Key insights:
In September, 44,000 BTC net withdrawals have curtailed the available supply, alleviating potential short-term selling pressure.
US-listed spot Bitcoin ETFs attracted $2.2 billion, demonstrating consistent daily demand that significantly surpasses the mined supply.
Bitcoin (BTC) has remained within a tight 2.3% range since Friday as traders await the US Federal Reserve’s interest rate announcement on Wednesday. While the immediate effects of an interest rate cut on Bitcoin remain unclear, three independent factors are indicating further price increases for BTC.
The significant drop in BTC held on exchanges is now crucial for short-term price dynamics. Glassnode reports a net withdrawal of 44,000 BTC in September, countering the high deposit levels seen in July. With fewer coins available, immediate liquidity is tighter, potentially reducing short-term selling pressure near the current $116,000 price point.
Decreased BTC supply, rising spot Bitcoin ETF interest
Some believe that the 2.96 million BTC still on exchanges can support buying volume. However, this perspective fails to recognize that a significant portion of these coins is not available on order books. Many clients maintain Bitcoin deposits on exchanges due to concerns about self-custody or to capitalize on features such as yield opportunities or reduced fees.
Support at the $115,000 level is bolstered by ongoing accumulation through spot Bitcoin exchange-traded funds (ETFs). This trend has revived investor confidence after gold’s 11% outperformance since August. Between Wednesday and Monday, US-listed Bitcoin ETFs recorded $2.2 billion in net inflows, showcasing daily buying pressure over 10 times greater than the daily new Bitcoin supply.
Eric Trump’s CNBC interview highlighted Bitcoin’s distinctive characteristics. The son of US President Donald Trump is personally involved as a co-founder of the Bitcoin mining and treasury management firm American Bitcoin (ABTC). Eric described Bitcoin as the “greatest asset of our time,” likening it to a modern gold and an effective hedge against weaknesses in the real estate market.
Bitcoin may not respond strongly to Fed interest rate cuts
Bond markets are anticipating a 96% probability that the Fed will reduce rates to 4.25% from the current 4.5%. This suggests that Bitcoin might show a modest reaction to Wednesday’s decision. The remarks from Fed Chair Jerome Powell during the press conference will play a crucial role in indicating whether rates will continue to decline. If inflation remains a critical concern, Bitcoin’s upward trajectory toward $120,000 might encounter resistance.
Despite this, a new financial signal surfaced this week that may suggest deeper market stress. On Monday, US banks borrowed $1.5 billion from the Fed’s Standing Repo Facility; a move that Reuters reported reflected “tightness in meeting funding obligations.” Additionally, overnight lending rates saw a rise to 4.42% on Friday, marking the highest level recorded in two months.
This uncertainty led to a surge in gold prices, which reached an all-time high on Tuesday. Regardless of the Fed’s decision on interest rates, there is potential for Bitcoin to surpass $120,000 as demand amplifies through spot ETFs, corporate reserve strategies, and its position as an independent hedge—an advantage underscored by Eric Trump’s statements.
This article is for informational purposes only and should not be construed as legal or investment advice. The views, thoughts, and opinions expressed herein are solely those of the author and do not necessarily reflect the views or opinions of Cointelegraph.
