BTC Stuck at $117,000: Can the Fed Decision Ignite New Highs?

Gold hit a record high, stocks blew past profit warnings, and the dollar weakened. Risk assets appeared poised to continue their climb. However, Bitcoin, typically most active during periods of loose liquidity, has fallen to just below $117,000. Despite ample market momentum—ETFs have absorbed billions of dollars, stablecoins are piling up on exchanges, and long-term holders are gradually reducing supply—what's missing? The answer becomes clear when we delve deeper into Week 37 of 2025 (September 8-14). Last week, Bitcoin filled the gap in the Chicago Mercantile Exchange (CME) August futures at $117,000 before stalling its advance between accumulation and price discovery following two weeks of significant macroeconomic developments. The market rallied, recording its first two consecutive weeks of gains in over two months. However, it struggled to break through resistance at $117,000 as it awaited a key event: the Federal Reserve's decision on September 17th. This situation occurred amidst a backdrop of economic uncertainty. First, the weaker-than-expected US jobs data released two weeks ago. Now, inflation data is showing diverging signals. The Producer Price Index (PPI) cooled, turning negative on a monthly basis, suggesting that cost pressures in the supply chain are easing. However, the Consumer Price Index (CPI) showed divergence. The CPI rose 0.4% month-over-month in August, reaching an annualized rate of 2.9%, the highest since February. This remains well above the Fed's 2% target, indicating that inflation is far from being defeated. The PPI data suggests that inflationary pressures will subside in the future, but the CPI data suggests that households are still under pressure. Combined with a weak labor market, the case for a rate cut remains strong. The Chicago Mercantile Exchange's (CME) FedWatch indicator shows the market has priced in over a 95% probability of a rate cut. Meanwhile, other assets are also in the spotlight. Gold prices surged to a record high above $3,640 per ounce. In the stock market, both the S&P 500 and Nasdaq hit new all-time highs ahead of the upcoming Fed meeting. Bitcoin is attempting to follow the same trajectory. Bitcoin rallied from a low near $108,000 in late August to over $116,000 last week. However, unlike gold or stocks, Bitcoin failed to break through that barrier. The gap has been filled, and upward momentum is building, but resistance at $117,000 remains stubborn. Bitcoin remained above $110,000 all week, posting a weekly gain of 3.81% as of Sunday evening. Spot Bitcoin ETFs attracted over $2.3 billion in just five days, their strongest week since July and the fifth-best week of 2025. Institutional investors are bolstering buying, building positions with new capital. However, derivatives markets haven't shown the same confidence. Bitcoin futures open interest has grown slightly, but speculative energy has shifted toward Ethereum and other altcoins. Bitcoin's dominance fell 0.7 percentage points, reflecting this shift. The Crypto Fear & Greed Index rose 9 points, entering neutral territory and moving away from the fear zone, indicating strengthening investor sentiment. On-chain data is consistent with this, suggesting that liquidity is awaiting market conviction. The Spent Output Profit Rate (SOPR) shows that long-term holders continue to take advantage of the market, while short-term holders are returning to profit rather than selling at losses. This suggests healthy market liquidity, maintaining supply flow, and lacking signs of pressure. The SOPR ratio for long-term holders remains high, indicating selling pressure is primarily coming from experienced wallets rather than nervous new entrants. This week, the market capitalization to realized value (MVRV) ratio rose from 2.09 to 2.17, indicating Bitcoin is in mid-cycle territory. Historically, MVRV levels between 3.5 and 4 typically signal an overheated market. At an MVRV of 2.2, the market is neither cheap nor overextended. Valuations are stable, not frothy. The stablecoin supply ratio (the ratio of total cryptocurrency market capitalization to the total market capitalization of all stablecoins) has fallen to a four-month low. This suggests that idle stablecoin liquidity on exchanges has increased relative to Bitcoin balances. The short-term relative strength index (RSI) has also fallen to around 50, indicating neutral momentum and upside potential. All of this data supports the general view of ample liquidity, but the market still lacks confidence. What's next? Interest rate cuts aren't always a good thing for Bitcoin. In March 2020, when the Federal Reserve slashed interest rates in response to the pandemic, Bitcoin initially crashed along with risk assets, before rebounding sharply following an influx of liquidity. A similar pattern emerged in late 2024: the initial rate cut triggered market volatility and profit-taking, followed by an easing cycle that set the stage for another rally. Back then, on-chain indicators like MVRV and the Whale Ratio demonstrated short-term volatility, followed by a long-term rally. If history repeats itself, this week's initial cut is likely to bring volatility rather than a straight-line advance, even if the overall outlook remains positive. If Bitcoin reclaims and holds $117,000, it could quickly pave the way to new highs. However, if the Fed delays rate cuts due to recent inflation data, the market could fall back to $113,000 or lower. Order books indicate ample liquidity at these levels, with traders poised to capture orders. Institutions are clearly favoring Bitcoin ETFs as investment vehicles, while speculative traders are shifting funds to Ethereum and Solana. If Bitcoin breaks out higher after the Fed's decision, we expect this momentum to continue. Ethereum, already attracting significant leverage, could outperform Bitcoin. However, if Bitcoin stagnates, altcoins could be the first dominoes to fall as speculative capital reverses course. Liquidity is accumulating as ETFs absorb supply, stablecoin balances swell, and long-term holders gradually sell off. However, the market lacks confidence and remains awaiting a catalyst. If Powell signals the start of an easing cycle without any caveats, Bitcoin is likely to rally back to $117,000 and enter a price discovery phase above that level. If he strikes a cautious tone, warning of persistent inflation or external risks, the market could continue to fluctuate within its current range, perhaps until the next data release in October. For investors, on-chain indicators suggest a healthy phase, but caution is warranted. Institutional and corporate funds are pouring into ETFs. The risk lies more in timing than direction. The coming week will reveal whether the wait for confidence is over. All eyes are on Powell.