Bitcoin (BTC) traded at $112,623, setting up a potential retest of the $105,500 support zone after losing the crucial $115,000 level following the Federal Reserve's 17 September rate cut.
Although BTC had briefly touched $118,000 soon after the Fed's 25 basis point cut, a profit-taking move triggered a slump that exposed the market's sensitivity to leverage, as reported in the report Bitfinex Alpha.
On-chain data indicated that the $115,200 level was significant for Bitcoin, as it represented the cost basis of about 95 per cent of the total supply. Maintaining this level is essential to sustain demand-side momentum. The report noted that failure to maintain above this threshold increases the likelihood of a return to the 85-95% quantile range, between $105,500 and $115,200.
Perpetual futures have played a central role in Bitcoin's recent price action, with open interest reaching a cyclical high of $85.9 billion on 13 September, before volatility driven by monetary policies led to a drop to $82.2 billion.
The drop reflected an increased sensitivity to macroeconomic catalysts as leveraged traders were 'flushed' (liquidated) in the run-up to the FOMC meeting.
Before the Fed announcement, liquidations of short positions triggered 'squeezes' that fuelled Bitcoin's rally to $118,000. However, the regime changed abruptly after the collapse, with liquidations of long positions rising to dominate the liquidation rate at 62% as highly leveraged positions dissolved.
The Cumulative Volume Delta (CVD) across the major exchanges shifted from an extreme sell-off to a nearly balanced state, signalling a significant return of liquidity after persistent selling pressure had dominated from late August until the FOMC meeting.
This stabilisation highlights the crucial role of futures markets in supporting the rally, as speculators positioned themselves in anticipation of favourable monetary policies.
The price range between $105,500 and $115,200 represents the next major support zone where Bitcoin could find demand if current levels fail to hold.
This range corresponds to the base cost for 85-95% of Bitcoin's supply, making it a critical battleground for both bullish and bearish investors. Market dynamics suggest that Bitcoin's future path will depend heavily on maintaining positions above key on-chain cost levels as derivative markets continue to normalise following the Fed-induced volatility.
