Bitcoin’s Biggest Weekly Rebound Since 2024: Breakout, Fakeout — or a New Liquidity Regime?

Bitcoin had spent weeks trading in a narrow, frustrating range after a much larger decline from its earlier highs. That matters because compressed markets accumulate positioning. When the first macro catalyst arrived, the move was amplified by traders rushing to exit bearish positions.

Reuters explicitly described the rally as being fueled by short-covering. Other market reporting estimated more than $4 billion of bearish crypto positions were liquidated as the move accelerated. In other words, the first buyers pushed the door open — then shorts helped kick it off the hinges.

There was also a policy tailwind. President Trump again urged Congress to pass the CLARITY Act, which aims to define a clearer regulatory framework for digital assets. Whatever one thinks of the politics, markets tend to reward reduced regulatory uncertainty.

That combination — macro catalyst, weaker dollar, regulatory optimism and forced short-covering — explains why Bitcoin moved faster than many traditional risk assets.

U.S. M2 has been rising again. FRED shows seasonally adjusted M2 at $23.155 trillion in June, up from $23.056 trillion in May and $22.800 trillion in April. M2 is not a magic Bitcoin timing indicator, and it should never be treated as one. But sustained expansion in broad money is generally more supportive for financial assets than contraction.

Inflation has also cooled at the margin. The Bureau of Labor Statistics reported July CPI up 0.1% month over month and 3.4% year over year, while core CPI rose 0.2% on the month and 2.5% over twelve months. That is still above the Federal Reserve’s goal, but it is less hostile than a fresh inflation re-acceleration.

The Fed itself remains cautious. On July 29 it held the federal-funds target at 3.50%–3.75% and continued its policy of maintaining ample reserves. Importantly, three policymakers dissented in favor of a 25-basis-point hike. So the backdrop is not “easy money is back.” It is closer to this: liquidity is improving, inflation is cooling somewhat, but policy remains restrictive enough that markets still have to earn their upside.

Large weekly candles usually tell us that the market has been forced to reprice. They do not tell us, by themselves, that the new price is accepted.

The first technical test is the $77,000–$80,000 area. Price is now challenging a zone where the market can either build a new base or reject sharply. A weekly close that holds the upper part of this move would be constructive. A fast reversal back through the low-$70,000s would make the rally look more like an exhaustion event.

AssetScreener looks at Bitcoin as part of the wider cross-asset system: liquidity, rates, the dollar, inflation, capital flows and market structure. For investors who want to assess long-term Bitcoin cycle risk systematically, BitcoinReversal applies a rules-based framework to defined market and cycle conditions.

The point is not to claim certainty from one reading. It is to make the decision process explicit and repeatable. When a candle this large appears, the useful question is not “Do I feel bullish?” It is “What evidence would prove that this is a durable regime change — and what evidence would prove me wrong?”