Bitcoin's bounce above $85,000 waits on ETF buyers to follow a pre-payrolls squeeze

The 44-point fall in Glassnode's October hike estimate cut the probability by two-thirds from its Sept. 28 level ^[1]. Bitcoin went the other way once the jobs data was out. By 15:40 UTC on Oct. 2 it was more than 1% below its immediate pre-release level, according to Glassnode ^[5]. Sunday's 0.83% gain over 24 hours still left it about $724, or 0.8%, short of the $86,000 area it reached before payrolls ^[1][2][2].

The buying that lifted the price had already happened. Positions grew about 2.5% in coin terms over the 24 hours before payrolls, so the $2.1 billion rise in open interest came from new contracts as well as higher prices ^[6]. The $1.5 billion that came out after the release is about 71% of that dollar build ^[3]. Roughly $600 million of the pre-release build was still open on Glassnode's figures, plus whatever was added in the hour after the report ^[4][7]. Dollar open interest moves with valuation, and the study leaves the cause of the reversal unresolved ^[8].

Once short sellers have closed out, holding a higher price takes other buyers willing to absorb continuing offers ^[15]. Thursday's $102 million of net ETF inflows is about twice the ten-minute liquidation burst, although one is new fund money and the other is forced closing of futures shorts ^[5]. CryptoSlate wrote that the inflow gives the recovery "more substance than a short-covering explanation alone" ^[11]. It was also a session before the report ^[9].

Repeated inflows across this week's sessions would show investors still committing money after the release ^[17]. A return to redemptions would make Thursday one good day in a recovery struggling for fund support ^[17]. Glassnode put combined spot-exchange and US spot-ETF volume at about $6.4 billion a day on Sept. 30, near the bottom of its range since the ETFs launched ^[12]. Flat flows with volume still near that level would point to an advance dominated by futures positions closing ^[18].

I think the lower hike odds have not yet become support for the price. The forced buying came before the data, and the price fell after it with the policy news in hand ^[4][5]. The counter-case is Thursday's inflow: fund buyers had come back before the report, following Wednesday's redemptions ^[9]. This view is wrong if the post-payroll sessions print net inflows and Bitcoin clears $86,000 again ^[17][2].

The relief on offer is a lower chance of another hike. The Fed raised its target range a quarter point to 3.75%-4% on Sept. 16, and falling October odds leave that increase in place; a cut would take a separate decision ^[13].