto assets denominated in US dollars. This improvement in macro-fundamentals provides important external support for Bitcoin to break through the previous volatile range. However, the sustainability of the policy effects remains to be seen. If subsequent strong economic data causes yields to rise again, the current positive effects may be offset. Therefore, investors need to pay close attention to the US Treasury's subsequent operations and the Federal Reserve's policy trends to determine whether the trend of liquidity easing can continue.
Furthermore, monetary policy coordination by central banks around the world will also have an important impact on the trend of the US dollar, which in turn will affect the crypto market indirectly. In the current complex and changing macroeconomic environment, it is difficult for a single factor to determine the long-term trend of the market, and it is necessary to comprehensively consider the interaction of multiple variables.
Positive changes at the regulatory level have also injected a dose of strength into the market. The SEC proposed a new draft rule called “Regulation Crypto Assets” on August 18 to establish a more targeted issuance system for investment contracts involving crypto assets. The draft includes two key exemptions: a startup project release exemption of up to $5 million, and a funding exemption of up to $75 million every 12 months. Among them, the “safe harbor” rule has received the most attention from the market. This rule provides a clear path for project parties to comply: after the project party completes the promised development, operation, or officially ceases operations and reports it with the SEC, its tokens will no longer be recognized as securities.
This provision has greatly reduced regulatory uncertainty, allowed tokens to be traded more freely on exchanges, and reduced the risk of projects being fined or removed. Furthermore, the maximum funding limit for early projects has been raised to $5 million and procedures have been simplified, which is conducive to promoting the implementation and development of innovative projects. Although the draft is currently only a proposal and has not yet become an official regulation, market transactions are often expected rather than reality. Crypto concept stocks such as Coinbase (COIN.US) and Circle (CRCL.US) clearly strengthened on the same day, reflecting the market's optimistic expectations for an improvement in the regulatory environment.
This policy trend marks the beginning of an attempt by US regulators to find a balance between innovation and risk, providing the crypto industry with more clear compliance guidelines. In the long run, a clear regulatory framework will help attract traditional financial institutions and long-term capital into the crypto market and enhance the overall stability and transparency of the industry.
However, the final implementation of the draft still faces many uncertainties and potential resistance, and requires a lengthy legislative and approval process. Investors should be rational when interpreting this benefit and avoid overly optimistic estimates of its short-term impact. At the same time, attention should be paid to the evolution of regulatory policies in other countries and regions. Coordination of the global regulatory environment will have a profound impact on the global development of the crypto market. At this stage, improvements in regulatory expectations mainly affect market sentiment. Real fundamental improvements still need to wait for more substantial policies to be introduced and implemented.
In-depth analysis of on-chain data revealed the quiet layout of big money at the bottom of the market. According to data compiled by Woofun AI, large Bitcoin holders (excluding exchange and pool wallets) have increased their net holdings by about 43,000 BTC over the past 60 days. Based on the previous price of around 64,000 US dollars, this batch of chips is worth about 2.75 billion US dollars; if calculated at the current price of around 69,000 US dollars, the value is already close to 3 billion US dollars, indicating that some of the large funds have begun to be gradually received.
Spot demand indicators also showed signs of recovery. CryptoQuant research showed that Bitcoin's 30-day “spot demand” quickly recovered from about 206,000 BTC on July 23 to negative 5,000 on August 18, which is only one step away from recovering to a positive value. This is the closest thing to a positive correction since the end of February. This indicator measures the intensity of demand in the market who are actually willing to use money to buy coins. CryptoQuant's historical backtesting shows that when this demand indicator changed from negative to positive, Bitcoin's median increase of about 18.1% over the next 60 days, with an increase probability of about 78%; if at the same time in a similar undervalued environment, the median increase was about 23.3%, and the historical win rate rose further to 87%.
This indicates that real commodity purchases, which have been missing in the past few months, are gradually returning. Glassnode also observed a similar phenomenon, pointing out that “strong players” are re-buying Bitcoin. When profit settlements slow down and “determined buyers” begin to accumulate chips, it is often an important feature in the process of market bottoming out. Glassnode believes that the current market structure is similar to the late 2022 bear market, and the biggest increase in the previous round of positions by such buyers occurred when Bitcoin fell to around $60,000. Together, these on-chain data point to a conclusion: smart capital is attracting funds at a low level, laying the foundation for subsequent price increases.
However, the interpretation of on-chain data requires caution. An increase in holdings of large investors does not necessarily mean an immediate increase; they may choose to hold at a low level for a long time to obtain higher returns. Furthermore, the degree of recovery in spot demand still needs to be further verified. Failure to continue to correct may limit the room for price increases. Investors should combine other technical indicators and market sentiment indicators to comprehensively judge the signal significance of on-chain data to avoid misleading investment decisions by a single indicator.
In terms of technical analysis and risk alerts, although bullish breakthroughs bring short-term momentum, long-term verification will still take time. Technical analyst Aksel Kibar notes that the BTC daily line is forming an inverted shoulder structure, with the key neck line at around $6.66 million. If the price effectively breaks through and stabilizes, based on the pattern, the upper target may point to 76,000 US dollars. Today, after BTC broke through this position, it accelerated markedly. CoinGlass data showed that approximately $1.4 billion of short positions were liquidated in just 4 hours, and short compensation further amplified the increase.
However, VanEck's latest Bitcoin ChainCheck shows that 8 of the 12 “capitulation” indicators it tracks have been triggered, and the US spot Bitcoin ETP has re-recorded a net inflow of around $663 million over the past 30 days. However, historical data shows that after similar signals appeared, BTC's average earnings for the next 90 and 180 days did not outperform the long-term benchmark, and it often took about a year to actually show the advantage. In the short term, we need to focus on whether the $68,000 position can stabilize and become an effective support, and whether the US bond yield and dollar pullback can continue. The market will also find clues about the next interest rate path from the Federal Reserve's July meeting minutes.
Furthermore, whether leading altcoins such as ETH and SOL can maintain their relative strength will determine whether this round of risk appetite correction is a local phenomenon or a full recovery. This is another similar long and short game pattern in the market since the end of the bear market in 2022. Investors should remain cautiously optimistic and keep a close eye on key support levels and macroeconomic policy trends to deal with potential market fluctuations.