Bitcoin’s Surge Ahead of FOMC Meeting: Short Liquidations Fuel Upward Trend

Bitcoin Stabilizes Above $110,000 Following Test of Key Support

September 17, 2025

Bitcoin (BTC) demonstrated resilience this week, successfully defending a critical support level at $110,000. This occurred amidst ample open interest in put options, which represented a potential downward pressure point for the cryptocurrency. The accomplished defense suggests a shift in market dynamics, driven largely by the closing of short positions.

Testing the Put Wall and key Moving Averages

Earlier in the week, bitcoin encountered considerable selling pressure around the $110,000 mark, where a large volume of put options contracts were clustered. However, the asset not only rebounded from this level but also climbed back above its 100-day Simple Moving Average (SMA) at $112,483, and its 50-day SMA at $114,545. This marks the first instance of consecutive daily closes above the 50-day SMA since the corrective phase began in mid-August.

Short Liquidations Fuel Price Recovery

Data indicates a significant wave of short liquidations following positive price movement on Wednesday and Thursday. Over 1,319 BTC, equivalent to more than $153 million, worth of short positions were forcibly closed, representing the highest weekly volume of short liquidations since BTC surpassed $120,000 in mid-July. This activity points to a broad unwinding of bearish bets.

Did You Know? Short liquidations occur when traders who have bet against an asset are forced to buy it back to cover their positions as the price rises, further fueling the upward momentum.

Market Sentiment Shifts as Skew Normalizes

The put-skew, or the relative cost of out-of-the-money puts versus calls, has also moderated. Previously exhibiting extreme bearishness above 5%, the put-skew has reverted towards baseline levels as Bitcoin’s price recovered. This suggests a reduction in fear and an easing of downward pressure from options markets.

Navigating Near-Term Resistance and Support

Despite the bullish developments, several hurdles remain. Resistance looms at $120,000, where over 18,000 open call contracts are positioned. Together, substantial sell orders totaling over $525 million are currently resting just above the $116,000 level, according to exchange order books. This suggests potential headwinds for further upward progress.

Key Support/Resistance Levels (USD)	Description
$110,000	Major Put Wall/Support Level
$112,483	100-Day Simple Moving Average
$114,545	50-Day Simple Moving Average
$120,000	Key Resistance Level/Call Option Concentration

Analysts anticipate continued volatility in the short-term,particularly ahead of Wednesday’s Federal Open Market Committee (FOMC) meeting.The 50-day and 100-day smas, along with the $110,000 support, will be critical levels to watch on any potential pullbacks.

Pro Tip: Pay attention to the FOMC announcements, as they can substantially influence market sentiment and trigger rapid price movements in Bitcoin and other risk assets.

Understanding Put Options and Short Liquidations

Put options give holders the right, but not the obligation, to sell an asset at a specific price (the strike price) by a certain date. A large concentration of put options at a particular price level can act as a magnet for the market, potentially triggering a sell-off if the price falls below that level. This is ofen referred to as a “put wall.”

Short liquidations, as mentioned, occur when traders who have borrowed and sold an asset (going “short”) are forced to buy it back to cover their positions, exacerbating upward price movements. They are a common feature of leveraged trading and can contribute to significant volatility.

Frequently Asked Questions about Bitcoin Price Action

• What is a “put wall” in Bitcoin trading? A put wall refers to a concentration of put option contracts at a specific price level, which can act as a significant support level but also potentially trigger a sell-off if breached.
• What causes short liquidations in Bitcoin? Short liquidations occur when the price of Bitcoin rises, forcing traders who had bet against it to buy back their positions to limit their losses.
• How do moving averages influence Bitcoin’s price? Moving averages are used to identify trends and potential support and resistance levels. Crossing above a moving average is often seen as a bullish signal.
• What is put-skew and what does it indicate? Put-skew measures the relative cost of out-of-the-money puts versus calls, indicating market sentiment – a higher skew suggests more bearishness.
• What is the role of the FOMC in Bitcoin’s price movement? The Federal Open Market Committee’s decisions on interest rates and monetary policy can influence investor risk appetite and thus impact Bitcoin’s price.

What are your expectations for Bitcoin’s performance leading into the FOMC meeting? Share your thoughts in the comments below!

how might the cascading effect of short liquidations amplify the impact of a hawkish or dovish stance from the FOMC?

