Bitcoin traders are rebuilding upside exposure ahead of the Federal Reserve’s September 15 to 16 meeting, but positioning is becoming more selective than a broad return to leverage.
Options traders are paying more for calls and US spot Bitcoin ETF inflows have turned negative, while spot exchange buying and perpetual futures positioning remain less convincing.
August CPI rose 0.4% month over month and 3.4% year over year, while core CPI increased 0.3% in the period and 2.4% from a year earlier, according to data from the Bureau of Labor Statistics.
This, in turn, pushed the probability of a 25 basis point Fed hike as high as 83% before settling around 90%.
Options Are Pricing More Upside While Spot Flow Lags
The macro backdrop has reversed the softer policy expectations that followed Christopher Waller’s September 3 comments.
Waller had said he could support holding rates if inflation continued to improve, helping fuel a sharp Bitcoin rally and a wave of short liquidations. Reacting to the news, Bitcoin moved above $80,000 while more than $415 million in Bitcoin shorts were liquidated at the time.
The derivatives data now shows traders expressing more upside interest even as the situation has turned more hawkish.
According to Glassnode, Bitcoin’s 25 delta skew moved from 0.79% to minus 2.05%, indicating calls had become relatively more expensive than puts.
On the other hand, spot cumulative volume delta improved from negative $84.9 million to negative $29.6 million, but remained below zero, while perpetual futures CVD also stayed negative. In addition, futures open interest remained elevated at around $37 billion, leaving traders anticipating a larger move without aggressive spot buying confirming the upside.
ETF Demand Reverses As Leverage Becomes More Selective
US spot Bitcoin ETFs experienced 986.9 million in net inflows in the week ending September 5, according to SoSoValue data, bringing their three-week inflow total to $3.8 billion.
That momentum reversed last week, however, with the investment vehicles recording about $462.6 million in net outflows from September 8 to 11, ending the three-week run of inflows.
Furthermore, the selling accelerated through the week, with $120.2 million leaving the funds on September 9 and another $282.7 million the next day.
Meanwhile, Bitcoin’s September 25 expiry carries a lot more open interest than the September 18 expiry, leaving a large concentration of options exposure just after the Fed decision. Traders are now paying for bullish exposure into the event even as ETF investors have started reducing spot exposure.
The setup leaves Bitcoin with more upside-oriented options positioning against weaker ETF flows, negative spot CVD, and subdued perpetual futures buying. Leverage has not returned across the board, but traders are still set for a larger move around the Fed decision.
The upcoming decision will now test whether that upside positioning can hold. Markets are heavily pricing a 25 basis point hike, making a hold the bigger dovish surprise, while another hike accompanied by a hawkish signal could put pressure on leveraged longs.
With spot demand still weak, options traders are leaning into upside without broad confirmation from the rest of the market.
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