Post-Cut Patience

Executive Summary

• Bitcoin gained moderate momentum into the September 17 FOMC meeting. Derivative markets have shifted from a risk-off stance toward a more balanced positioning, with downside concerns easing post-FOMC. Spot markets showed mild sell pressure, while perpetuals absorbed liquidity through short squeezes.
• Perpetual Open Interest peaked at 395k BTC before pulling back to ~380k BTC as volatility flushed leveraged traders. Liquidation patterns confirmed shorts were squeezed ahead of the FOMC, followed by long liquidations on the post-rate pullback.
• Options Open Interest reached a record 500k BTC, with the September 26 expiry set to be the largest in history. Expiry flows around the $110k max pain level may strongly influence spot.
• Volatility repricing into the FOMC lifted the 1-month IV–RV spread, while dealer positioning implies hedging flows that can sustain rallies and cushion dips.
• On-chain, Bitcoin trades above the cost basis of 95% of supply at $115.2k. Holding this level is key to sustaining momentum, while losing it risks a contraction toward $105.5k.

The Bitcoin market has shown moderate momentum since early September, fueled by anticipation of the FOMC rate cut and optimism around its potential impact.

This report examines market dynamics in the days leading up to the meeting and the post-rate structure across perpetual and options markets. Finally, we turn to on-chain indicators to assess the broader macro cycle and evaluate whether the foundation for a sustained trend is forming.

Perpetual Market Analysis

Through September, Bitcoin stabilized near $107.8k, aligning with the short-term holder cost basis. From this level, the market structure shifted from balanced to modestly seller-driven. This bias is captured by the deviation of Cumulative Volume Delta (CVD) from its 90-day median baseline.

In the days leading up to the FOMC meeting, CVD across Coinbase, Binance, and all major exchanges showed mild negative deviations, highlighting net sell pressure in the spot market and a cautious tone among participants.

If we extend the same lens to the perpetual market, the Cumulative Volume Delta (CVD) bias reveals a notable shift from extreme selling to a nearly balanced state. This reflects a significant return of liquidity, as buy-side flows offset persistent sell pressure from late August through the FOMC meeting.

Such stabilization underscores the futures market’s central role in supporting the rally, with speculators positioning ahead of a rate cut and anticipating a positive policy outcome.

Perpetual Open Interest

Given the outsized role of futures in current market dynamics, perpetual indicators offer a sharper lens on short-term sentiment.

Perpetual Open Interest climbed to a cycle high of ~395k BTC on September 13, reflecting aggressive positioning. However, by Monday, choppy price action drove OI down to 378k BTC — a decline of roughly 4.3%.

Since the FOMC meeting, OI has stabilized between 378k–384k BTC, a pattern consistent with rising intraday volatility and leveraged traders being flushed around key macro events. This highlights the heightened sensitivity of the futures market to policy-driven catalysts.

Shorts Squeezed, Longs Flushed

Inspecting liquidation dominance over the past 30 days shows that the drop in Open Interest between September 13–17 was largely driven by short liquidations. This translated into a series of short squeezes ahead of the FOMC announcement, fueling momentum on the long side of perpetuals.

However, this regime was abruptly interrupted by the sharp pullback to $115k after the rate cut, which triggered a wave of high-leverage long liquidations and pushed liquidation dominance to 62%.

Using Glassnode’s newly launched dashboard on Liquidation Heatmap & Long/Short Bias, we can highlight both the recent long flushes and short-term max pain levels. The metrics in this dashboard serve as a proxy for liquidation prices, pinpointing levels where traders risk forced liquidations and helping anticipate potential cascades. Built from the 1,000 largest Bitcoin positions on Hyperliquid, these indicators provide a highly relevant proxy for broader market positioning.

Mapping Max Pain Levels

We start with the liquidation wall to gauge the most immediate max-pain levels for both long and short positions. The latest-hour snapshot highlights potential liquidation “walls”: prices below spot show long liquidations, while prices above spot show short liquidations.

Currently, the long-side max pain sits at $112.7k, while the short-side max pain is at $121.6k with spot trading at $117.2k. This suggests the market is positioned in a fragile balance, where a downside move risks triggering long liquidations, while an upside break could fuel a short squeeze toward recent highs.

Options Market

Shifting focus to the options market, we use positioning and expiries to gauge short-term volatility expectations.

