As Bitcoin prices retreat further from historical highs to $107,000, the market is currently above the cost basis of short-term holders. In the spot market, the Relative Strength Index (RSI) has fallen into oversold territory, with momentum further weakening and trading volume declining, reflecting a decrease in market confidence. The spot CVD shows that selling pressure has eased, suggesting a temporary stabilization in the market, but overall signals indicate weak demand.
The futures market shows cautious position allocation. Open interest has decreased, financing payments have reduced, and the CVD of perpetual contracts has slightly improved, indicating a decline in leverage and weakening bullish sentiment. Traders seem reluctant to expand risk exposure, highlighting a defensive strategy adopted after recent volatility.
In the options market, the decrease in open interest has led to a decline in participation, and the volatility spread is narrowing, indicating a sense of complacency in the market. However, the 25 Delta skew has soared above historical extremes, highlighting strong demand for downside protection and reinforcing the defensive inclination of options traders.
The market structure remains fragile, with bearish pressure dominating in spot, futures, and on-chain indicators. ETF inflows provide a temporary buffer, but shrinking trading volumes and declining profitability highlight a lack of market confidence. While a rebound may occur in the short term, overall market sentiment remains defensive, and unless demand grows robustly again, the market may continue to consolidate further.
The market widely expects the Federal Reserve to cut rates for the first time in this cycle in September. Historically, Bitcoin tends to rise before easing policies are announced but falls back after the rate cuts are implemented. How might the market react if a rate cut occurs in September?
Interest rate cut in 2024: Narrative outweighs liquidity.
The trend in 2024 has changed. BTC did not decline after the rate cut but continued its upward momentum.
The reason is:
Trump's campaign has turned cryptocurrency into an election issue.
Spot ETFs are attracting record inflows of capital.
MicroStrategy's purchasing demand at the balance sheet level remains strong.
In this context, the importance of liquidity has diminished. Structural buying and politically favorable factors have overwhelmed the traditional economic cycle impact.
September 2025: Conditional market activation.
The current market backdrop is different from the uncontrolled surges seen in past cycles. Since late August, Bitcoin has been in a consolidation phase, with ETF inflows significantly slowing, and corporate balance sheet buying, which was once a continuous bullish factor, has also begun to weaken.
This makes September's rate cut a conditional trigger for market activity rather than a direct catalyst.
If Bitcoin surges significantly before the interest rate meeting, the risk of history repeating itself increases—traders may 'sell the fact' after the easing policy is implemented, leading to a 'rise then fall' scenario.
However, if prices remain stable or slightly decline before this decision, most excess positions may have been cleared, making interest rate cuts more stabilizing for the market rather than a terminal point for upward momentum.
The current Bitcoin trend may be influenced by the Federal Reserve's September interest rate meeting and related liquidity changes. Overall, Bitcoin might experience a surge before the FOMC meeting, but the increase may struggle to break new highs.
If prices surge significantly before the meeting, a 'sell the news' type of correction is likely to occur;
However, if prices consolidate or decline from early September to the meeting, there might be an unexpected surge due to interest rate adjustments.
Yet, even if a rebound occurs, the market must remain cautious. The next rally may form lower highs (around the $118,000 to $120,000 range).
Assuming this lower high occurs, it could create conditions for the latter half of Q4, when liquidity conditions are expected to stabilize, and demand may rebound, pushing Bitcoin toward new highs.
Today's fear index is 49, rising to a neutral state.
This week’s economic data release is somewhat abundant, with non-farm employment data being released on Thursday and Friday, likely causing significant market fluctuations. Additionally, tonight's manufacturing PMI and Thursday's services PMI are also important; if these two data points deviate significantly from expectations, they could cause market turbulence. Currently, the WLFI has little impact on market trends, so the focus remains on the influence of U.S. economic data. For those only trading Bitcoin and Ethereum, pay attention to the key integer levels of 100,000 and 4,000 as potential entry points.
Sun has also been bullish; everything he touches seems to perform poorly. WIFI peaked right at the market opening. Those looking to pick up bargains can monitor the 0.2 position for a potential oversold rebound.
