Key takeaways:
Bitcoin futures open interest decreased by $2 billion over five days, indicating cautious sentiment among futures traders.
Binance taker volume is experiencing cycle lows as the market anticipates the Fed’s interest rate decision.
The Coinbase premium indicates steady US demand supporting $115,000.
Bitcoin (BTC) traders seem to be reducing their exposure ahead of the US Federal Reserve’s policy decision this week, as onchain and derivatives data reveal a significant decline in leverage alongside evidence of consistent buying demand around the $115,000 level.
Open interest in Bitcoin has dropped by $2 billion since last Friday, falling below $40 billion from $42 billion. This decline follows Bitcoin’s brief peak near $116,700 on Monday. In addition, overall futures volume has been minimal, indicating a lack of decisive positioning as futures traders remain cautious.
The funding rate, which reflects the cost of holding positions in perpetual futures, is also on a decline. Notably, the London session on Tuesday experienced the most significant hourly funding surge since August 14, a movement that previously signaled a local peak.
Crypto analyst Maartunn reports that hourly net taker volume on Binance has fallen below $50 million, substantially lower than the usual $150 million average. Such low activity suggests a market waiting for the Fed’s direction before committing new 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 pulling back, spot demand on Coinbase presents a different picture. The Coinbase premium, measuring the price difference between Bitcoin on Coinbase and other exchanges, has been steadily increasing since last Tuesday. This pattern reflects strong demand from US investors, with current buying activity the strongest since early August. The flow indicates that buyers are actively protecting the $115,000 level.
Wider sentiment indicators also illustrate this balance between caution and quiet confidence. The Bitcoin Bull Score, which tracks shifts in market momentum, has risen to a “neutral” 50 from a previous “bearish” reading of 20 over the last four days. This suggests that selling pressure is diminishing, with the market transitioning into a more balanced state ahead of the Fed’s announcement.
Furthermore, the Bitcoin Risk Index, monitored by analyst Axel Adler Jr., is currently at 23%, close to cycle lows. This metric assesses the relative risk of significant pullbacks compared to the past three years.
Adler highlights that low readings are linked to “calmer environments,” reducing the chances of swift liquidations. A similar situation was observed between September and December 2023, when Bitcoin traded steadily prior to a new upwards trend.
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.
