Why is Bitcoin’s price up today? FOMC rate cut, liquidity & more…

Key Takeaways

Why is BTC’s price up today?

BTC challenged the $117.5k, but the FOMC rally might be losing strength.

Can Bitcoin establish an uptrend soon?

Possible, but unlikely. September is historically problematic for the bulls, and the liquidity below $115k could spark a price dip.

Bitcoin [BTC] was inching closer to the $117.5k local resistance after making a 0.54% gain for the day on the 18th of September.

The following day, Bitcoin tested the same resistance again, but was unable to climb higher.

In a recent report, AMBCrypto explored the short-term outlook for Bitcoin. The rising global liquidity implied that some capital flows would be directed to assets, but it went to safer assets. Capital flow to risk assets like Bitcoin could be limited.

A short-term sell-off from institutional investors was also a factor that could affect sentiment. These threats could hurt the chances of a rally above the local resistance level.

In a post on X (formerly Twitter), Glassnode, the popular analytics firm, highlighted the significance of the $115.2k level for bulls.

Futures data showed short squeezes, and the options interest soared to 500k BTC ahead of the upcoming Options expiry.

A drop below $115.2k would threaten a deeper price dip to $105.5k.

Can Bitcoin defend the local support, or…

Source: Glassnode

In the days leading up to the FOMC meeting, the Cumulative Volume Delta (CVD) bias in the perpetuals market revealed a notable shift. It changed from extreme selling to a more balanced state.

This revealed the return of liquidity, as buy-side flows offset the selling pressure present since late August. It signaled speculators were positioning for a positive policy outcome.

The liquidation heatmap data revealed that, at the time of writing, the long-side max pain level was at $112.7k, and the short-side max pain level was at $121.6k.

Source: CryptoQuant

The falling Exchange Supply Ratio painted a more bullish picture for the coming weeks.

Following the Fed’s approval of a rate cut, the decline in the Exchange Supply Ratio to 0.02911, at press time, meant investors were withdrawing their BTC and preparing to HODL.

While the reduced supply available for sale on Binance was an encouraging factor, it does not eliminate the threat of a price dip below $115.2k in search of liquidity.