Bitcoin Reaches $113K as Market Eyes Federal Reserve Rate Decision
Bitcoin (BTC) climbed to a local peak of $113,279 on Tuesday, just before the Wall Street open, signaling a shift in trader sentiment amid expectations of a Federal Reserve interest rate cut next week. The cryptocurrency sustained support above $110,000 following a higher low over the weekend, prompting speculation about a potential bullish breakout.
Technical Indicators Suggest Bullish Momentum
Market analyst and trader Michaël van de Poppe noted Bitcoin’s recovery above its 20-day simple moving average near $111,500 and surpassing the critical $112,000 threshold. Drawing parallels with gold’s recent all-time highs, he suggested Bitcoin might follow with a delayed but comparable ascent.
Another trader, Crypto Tony, identified the $113,000 mark as a strategic entry point for long positions on the daily chart, reinforcing optimism among some market participants.
Spot Market Demand and Liquidity Pose Questions
However, caution remains. Crypto investor Ted Pillows highlighted that the current rally is predominantly fueled by perpetual futures contracts, with open interest and funding rates elevated but the Coinbase premium—a proxy for spot market demand—remaining neutral. This dynamic casts doubt on the rally’s sustainability without stronger spot buying.
Liquidity analysis reveals a dense cluster of sell orders between the current price and $114,500, indicating a potential resistance zone. Some traders interpret this as a deliberate barrier that could trigger a short squeeze if breached.
Data analyst CW observed that Bitcoin is approaching a high-leverage short position area, increasing the likelihood of a short squeeze. Trading resource Material Indicators echoed this view, describing the sub-$115,000 zone as a friction point for bulls but emphasized that macroeconomic factors, notably the anticipated Fed rate cut, could drive Bitcoin back toward previous highs.
Risks of a Liquidity Flush Remain
Material Indicators cautioned that despite bullish signals, the possibility of a liquidity flush to support levels cannot be ruled out. Such a move could temporarily suppress prices before any sustained upward momentum resumes.
Investors are advised to remain vigilant as the market navigates these technical and macroeconomic factors.
Disclaimer: This article does not constitute investment advice. All trading involves risk, and readers should conduct independent research before making financial decisions.
FinOracleAI — Market View
Bitcoin’s recent surge to $113,000 reflects growing optimism linked to expectations of a Federal Reserve interest rate cut, which historically supports risk assets. The dense sell order liquidity near $115,000 suggests a potential short squeeze, which could accelerate upward momentum if triggered. However, the rally’s dependence on perpetual futures rather than spot market demand introduces downside risk, as a liquidity flush remains plausible. Market participants should monitor spot demand indicators and the Fed’s policy announcement closely to gauge the rally’s durability.
Impact: neutral
