Key insights:
September saw 44,000 BTC net withdrawals, reducing available supply and alleviating potential short-term selling pressure.
US-listed spot Bitcoin ETFs gained $2.2 billion, creating consistent daily demand that significantly surpasses the mined supply.
Bitcoin (BTC) has been trading within a tight 2.3% range since Friday as market participants anticipate the US Federal Reserve’s interest rate decision on Wednesday. While the immediate effect of an interest rate cut on Bitcoin is uncertain, three distinct factors are contributing to potential BTC price increases.
The notable drop in BTC held on exchanges is pivotal for short-term price dynamics. Glassnode estimates a net withdrawal of 44,000 BTC in September, reversing the heightened deposit activity from July. With fewer coins on hand, immediate liquidity is reduced, potentially limiting short-term selling pressure around the current $116,000 price point.
Decreased BTC supply, rising spot Bitcoin ETF interest
Some believe that the 2.96 million BTC remaining on exchanges is sufficient to handle buying pressure. However, this perspective overlooks that much of these coins are not available on order books. Many clients choose to keep Bitcoin on exchanges due to self-custody concerns or to take advantage of yield opportunities and lower fees.
Support around the $115,000 level is bolstered by ongoing accumulation through spot Bitcoin exchange-traded funds (ETFs). This pattern has revitalized investor sentiment following gold’s 11% outperformance since August. US-listed Bitcoin ETFs reported $2.2 billion in net inflows from Wednesday to Monday, representing daily demand over ten times the daily Bitcoin mined.
Eric Trump’s CNBC interview on Tuesday highlighted Bitcoin’s distinct attributes. US President Donald Trump’s son is actively invested as a co-founder of American Bitcoin (ABTC), a Bitcoin mining and treasury management firm. Eric Trump labeled Bitcoin as the “greatest asset of our time,” characterizing it as a contemporary version of gold and a viable hedge against weaknesses in the real estate market.
Bitcoin’s response to Fed interest rate cuts
Bond markets are predicting a 96% likelihood that the Fed will lower rates to 4.25% from the current 4.5%. This indicates that Bitcoin might respond moderately to Wednesday’s decision. Fed Chair Jerome Powell’s press conference will be more telling regarding whether rates will continue on a downward trend. If inflation remains a considerable concern, Bitcoin’s path to $120,000 may encounter resistance.
Nevertheless, a new financial signal emerged this week that might indicate deeper market stresses. On Monday, US banks borrowed $1.5 billion from the Fed’s Standing Repo Facility, a move that Reuters described as reflecting “tightness in meeting funding obligations.” Overnight lending rates also rose to 4.42% on Friday, marking the highest level in two months.
This uncertainty drove a spike in gold prices, which reached an all-time high on Tuesday. Regardless of the Fed’s specific interest rate decision, Bitcoin could surpass $120,000 as demand grows through spot ETFs, corporate reserve strategies, and its role as an independent hedge — a benefit underscored by Eric Trump’s statements.
This article is for informational purposes only and is not meant to constitute 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.
