Bitcoin stalls after Fed-rate relief and leverage flush

What moved prices this week

A quick risk-on burst followed cooler-than-expected inflation and falling short-dated Treasury yields, as traders leaned toward the Fed skipping a hike next month. Equities popped early but ended the session lower. Bitcoin joined the initial bounce, reaching $85,594 before giving it back and settling near flat on Wednesday.

The turbulence comes as Bitcoin logs its strongest quarter since late 2024, when President Donald Trump won re-election, notching a 43% rise in Q3. Whether it pushes to another yearly high or pulls back is still an open question, with many traders sitting tight in derivatives after several heavy liquidation waves in recent months.

What happened in derivatives markets

Recent fast swings have largely stemmed from leverage getting wiped out in perpetual futures, the biggest venue for crypto trading. In late August, a record clearing of bearish positions set off an unexpected rally as shorts scrambled to repurchase coins and cover.

In a Wednesday note, Tagus Capital wrote that most of the speculative leverage accumulated as prices surged toward $87,000 has been unwound, leaving perpetuals positioning close to neutral while the market consolidates. Following another wave of perp liquidations earlier this month, Bitcoin open interest is at its lowest since March and roughly 20% below August levels, with the token still about 35% above its August low of $62,000.