Key Takeaways
What happened to Bitcoin during the 2024 cycle top?
The Fed rate cut in December 2024 coincided with Bitcoin peaking at $108k. It was followed by a nearly 20% drop as STHs capitulated.
Could a similar scenario unfold now?
BTC Derivatives are overheated, and traders are stacking massive long clusters, mirroring the 2024 setup.
Bitcoin [BTC] hovered near $115k at press time, sitting right at a key inflection point. The Fear & Greed Index at 50 signaled indecision.
Traders are clearly waiting on the Federal Reserve to set the next directional bias. Interestingly, history is giving us hints.
Fed cuts and echoes from 2024
The last rate cut on the 18th of December 2024, hit while BTC was mid-bull run in the post-election cycle. However, that catalyst ended up capping a local top at $108k.
The aftermath?
BTC fell nearly 20% over a 12-week bearish cycle, and the Short-Term Holder (STH) NUPL plunged from 0.20 to -0.13 for the first time in over a year.
In short, STHs capitulated, signaling a clear exhaustion of bullish momentum.
Source: Glassnode
Interestingly, STH NUPL was still hovering near the red zone while assessing.
For context, this metric measures STHs’ unrealized PnL. Basically, it tells us if recent buyers are in profit or bleeding.
Once it flips red, it often points to capitulation kicking in, which tends to fuel a sharper downside. At press time, STH Realized Price sat near $110k. Simply put, that’s the breakeven line.
If BTC slips below, STHs (coin age < 155 days) are more likely to dump. And the odds of that happening are clearly on the rise.
Bitcoin Derivatives flash overheated positioning
Bitcoin’s Derivatives volume is absolutely blowing past spot.
On the 15th of September, BTC Derivatives clocked around $242 billion versus $25 billion on Spot. Traders stacked leverage aggressively, tilting the market heavily toward Derivatives.
Interestingly, this vibes with the last Fed rate cut cycle.
Bitcoin’s Open Interest (OI) hit a then-ATH of $72.44 billion on the 18th of December 2024, right around BTC’s $108k cycle top, setting off a wave of liquidations.
Source: CoinGlass
In this context, Binance’s 24H Heatmap highlighted a chunky long liquidity cluster, with traders stacking $85.97 million in leverage around $113,652.
This shows the market has overexposed longs.
Source: CoinGlass
That means a 2024-style blow-off top isn’t off the table.
With STHs at breakeven, derivatives overheated, and liquidity clustered, conditions resembled a setup for forced long squeezes before any breakout attempt.
Source: https://ambcrypto.com/bitcoins-fed-rate-cut-echoes-will-history-repeat-btcs-108k-crash/