Bitcoin's $112K Climb Masks a Bearish Battle Below the Surface

Bitcoin rose above $112,000 in early September, showing signs of a potential rebound amid cautious market sentiment. Despite the upward movement, derivatives data indicates ongoing bearish caution, with Bitcoin unable to secure a firm footing above the $110,000 support level seen the previous week. The 30-day options delta skew in the Deribit market stood at 9%, signaling a preference for put options, which are typically used to hedge against price declines. The put-to-call ratio also showed a jump in demand for put options, reinforcing the bearish outlook among traders.

The market's hesitance to commit to a bullish stance is attributed to several factors. The S&P 500's recent all-time highs and the performance of gold have not been mirrored by Bitcoin, which remains under pressure from macroeconomic conditions. Additionally, spot Bitcoin ETFs have recorded outflows of $383 million, compounding concerns over investor confidence. Corporate allocations to Ether (ETH) have also grown, with firms adding $200 million to ETH reserves in just one week, suggesting a shift in corporate asset preferences.

Bitcoin’s derivatives market also reflects a cautious stance. Perpetual futures funding rates, which typically range between 6% and 12%, are currently at a neutral 11%. This marks an improvement from the bearish 4% observed the previous weekend. The rise in funding rate neutrality may be a response to increased competition from altcoins, particularly after Nasdaq filed with the SEC to list tokenized equity securities and ETFs. However, the broader sentiment remains mixed, as Bitcoin’s inability to gain momentum above $112,000 continues to weigh on trader confidence.

Meanwhile, Strategy, the investment firm led by Michael Saylor, has continued its aggressive Bitcoin accumulation strategy. The company recently purchased 1,955 BTC for $217.4 million at an average price of $111,196, bringing its total holdings to 638,460 BTC. Despite being excluded from the S&P 500 rebalance in favor of Robinhood, the firm remains committed to its Bitcoin-focused treasury strategy. The purchase reinforces Strategy's position as the largest corporate holder of Bitcoin, with its average purchase price at $73,880—significantly below the current market value.

Altcoins also saw movement, with Solana (SOL) and Dogecoin (DOGE) among the top performers. SOL experienced a 6% rise, with bullish chart signals indicating potential leadership in the altcoin space. DOGE swung nearly 5.7% in a 24-hour period, showing signs of accumulation and potential institutional involvement. While still facing resistance at $0.244, DOGE's late-session rebound to $0.237 suggests growing speculative interest. The broader altcoin market appears to be rotating into smaller-cap assets, with technical indicators pointing to a possible shift in market leadership from Ethereum to altcoins like SOL.

The market's forward-looking expectations are closely tied to the Federal Reserve’s upcoming policy decision. The CME FedWatch tool shows a 73% probability that the Fed will cut interest rates to 3.50% or lower by March 2026, up from 41% one month prior. Traders are watching for any signals that could influence liquidity and risk appetite across global asset classes. The Fed’s decision on September 17 will be a key event, with volatility expected in the days leading up to the announcement.

If spot Bitcoin ETFs stabilize and institutional confidence returns, the market could see renewed upward momentum. However, given the current derivatives sentiment and macroeconomic conditions, a push above $120,000 remains uncertain. The coming weeks will likely determine whether Bitcoin can consolidate above $110,000 and gain enough traction to spark a broader bullish trend in the crypto market.