On-chain data shows a complex combination of Bitcoin price signals following Thursday’s Federal Reserve interest rate decision.
It’s important that Bitcoin prices exceed $115,200, according to a new analysis report from the on-chain data platform GlassNode. The company warns that if it doesn’t, it could drop to $105,500.
Recording options are on expiration date
GlassNode data shows that since the Fed’s announcement, the fear of a significant price drop has been reduced. The spot market showed some minor sales pressures, but the risk-off position in the derivatives market increased significantly.
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Open interest in the permanent market has declined slightly. GlassNode noted that open interest, which peaked at 3.95 million BTC, has fallen to 3.78 million BTC. Analysis of liquidation data shows that short positions were narrowed just before the rate announcement, but the percentage of long position liquidation increased after rate reduction.
However, with open interest in the options market reaching a record high of 5 million BTC, the potential for large volatility remains. Record amounts for these options are set to expire next week on September 26th.
Below $115,200, the momentum could break
GlassNode suggests paying close attention to the “Max Pain” prices for Bitcoin options. With both price increases and falls on the table, large liquidation events on both sides can have a major impact on spot prices.
The current maximum pain for the long position is $112,700, while the short position is $121,600. At the time of writing, Bitcoin prices have fluctuated at around $116,990.
Since FOMC in September, most of Bitcoin has been trading on chains. It’s over $115,200. GlassNode says maintaining this price level is key to maintaining momentum and there is a risk that it will drop to $105,500 if you lose it.
Ultimately, it will maintain demand-driven momentum at over $115,200, while drops below that level risk withdrawals in the range of $105,500 to $115,200. GlassNode concludes that a comprehensive look at on-chain signals suggests that market participants may be in a state where they are waiting for the direction of Bitcoin to be determined.
