Key points:
The 44,000 BTC net withdrawals in September have decreased the available supply, alleviating potential short-term selling pressure.
US-listed spot Bitcoin ETFs saw an influx of $2.2 billion, leading to consistent daily demand that far surpasses the mined supply.
Bitcoin (BTC) has fluctuated within a narrow 2.3% range since Friday as market participants await the United States Federal Reserve’s interest rate decision set for Wednesday. While the immediate effects of an interest rate cut on Bitcoin remain uncertain, three independent factors are contributing to likely BTC price increases.
The significant drop in BTC held on exchanges is crucial for immediate price formation. Glassnode estimates a net withdrawal of 44,000 BTC in September, reversing the high deposit activity observed in July. The reduced number of available coins results in tighter immediate liquidity, potentially limiting short-term selling pressure near the current $116,000 price point.
Decreased BTC supply, increasing spot Bitcoin ETF interest
Some believe that the 2.96 million BTC held on exchanges can adequately absorb buying volume. However, this perspective neglects that a substantial fraction of these coins is not available on order books. Many users retain Bitcoin deposits on exchanges due to self-custody concerns or to take advantage of features like yield opportunities or lower fees.
Support at the $115,000 level is bolstered by ongoing accumulation via spot Bitcoin exchange-traded funds (ETFs). This development has boosted investor confidence after gold’s 11% outperformance since August. US-listed Bitcoin ETFs recorded $2.2 billion in net inflows between Wednesday and Monday, leading to daily buying pressure exceeding ten times the amount of new Bitcoin mined daily.
Eric Trump’s CNBC interview on Tuesday highlighted Bitcoin’s distinctive traits. The son of US President Donald Trump, who is personally invested and co-founded the Bitcoin mining and treasury management firm American Bitcoin (ABTC), described Bitcoin as the “greatest asset of our time,” likening it to a modern form of gold and an effective hedge against weaknesses in the real estate market.
Bitcoin’s potential response to Fed interest rate cuts
The bond markets are predicting a 96% likelihood that the Fed will lower rates to 4.25% from the current 4.5%. This indicates Bitcoin may react minimally to Wednesday’s announcement. Remarks from Fed Chair Jerome Powell at the press conference will be key in signaling whether rates will continue their downward trend. Should inflation remain a significant concern, Bitcoin’s path to $120,000 might face challenges.
Nonetheless, a new financial signal emerged this week indicating broader market stress. On Monday, US banks borrowed $1.5 billion from the Fed’s Standing Repo Facility, which Reuters characterized as reflecting “tightness in meeting funding obligations.” Overnight lending rates also surged to 4.42% on Friday, marking the highest level 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 final decision on interest rates, Bitcoin could rise past $120,000 as demand strengthens through spot ETFs, corporate reserve strategies, and its role as an independent hedge—an advantage further bolstered 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 here are those of the author and do not necessarily reflect the views and opinions of Cointelegraph.
