Bitcoin News Today: Bitcoin's Fed-Driven Rally Hides a Looming Derivatives Dilemma

Bitcoin’s price surged past $116,000 following remarks by Federal Reserve Chair Jerome Powell at the Jackson Hole symposium, where he indicated the possibility of a September rate cut. This shift in policy expectations fueled a broader rally in the crypto market, with Bitcoin gaining over 3% in a single day and pushing its market cap above $2.32 trillion. Daily trading volume for BTC-USD rose by 15.3% to $69.13 billion, outpacing traditional equities like the Dow Jones Industrial Average, which climbed nearly 903 points during the same period [2].

The Federal Reserve’s dovish pivot was quickly priced into the market, with traders assigning a 91% probability to a 25 basis point rate cut in September, up from 70% earlier in the week. U.S. Treasury yields dropped, with the 10-year yield falling to 4.26% and the 2-year yield to 3.70%, reducing their relative appeal compared to digital assets. Bitcoin’s strong correlation with Fed policy underscores its role as a liquidity hedge in a market increasingly sensitive to central bank actions [2].

On-chain activity reinforced Bitcoin’s resilience, with whale addresses accumulating over 16,000 BTC during the recent pullback—worth nearly $1.9 billion. This accumulation contrasts with retail traders who liquidated positions during the dip, shifting supply from weaker to stronger hands. A dense cost basis between $113,000 and $120,000 emerged as a key support and accumulation zone, historically associated with bottoming phases [2].

However, derivatives markets show a more cautious outlook. On August 22, 34,000 BTC options with a notional value of $3.82 billion expired, yielding a put/call ratio of 1.3 and a “max pain” price of $118,000. The 180-day put/call imbalance has dropped to –0.42, the lowest since mid-2023, indicating increased demand for protective hedges. Institutional participants, as noted by Options Insights, are shifting from aggressive bullish positioning to defensive strategies, suggesting heightened uncertainty around Bitcoin’s near-term direction [2].

Technical analysis presents a mixed picture. Bullish indicators point to a potential breakout with Fibonacci projections suggesting a possible rally to $161,383 if momentum resumes. Conversely, bearish patterns, such as an ascending wedge, raise concerns about a possible breakdown. If Bitcoin fails to hold above $111,000, the market could face a renewed test of the $100,000 psychological level. Additional macroeconomic risks, including U.S.-China trade tensions and European growth concerns, remain in play [2].

The recent market volatility also highlighted the fragility of leveraged positions. Over $500 million in liquidations were reported on Monday as Bitcoin dropped to $115,000 and Ethereum neared $4,200. Ethereum, in particular, faces a critical support level at $4,170, where over 56,000 ETH long positions—worth $236 million—are at risk. If the price breaks below this threshold, it could trigger a cascade of further liquidations, potentially reaching $5 billion in value [3].

Source: [1] When is the Best Time to Check the BTC Heatmap? (https://www.stickneyelevator.com/markets/stocks.php?article=worldnewswire-2025-8-20-when-is-the-best-time-to-check-the-btc-heatmap) [2] Bitcoin Price Forecast $116K - BTC-USD Outlook as Powell ... (https://www.tradingnews.com/news/bitcoin-price-forecast-btc-usd-rebounds-above-116k-usd-with-fed-in-focus) [3] $500M Liquidations Rock Ethereum and Bitcoin (https://www.mitrade.com/au/insights/news/live-news/article-3-1049267-20250819)