Key takeaways:
Bitcoin futures open interest decreased by $2 billion over five days, indicating cautious sentiment among futures traders.
Binance’s taker volume is at cycle lows as the market awaits the Fed’s interest rate decision.
The Coinbase premium indicates steady US demand supporting the $115,000 level.
Bitcoin (BTC) traders seem to be reducing their exposure before the US Federal Reserve’s policy decision this week, as onchain and derivatives data reveal a significant decrease in leverage alongside consistent buying interest near the $115,000 threshold.
Open interest in Bitcoin has fallen by $2 billion since last Friday, dropping below $40 billion from $42 billion. This decline follows Bitcoin’s brief surge to approximately $116,700 on Monday. Additionally, total futures volume has been minimal, suggesting traders are remaining cautious and not taking aggressive positions.
The funding rate, reflecting the cost of holding perpetual futures positions, is also trending downward. Notably, the London session on Tuesday experienced the highest hourly funding spike since August 14, which previously coincided with a local peak.
Crypto analyst Maartunn notes that hourly net taker volume on Binance has dropped below $50 million, significantly lower than the typical $150 million average. This subdued activity indicates a market on the sidelines, as participants await clearer guidance from the Fed before reallocating capital.
Related: Bitcoin faces resistance at $118K, but ETFs may push BTC price higher
Coinbase premium signals strong demand at $115,000
While derivatives traders are stepping back, spot demand on Coinbase presents a different picture. The Coinbase premium, which reflects the price difference of Bitcoin between Coinbase and other exchanges, has been on an upward trend since last Tuesday. This indicates strong US investor demand, with the current buying activity being the most robust since early August. The flow data suggests that buyers are actively supporting the $115,000 level.
Wider sentiment indicators also reflect this balance between caution and underlying confidence. The Bitcoin Bull Score, which tracks market momentum shifts, has lifted to a “neutral” 50 from a “bearish” score of 20 over the last four days. This suggests diminishing selling pressure, with the market moving towards a more stable state ahead of the Fed’s announcement.
Additionally, the Bitcoin Risk Index monitored by analyst Axel Adler Jr. is at 23%, close to cycle lows. This metric evaluates the relative risk of sharp pullbacks compared to the past three years.
Adler observes that such low values are indicative of “calmer environments” with a lower likelihood of sudden liquidations. A similar situation was seen from September to December 2023, when Bitcoin traded steadily prior to starting a new uptrend.
Related: Bitcoin price drop to $113K might be the last big discount before new highs: Here’s why
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