Rising Options OI and Expiry Dynamics

Open interest in BTC options has surged to nearly 500k BTC, its highest level on record, underscoring growing adoption of options for both hedging and speculation. OI consistently declines at month-end, and even more sharply at quarter-end, before rebuilding. This pattern reflects the dominance of monthly expiries, while weeklies are listed only 2–3 weeks in advance. Quarterly expiries, often called “Triple Witching,” combine weekly, monthly, and quarterly maturities, concentrating flows and liquidity.

Although rising OI does not reveal directional bias, it signals a more sophisticated market deploying complex structures to manage risk. Importantly, as OI peaks near expiry, gamma effects can amplify spot volatility as dealers hedge more aggressively, making expiry days increasingly impactful for BTC price action.

A Record-Breaking Setup

Building on rising open interest, the September 26th expiry emerges as a pivotal event for the options market.

This expiry is the largest in Bitcoin’s history, reflecting nine months of buildup since its listing. Its strike distribution is unusually broad, with open interest concentrated around $95k puts on the downside and $140k calls on the upside. While these levels are likely to expire out of the money, they highlight where traders have speculated or hedged throughout the year.

The max pain point sits near $110k, the level where most options would expire worthless, often acting as a gravitational pull into expiry. Given the sheer size of this contract, hedging flows could exert significant influence on spot price until roll-off at 8:00 am UTC on Friday, September 26th. Once expired, the market may be freed for sharper volatility moves.

FOMC Repricing

Turning to volatility, the normalized 1-month spread shows how options traders positioned around the FOMC meeting.

Implied volatility tracked realized closely for much of September but spiked higher into the event as market makers repriced risk and traders bid for long gamma. The normalized spread now sits at 0.228, still within its normal zone but slightly elevated. This reflects the extra premium gamma sellers demand to absorb risk, offering income opportunities in an otherwise subdued volatility environment.

Dealer Flows in Focus

To complement volatility spreads, the Options Net Premium Strike Heatmap reveals how traders are positioning across strikes.

Recent months show consistent put selling below spot and call buying above, while in recent days upside demand has intensified. This structure leaves dealers short gamma on the upside and long gamma on the downside, forcing them to buy into both rallies and dips as hedges. The resulting flow provides fuel to extend upside moves while simultaneously cushioning declines, reinforcing stability around key strike zones.

Macro Navigation with On-Chain Data

Having reviewed perpetual and options indicators, we now turn to on-chain metrics to assess the market from a macro, investor-behaviour perspective.

Following the FOMC meeting, Bitcoin’s rise to $117.2k pushed the majority of supply back into profit. The Supply Quantiles Cost Basis model shows that price is now above the cost basis of 95% of supply at $115.2k. Sustaining this level is critical for maintaining demand-side momentum. Conversely, failure to hold above it would raise the probability of contracting back into the 85%–95% quantile range between $105.5k–$115.2k, where weaker conviction and renewed selling pressure could emerge.

Conclusion

The Bitcoin market remains delicately balanced following the FOMC-driven rally. In futures, net sell pressure in spot was offset by renewed liquidity in perpetuals, where short squeezes and liquidations played a key role.

Options markets highlight record open interest and a historic quarterly expiry, pointing to heightened volatility potential, with dealer flows providing both support on dips and fuel for rallies.

On-chain, Bitcoin trades above the cost basis of 95% of supply, a level that now serves as a critical line in the sand. Holding above $115.2k would sustain demand-driven momentum, while losing it risks a contraction back toward the $105.5k–$115.2k range. Together, these signals suggest a market awaiting confirmation where stability above key cost-basis levels could extend upside, while fragility in flows keeps downside risk alive.

Disclaimer: This report does not provide any investment advice. All data is provided for informational and educational purposes only. No investment decision shall be based on the information provided here, and you are solely responsible for your own investment decisions.

Exchange balances presented are derived from Glassnode’s comprehensive database of address labels, which are amassed through both officially published exchange information and proprietary clustering algorithms. While we strive to ensure the utmost accuracy in representing exchange balances, it is important to note that these figures might not always encapsulate the entirety of an exchange’s reserves, particularly when exchanges refrain from disclosing their official addresses. We urge users to exercise caution and discretion when utilizing these metrics. Glassnode shall not be held responsible for any discrepancies or potential inaccuracies. 

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