Key Points:
In September, a net withdrawal of 44,000 Bitcoins (BTC) occurred, reducing the circulating supply and alleviating short-term selling pressure.
A total of $2.2 billion in new funds flowed into the U.S. listed spot Bitcoin ETF, with ongoing daily demand far exceeding the new mining supply.
Since Friday, Bitcoin (BTC) has been fluctuating within a narrow range of 2.3%, as investors await the Federal Reserve's interest rate decision to be announced on Wednesday. Although the immediate impact of a rate cut on Bitcoin (BTC) remains unclear, three independent factors are driving the price of Bitcoin (BTC) higher.
The amount of Bitcoin held on exchanges has significantly decreased, directly affecting short-term price trends. According to Glassnode data, there was a net withdrawal of 44,000 Bitcoins (BTC) in September, reversing the high deposit trend seen in July. The reduction in available coins has tightened immediate liquidity, thereby limiting short-term selling pressure at the current price level of $116,000.
Some opinions suggest that there are still 2.96 million Bitcoins (BTC) on exchanges that can absorb buying demand pressure. However, this view overlooks that a considerable portion of these coins are not listed for sale. Many customers keep their Bitcoins (BTC) on exchanges for self-management of risk, to gain profits, or to enjoy lower transaction fees.
The continued inflow into the spot Bitcoin ETF provides stronger support at the $115,000 price level. Since August, when gold outperformed Bitcoin (BTC) by 11%, this trend has boosted investor confidence. The U.S. listed Bitcoin ETF recorded a net inflow of $2.2 billion from Wednesday to Monday, with daily buying demand far exceeding the amount of newly mined Bitcoin by more than ten times.
Eric Trump emphasized the unique attributes of Bitcoin (BTC) in an interview with CNBC on Tuesday. The son of former President Trump, who is a co-founder of an American Bitcoin (ABTC) mining and treasury management company, personally holds investments in Bitcoin. Eric Trump described Bitcoin (BTC) as "the greatest asset of our time," considering it a modern version of gold that can effectively hedge against weakness in the real estate sector.
The bond market currently estimates a 96% probability that the Federal Reserve will lower interest rates from 4.5% to 4.25%. This suggests that Bitcoin's (BTC) reaction to Wednesday's rate decision may be limited. Federal Reserve Chairman Powell's comments at the press conference will be more indicative, determining whether rates will continue to decline in the future. If inflation risks remain, Bitcoin's (BTC) momentum towards $120,000 may be hindered.
New financial signals have also emerged this week, indicating increased market pressure. On Monday, Bank of America borrowed $1.5 billion through the Federal Reserve's standing repo facility, reflecting "tightness in meeting funding obligations," according to Reuters. The overnight borrowing rate rose to 4.42% on Friday, the highest level in two months.
Uncertainty has driven gold prices to soar, reaching a historic high on Tuesday. Regardless of the Federal Reserve's interest rate decision, Bitcoin (BTC) is expected to break through $120,000, driven by the ongoing demand for spot ETFs, corporate reserve strategies, and its independent hedging role, further reinforced by Eric Trump's related statements.
Related: Tom Lee: Bitcoin (BTC) and Ethereum (ETH) may see "huge increases" in the next three months.
Original: “Bitcoin (BTC) May Hit $120K on Wednesday – Here’s Why”
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