On the 11th of September, Bitcoin [$BTC] fell to a low of $76,046. Just an hour and a half later, $BTC had rallied 5.05% to reach a high of $79,890. This kind of swift, intense volatility hunted down both long and short liquidations.
The seemingly resurgent bulls were stopped in their tracks. Over the weekend, $BTC consolidated between $76.5k and $77.5k. In recent trading hours, Bitcoin once again breached the upper boundary, but it is unclear if it will fall lower once again.
The upcoming week could see more $BTC volatility
The Federal Reserve and the Bank of Japan are about to provide back-to-back policy decisions, making this week a pivotal one for markets. There is an 85% probability of a rate hike, and the markets have likely priced it in.
A 1.25% BOJ increase is expected, too. The real question is how hawkish both central banks sound after the decision, wrote XWIN Japan on CryptoQuant.
A rise in U.S. yields and yen appreciation would be particularly risky for Bitcoin. Such tight liquidity conditions could lead to investors cutting risk in crypto.
Will the fearful market conditions see another $BTC reversal?
The 30-day sum of the Funding Rates on Binance was aggregated this way to make spotting a trend easier. The bearish consensus earlier this year saw some of the most bearish derivatives sentiment on Binance. Yet, the rally in May that reached $82,850 used this build-up of short positions as fuel.
Analyst Darkfost wrote that this kind of bearish consensus has tended to mark the end of a Bitcoin correction. In the months since then, Funding Rates have recovered from extreme bearishness.
The build-up of optimism has to be accompanied by steady spot demand to drive the next bull run.
Well-known analyst Joao Wedson used the monthly CVD chart of Bitcoin to understand buy and sell pressure on a monthly basis and how $BTC prices react to it. The metric resets every month. At the time of writing, September was seller-dominated. However, it does not automatically yield a bearish bias.
If $BTC manages to hold on to key supports, such as $76k, while the monthly CVD is deeply negative, it would mean passive (limit order) buys have absorbed the aggressive selling.
Final Summary
- Bitcoin is likely to have a volatile trading week ahead, even though the market has priced in an 86.5% rate hike chance.
- The derivatives and monthly CVD data highlighted how Bitcoin optimism has been building since May, but strong buying pressure has to come in to keep the recovery alive.
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