The Pre-FOMC Rally: A Deep Dive

Bitcoin (BTC) is experiencing a notable price surge as the Federal Open Market Committee (FOMC) meeting approaches. This isn’t simply anticipation of monetary policy; a notable driver is the cascading effect of short liquidations within the cryptocurrency market. The current Bitcoin price is reacting strongly to this dynamic, creating a feedback loop of upward momentum. Understanding the interplay between the FOMC, crypto market sentiment, and liquidation events is crucial for investors navigating this volatile period.

Understanding Short Liquidations & Their Impact

short liquidations occur when traders who have bet against Bitcoin (through short positions) are forced to buy back the asset to cover their losses as the price rises. This forced buying adds further upward pressure, exacerbating the initial price increase.

Hear’s a breakdown of how it works:

* Short Position: A trader believes Bitcoin’s price will fall and borrows BTC to sell it, hoping to buy it back later at a lower price.

* Price Increase: If bitcoin’s price rises instead, the trader faces losses.

* Liquidation Level: Exchanges have a “liquidation level” – a price point where the trader’s losses become so significant that the exchange automatically sells their position to prevent further debt.

* Cascade Effect: These forced sales trigger further price increases, liquidating more short positions, and creating a cascading effect.

The current rally is heavily influenced by this cascade, with over $XXX million in short positions liquidated in the past 24 hours (as of September 17, 2025 – replace XXX with actual data). Platforms like Coinglass are tracking these liquidations in real-time, providing valuable insights into market pressure.

FOMC meeting & Bitcoin: What to Expect

The FOMC meeting is a key event for all financial markets, and Bitcoin trading is no exception. The primary focus is on potential changes to interest rates and the Federal Reserve’s outlook on inflation.

Here’s how different scenarios could impact Bitcoin:

* Hawkish Stance (Rate Hike/continued tightening): Traditionally, a hawkish stance – indicating higher interest rates – is negative for risk assets like Bitcoin. Higher rates make borrowing more expensive, potentially slowing economic growth and reducing investment in speculative assets.

* Dovish Stance (Rate Cut/Easing): A dovish stance – suggesting lower interest rates – is generally positive for Bitcoin.Lower rates encourage borrowing and investment, potentially driving capital into riskier assets.

* Neutral Stance: Uncertainty following a neutral statement can led to increased volatility in the cryptocurrency market.

Currently,market expectations lean towards a pause in rate hikes,but any surprises could trigger significant price swings. The Bitcoin reaction to the FOMC proclamation will likely be swift and substantial.

The Role of Institutional Investment

Increased institutional interest in Bitcoin is adding another layer to the pre-FOMC rally.The potential approval of spot Bitcoin ETFs continues to fuel optimism. Institutional investors often view Bitcoin as a hedge against inflation and a store of value, particularly during times of economic uncertainty.

* BlackRock ETF: The request by BlackRock, a major asset manager, has been a significant catalyst for positive sentiment.

* Fidelity ETF: Similar applications from Fidelity and other institutions are further validating Bitcoin’s legitimacy as an investment asset.

* Increased Adoption: Growing institutional adoption suggests a long-term bullish outlook for Bitcoin, independent of short-term market fluctuations.

Technical Analysis: Key Levels to Watch

From a technical perspective,Bitcoin is currently facing resistance at the $XXX level (replace XXX with current resistance level). A break above this level could signal further upside potential, potentially targeting the $YYY level (replace YYY with next resistance level).

* Support Levels: Key support levels to watch are at $ZZZ and $AAA (replace ZZZ and AAA with current support levels).

* Moving Averages: The 50-day and 200-day moving averages are currently trending upwards, indicating bullish momentum.

* Relative strength Index (RSI): The RSI is approaching overbought territory, suggesting a potential pullback.

Traders are closely monitoring these technical indicators to identify potential entry and exit points. Bitcoin analysis relies heavily on these tools to predict future price movements.

Risk Management in a Volatile Market

The current market environment is characterized by high volatility. Effective risk management is paramount for all investors.

Here are some practical tips:

1. Diversification: Don’t put all your eggs in one basket. Diversify your portfolio across different asset classes.
2. stop-Loss Orders: Use stop-loss orders to limit potential losses.
3. Position Sizing: Adjust your position size based on your risk tolerance.
4. Stay Informed: Keep up-to-date with the latest market news and analysis.
5. Avoid Leverage: While leverage can amplify gains, it also magnifies losses. Exercise caution when using leverage.

Real-World Example: The June 2