The likelihood of the Federal Reserve’s target rate increasing by 25 basis points to a range of 375-400 bps has been rising consistently. According to the FedWatch tool, the probability of this rate hike is currently at 87.3%.
This development suggests a greater risk of Bitcoin’s [$BTC] price reacting negatively. An analysis from CryptoQuant noted that Bitcoin is caught between committed long-term investors and a wary short-term outlook, as highlighted by XWIN Japan.
If this caution escalates into real concern, short-term trends for Bitcoin may turn bearish once again.
Key Demand Zone for Bitcoin at $76k
The U.S. Consumer Price Index (CPI) report released on Friday resulted in significant short-term volatility and caused $685.5 million in liquidations throughout the cryptocurrency market on that day. Over the past four trading sessions, Bitcoin spot ETFs have experienced outflows.
Currently, Binance’s Bitcoin [$BTC] reserves are at a two-year peak, while the Coinbase Premium Index has dipped into the negative range once more. There was a brief period at the end of August and the beginning of September when U.S. investor demand showed signs of market confidence.
Even with doubts among long-term holders, Bitcoin has been gradually moving towards the critical $82k resistance, giving bulls a glimmer of hope.
The increasing likelihood of a rate hike, exacerbated by the recent CPI report, has negatively impacted Bitcoin’s short-term bullish momentum.
Positive Indicators for Crypto Swing Traders
In a recent post on X, analyst Axel Adler Jr. noted a significant drop in Bitcoin Open Interest, which fell by 13.6k $BTC within a single day. During this time, Bitcoin climbed from $77k to $79.9k but retraced most gains within just a few hours.
This liquidity flush and reduction in open interest have lessened the likelihood of a liquidation cascade by eliminating over-leveraged traders at current market levels.
A positive shift in the Coinbase Premium Index could indicate increased investor interest, signaling a market regime change. Additionally, if the exchange net position changes to negative, it would indicate accumulation.
Negative values observed in the latter part of August correlated with the rise towards $82k. A continuous outflow from exchanges may accompany the next bullish trend as selling pressure diminishes.
Conclusion
- Bitcoin has yet to break above the significant long-term resistance level around $82k and risks losing short-term bullish momentum.
- Factors such as a rebound in the Coinbase Premium Index, changes in exchange net positions, and net flows from spot ETFs could suggest short-term demand and potential price increases.