Executive Summary
The Story So Far
Why This Matters
Who Thinks What?
Bitcoin futures traders have significantly reduced their exposure by $2 billion ahead of this week’s critical US Federal Reserve policy decision, signaling widespread caution across derivatives markets. However, strong underlying demand from U.S. investors, evidenced by a rising Coinbase premium, suggests active defense of the $115,000 price level in the spot market.
Futures Market Sees De-Risking
On-chain and derivatives data indicate a notable reduction in leverage as traders scale back positions. Bitcoin open interest has fallen below $40 billion from $42 billion since last Friday, following a brief peak near $116,700 earlier this week.
Aggregate futures volume has remained negligible, pointing to a lack of aggressive positioning in either direction. The funding rate, which measures the cost of holding perpetual futures positions, is also on a downward trajectory, reflecting reduced speculative interest.
Notably, Tuesday’s London session saw the sharpest hourly funding spike since August 14, a historical pattern that previously coincided with a local market top. Additionally, hourly net taker volume on Binance has dropped below $50 million, significantly lower than its typical $150 million average, suggesting market participants are largely sidelined awaiting clarity from the Fed.
Spot Demand Remains Resilient
Despite the caution in derivatives, spot demand on Coinbase paints a different picture. The Coinbase premium, which tracks the price difference between Bitcoin on Coinbase and other exchanges, has been steadily rising since last Tuesday.
This persistent premium reflects robust demand from U.S. investors, with the current buying cluster being the strongest observed since early August. These flows indicate that buyers are actively stepping in to defend the psychologically important $115,000 price level.
Broader Market Sentiment
Broader sentiment indicators reflect a cautious yet quietly confident market. The Bitcoin Bull Score has rebounded from a “bearish” reading of 20 to a “neutral” 50 over the past four days, suggesting an easing of selling pressure.
Furthermore, the Bitcoin Risk Index currently sits at 23%, near its cycle lows. This metric assesses the potential for sharp pullbacks relative to the past three years, with a similar setup occurring between September and December 2023, preceding a new uptrend.
Overall, while derivatives traders are de-risking in anticipation of the Fed’s announcement, strong spot demand and stabilizing sentiment indicators suggest underlying strength in Bitcoin, particularly around the $115,000 mark.
