Bitcoin tests $65,000 as $17 billion Fed liquidity fuels breakout

Bitcoin rose 0.65% to $63,466 after the Federal Reserve injected about $17 billion in liquidity, reviving a push toward the $65,000 breakout level.

"The injection improves near-term liquidity expectations and reduces pressure from a strong dollar, supporting risk assets including Bitcoin," Nischal Shetty, founder of WazirX, said.

The move follows a week of uneven institutional flows. US spot Bitcoin ETFs recorded $390 million in net outflows this week, reversing part of the $865.3 million absorbed between Aug. 3 and Aug. 7, according to Mudrex and Giottus data. Spot trading volume measured in Bitcoin has fallen to its lowest level since 2019, while Bitcoin's median realized price sits near $63,000, per on-chain data.

A sustained close above $64,000 could open a path toward the $65,000 psychological zone, with the short-term holder cost basis near $68,700 marking the next major reclaim target. A slip below $62,500 risks exposing the $61,000 support region next.

Fed Liquidity Meets a Compressed Range

Bitcoin has traded in a tight $62,000-$65,000 band for weeks, with four-hour ATR compressing and the DVOL index near 35, according to Delta Exchange's Riya Sehgal. The $17 billion injection arrives as traders await the Federal Open Market Committee minutes due Aug. 19, which could clarify the policy path after the central bank held rates at 3.50%-3.75% in July.

Fed futures imply a 66.9% probability of no rate change in September after weaker employment, inflation and retail-sales data, with July retail sales falling 0.6%. A dovish tone from the minutes could ease pressure on Bitcoin and support further gains; a hawkish surprise risks pulling the market back into its recent range.

ETF Flows and the Path to $65,000

Institutional demand has cooled but not disappeared. BlackRock's IBIT continues absorbing the bulk of fresh capital among issuers, while Ethereum ETFs recorded modest single-day outflows in recent sessions. Hashdex confirmed it will liquidate its DEFI spot Bitcoin ETF after Aug. 17, the first such closure among US funds, holding roughly $14.7 million in net assets.

Ethereum reclaimed the $1,900 mark, up 1.13%, adding a constructive signal for broader altcoin sentiment. Hyperliquid led top-10 gainers with a 3.07% advance, while the Fear and Greed Index sits at 34, still in fear territory.

The $17 billion injection provides a near-term tailwind, but sustained upside depends on whether spot demand returns with conviction. A break above $65,000 with rising volume would mark the first decisive move out of the range since early August, potentially drawing fresh institutional interest into Q3. Until then, traders face a market where sellers appear exhausted but buyers have yet to commit.

This article is for informational purposes only and does not constitute investment advice.