Bitcoin is currently navigating a precarious path, having recently relinquished a crucial support level in the wake of a Federal Reserve rate cut. This market reaction highlights the asset's sensitivity to macroeconomic policy and sets the stage for a potential retest of lower price thresholds, demanding close attention from investors.
Key Support Levels Under Threat
Following the Federal Reserve's September 17th rate cut, Bitcoin initially saw a brief surge to $118,000 before a significant profit-taking movement reversed its trajectory. This pullback led to the loss of the critical $115,000 support level, a price point underscored by on-chain data indicating that $115,200 represents the cost basis for approximately 95% of Bitcoin's total supply. The inability to sustain above this threshold increases the likelihood of Bitcoin descending into the $105,500 to $115,200 range, a zone critical for demand-side momentum and acting as the next major support.
Derivatives Market Influence and Shifting Sentiment
The recent price action was heavily influenced by activity in perpetual futures markets, where open interest had reached a cycle high of $85.9 billion just before the policy-driven volatility. Leveraged traders initially triggered short liquidations that fueled the brief rally to $118,000. However, the subsequent market regime shift saw long liquidations spike, dominating the liquidation rate at 62% as highly leveraged positions unwound. Despite this volatility, the Cumulative Volume Delta (CVD) across major exchanges has transitioned from extreme selling pressure to a more balanced state, signaling a welcome return of liquidity. This stabilization suggests that while derivatives played a significant role in recent price swings, their normalization, coupled with maintaining positions above key on-chain cost basis levels, will be crucial for Bitcoin's future price stability.
