Bitcoin's Post-FOMC Stability: Can Key Support Hold ∞ Insights

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Briefing

Bitcoin’s market stands at a crucial point, having found stability above a significant on-chain cost basis following the recent FOMC rate cut. This suggests a delicate equilibrium where underlying demand is tested by dynamic derivative flows. The most important data point confirming this is Bitcoin trading above $115.2k, which represents the cost basis for 95% of its total supply.

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Context

Many investors are wondering if Bitcoin’s recent rally is sustainable, or if the market is poised for a reversal. The key uncertainty revolves around whether current price levels can hold, indicating genuine strength, or if hidden fragilities could lead to a swift downturn. This data helps clarify if current stability is a true foundation for growth or merely a temporary pause.

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Analysis

A critical on-chain indicator, the Supply Quantiles Cost Basis, reveals the average price at which different percentages of Bitcoin’s supply were acquired. When Bitcoin trades above the 95% supply cost basis, as it does now at $115.2k, it means nearly all holders are in profit. This level often acts as strong support, as profitable holders are less likely to sell at a loss. The market’s recent behavior shows Bitcoin successfully maintaining this $115.2k level after the FOMC meeting.

Derivative markets, including futures and options, initially saw short positions being forced to close, driving prices higher. This was followed by long positions being liquidated during a price pullback, indicating a flushing out of excessive leverage. Options Open Interest, representing outstanding contracts, has reached a record 500k BTC, with a significant expiry approaching on September 26th. While high open interest can amplify volatility, dealer hedging strategies tend to cushion price drops and fuel rallies. This combination of strong on-chain support and balanced derivative flows creates a market environment where stability above $115.2k is paramount for continued upward momentum.

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Parameters

Key Metric – Bitcoin Supply Quantiles Cost Basis ∞ Price trades above 95% of supply cost basis.
Critical Support Level – 95% Supply Cost Basis ∞ $115.2k.
Derivative Activity – Perpetual Open Interest ∞ Peaked at 395k BTC, now stabilizing around 378k ∞ 384k BTC.
Options Market – Options Open Interest ∞ Record 500k BTC, with max pain at $110k for September 26th expiry.
Liquidation Levels – Long-side Max Pain ∞ $112.7k.
Liquidation Levels – Short-side Max Pain ∞ $121.6k.

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Outlook

This insight suggests the market’s near-term future largely depends on Bitcoin’s ability to hold above the $115.2k cost basis. Sustained price action above this level would confirm underlying demand and could extend the current upside momentum. Conversely, a decisive drop below $115.2k would signal weakening conviction, risking a contraction towards the $105.5k ∞ $115.2k range. A confirming signal to watch for is a continued decrease in downside liquidation activity, reinforcing market stability.

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Verdict

Bitcoin’s market stability hinges on maintaining its critical on-chain support level, as derivative positioning reflects a cautious yet balanced environment.

Signal Acquired from ∞ glassnode.com