Market Data 
The probability that the Federal target rate could be bumped up by 25 bps to 375-400 bps was increasing by the day. The FedWatch tool showed a probability of a rate hike at 87.3%.
This meant that the chances of a bearish Bitcoin [$BTC] price reaction are also higher. In a CryptoQuant analysis, XWIN Japan pointed out that $BTC was between persistent, long-term buyers and short-term caution.
The short-term trends could flip bearishly for Bitcoin once again, especially if the caution is given reason to blossom into panic.
Bitcoin retraces into key demand zone at $76k
Friday’s U.S. CPI report introduced high short-term volatility and $685.5 million in liquidations across the crypto market for the day. The past four trading days have seen outflows from Bitcoin spot ETFs.
Binance $BTC reserves were at a 2-year high, and the Coinbase Premium Index has slipped into negative territory again. For a brief while towards the end of August, and again at the start of September, an uptick in U.S.-based investor demand seemed to signal market confidence.
Despite the doubt introduced among long-term holders, Bitcoin was steadily climbing towards the key $82k resistance, and this signal gave bulls some hope.
Increasing odds of a rate hike, with the CPI report being the latest to tip the scales further, have hurt the short-term bullish $BTC momentum.
The bright side for crypto swing traders
In a post on X, crypto analyst Axel Adler Jr. pointed out that the Bitcoin Open Interest had declined by 13.6k $BTC in a day. During this time, Bitcoin rallied from $77k to $79.9k before retracing most of those gains within a span of a few hours.
This liquidity flush and the OI decline have made a liquidation cascade less likely by wiping out over-leveraged traders around the current market price.
One sign of a market regime shift would be positive Coinbase Premium Index values to signal increased investor interest. Another factor would be the exchange net position change turning negative, to signal accumulation.
Negative values in the second half of August accompanied the rally towards $82k. Sustained withdrawals from exchanges could accompany the next bullish leg higher as sell pressure decreases.
Final Summary
- Bitcoin was yet to climb above the key long-term resistance zone around $82k, and was at risk of losing the short-term bullish momentum, too.
- Among other factors, a turnaround in the Coinbase Premium Index, the exchange net position change, and spot ETF net flows could signal short-term demand and upcoming price gains.
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