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Bitcoin’s upcoming significant shift following the FOMC depends on maintaining a position above $115,200.
Bitcoin (BTC) is currently in a precarious state following the Federal Reserve’s decision to cut rates, with the $115,200 mark being crucial for determining its forthcoming trajectory.
On September 18, Glassnode indicated that both derivatives markets and on-chain metrics suggested a market ready for its next directional shift.
As of the latest update, BTC was trading at $117,649.40, remaining above the cost basis for 95% of Bitcoin’s supply, which stands at $115.2k.
This level is vital for sustaining demand-side momentum. A failure to maintain this threshold could lead to a decline toward the range of $105,500 to $115,200, potentially intensifying selling pressure.
Bitcoin trades above cost basis levels for 95%, 85%, and 75% of supply, with the current price near $117k approaching historical highs. Image: Glassnode
Derivatives markets indicate fragile positioning
Perpetual futures markets have shown signs of stabilization after a phase of volatile positioning leading up to the FOMC meeting.
Open interest decreased from a cycle peak of 395,000 BTC on September 13 to 378,000 BTC amid erratic price movements, but has since stabilized within the range of 378,000 BTC to 384,000 BTC.
The retreat to $115,000 following the rate cut resulted in significant long liquidations, raising liquidation dominance to 62%.
Current positioning indicates a fragile market structure, with long-side max pain at $112,700 and short-side max pain at $121,600.
This narrow range implies that Bitcoin is precariously positioned between potential liquidation cascades, where downward movements could trigger long positions while upward breaks might lead to short squeezes.
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Record options activity underscores volatility
Bitcoin options open interest has surged to a record 500,000 BTC, with September 26 set to be the largest expiry in Bitcoin’s history.
The distribution of contracts spans from $95,000 puts to $140,000 calls, with max pain situated around $110,000, potentially acting as a gravitational force until expiry.
Options positioning reveals ongoing put selling below the spot price and increased call buying above current levels.
This setup compels dealers to provide liquidity in both directions, which may help mitigate declines while supporting rallies through hedging activities.
Market structure indicates cautious optimism
The cumulative volume delta in the spot market shows slight negative deviations across major exchanges, reflecting a cautious sentiment despite the optimism linked to the rate cut.
Nonetheless, perpetual markets exhibit a significant transition from extreme selling to more balanced conditions. This shift indicates a return of liquidity as buy-side flows counteract the ongoing selling pressure from August.
The combination of record options positioning, stabilized perpetual flows, and Bitcoin’s status above critical cost basis levels suggests a market poised for confirmation of its next significant movement.
Bitcoin’s ability to remain above $115,200 will determine the next major post-FOMC movement.
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