Bitcoin (BTC) traded at $112,623 at the time of reporting and set up a potential retest of its $105,500 support zone following the Federal Reserve’s September 17 interest rate cut.
The BTC briefly touched on $118,000 shortly after the Fed’s 25 basis point cut. However, according to a report by Bitfinex Alpha, the profit-raising movement has caused pullbacks that have caused the market to be exposed to vibrantness.
Lost Support
On-chain data shows that $115,200 was a significant level for Bitcoin, as it represents a cost base of about 95% of supply. Maintaining that is important to maintaining demand-side momentum.
The report noted that failing to maintain above this threshold increases the likelihood of returning to the 85-95% quantile range between $105,500 and $115,200.
Permanent futures played a central role in Bitcoin’s recent price action, reaching an open interest cycle of $85.9 billion on September 13th, followed by policy-driven volatility to $82.2 billion.
The fall reflects increased sensitivity to macroeconomic catalysts as leveraged traders were washed away around the FOMC meeting.
A brief liquidation ahead of the Fed’s announcement triggered a squeeze that fueled a Bitcoin rally to $118,000.
CVD Shift
However, the administration shifted suddenly following the pullback, with long liquidation surges and dominated the liquidation rate as a highly leveraged position of 62%.
The cumulative volume delta of major exchanges has shifted from extreme sales to near-balanced state, showing meaningful profits of liquidity after dominant sustained sales pressure from late August until the FOMC meeting.
Stabilization highlights the important role of futures markets in supporting rally as speculators set themselves up for supportive policy outcomes.
The $105,500 to $115,200 range represents the next major support zone where Bitcoin can find demand if the current level is not retained.
This range corresponds to a cost base of 85-95% of Bitcoin supply, making it an important battlefield for bulls and bears.
Market dynamics suggest that Bitcoin’s advancement is heavily dependent on maintaining a position above the main on-chain cost base level, but the derivatives market continues to normalize after Fed-induced volatility.
