Briefing
Bitcoin’s market stability hinges on its ability to hold above a critical on-chain cost basis of $115.2k following the recent FOMC meeting. Derivative markets, particularly record options open interest and volatile perpetuals, are exerting significant influence, creating a fragile balance where short squeezes and long liquidations have played key roles. The market’s immediate direction is heavily dependent on maintaining this crucial support level, with 95% of Bitcoin’s supply currently in profit.
Context
Many are wondering if Bitcoin’s recent rally, fueled by macro events like the FOMC rate cut, has sustainable momentum or if it’s merely a temporary surge. Investors are looking for clear signals on whether the market can maintain its upward trajectory or if a correction is imminent, especially with increasing activity in the derivatives space.
Analysis
The “Post-Cut Patience” report analyzes Bitcoin’s state by examining its on-chain cost basis and derivative market activity. The on-chain cost basis represents the average price at which all coins in circulation were last moved. When Bitcoin’s price trades above the cost basis of a significant portion of its supply, as it does now with 95% of supply in profit above $115.2k, it suggests that most holders are in a profitable position. This level acts as a psychological and technical support; holding above it indicates strong underlying demand, while falling below it can signal weakening conviction and potential selling pressure.
Simultaneously, the derivatives market, encompassing perpetual futures and options, shows heightened activity. Perpetual Open Interest, a measure of outstanding futures contracts, saw aggressive positioning and subsequent liquidations around the FOMC meeting, indicating leveraged traders were flushed out. Options Open Interest has reached a record 500k BTC, with a historic September 26th expiry. This large volume, particularly around the $110k max pain point, means that hedging flows from options dealers can amplify spot volatility as expiry approaches, creating a gravitational pull on the price. The combination of a high percentage of supply in profit and significant derivatives influence points to a market delicately balanced between sustained momentum and potential volatility.
Parameters
- Key Metric – On-Chain Cost Basis → Bitcoin trades above the cost basis of 95% of supply at $115.2k.
- Observed Pattern – Perpetual Open Interest → Peaked at ~395k BTC, then stabilized between 378k → 384k BTC post-FOMC.
- Observed Pattern – Options Open Interest → Reached a record 500k BTC, with the September 26th expiry being the largest in history.
- Core Data Point – Options Max Pain → The max pain point for the September 26th options expiry sits near $110k.
- Market Behavior – Liquidation Patterns → Short squeezes preceded the FOMC, followed by long liquidations post-rate cut.
Outlook
This insight suggests that Bitcoin’s near-term future is at a critical juncture. Maintaining the $115.2k price level, which represents the cost basis for 95% of the supply, is essential for sustaining bullish momentum. If this level holds, it could signal continued demand and further upside.
Conversely, a failure to maintain this support could trigger a contraction towards the $105.5k → $115.2k range, potentially leading to increased selling pressure. Traders should closely watch the price action around $115.2k, as well as the unwinding of the record options expiry on September 26th, for confirming signals of trend continuation or reversal.
Signal Acquired from → glassnode.com
