Bitcoin Rebound After 10% Dip Backed by Macro Signals
Bitcoin has fallen 10% since hitting a record high on August 14, driven by low liquidity inflows as investors liquidate positions at market peaks. U.S. macro indicators, notably the Fed Financial Stress Index (FFSI), remain below zero—historically a bullish sign for Bitcoin and the S&P 500. Over the past year, Bitcoin has gained 86.2%, outpacing the S&P 500’s 15.3%. Analyst Joao Wedson warns that an FFSI move above zero could signal U.S. instability and endanger Bitcoin’s rally, especially amid risks in Asian economies. On-chain data shows renewed Asian demand, with CryptoQuant’s Korean Premium Index rising to 0.3. Meanwhile, the Coinbase Premium Index has dipped to 0.017, reflecting U.S. selling. Traders should track these liquidity gauges for clues on Bitcoin’s next move.
Bullish
Despite a recent 10% price drop due to low liquidity, key macro indicators point to continued Bitcoin upside. The Fed Financial Stress Index, now below zero, has historically signaled buying interest and lower market stress, supporting further rallies in risk assets like Bitcoin. Additionally, on-chain metrics show renewed Asian demand, as evidenced by the rising Korean Premium Index, while the U.S. sell-off reflected in the Coinbase Premium Index appears temporary. Similar patterns emerged in 2020 when the FFSI bottomed out before Bitcoin’s next major bull run. Short-term volatility may persist if liquidity remains thin, but sustained low stress levels and regional demand growth suggest a bullish outlook for Bitcoin. Traders should watch for any FFSI move above zero as a potential warning but prepare for higher prices if macro support endures.