After a highly anticipated policy start from the U.S. Federal Reserve, Bitcoin (BTC) has held firm above the critical $104,000 support level, trigger fresh optimism among investors and analysts. Despite a steady interest rate decision and a cautious economic outlook, on-chain data suggests Bitcoin demand remains strong—and some believe a bullish breakout could be near.

With signs of market deleveraging and reduced selling pressure, the stage might be set for the next leg up in BTC’s ongoing market cycle. Here’s what the data is telling us.

Bitcoin Defends $104K Support as Fed Stalls Rate Hikes

On Wednesday, the Federal Reserve chose to keep interest rates unchanged for the fourth consecutive time, maintaining its cautious stance amid economic uncertainty. While many traders were hoping for signs of future rate cuts, the Fed’s decision was largely in line with expectations.

Typically, stagnant or rising rates are seen as headwinds for risk-on assets like Bitcoin. However, BTC has defied the odds, showing surprising strength by maintaining support just above the $104,000 mark. According to a recent analysis by on-chain data platform CryptoQuant, this zone is now emerging as a major area of buying interest.

Strong Demand Zone Forms Around $104K

Analyst Amr Taha from CryptoQuant notes that Bitcoin is establishing a demand zone in the mid-$100,000 range. This zone has absorbed heavy selling pressure, allowing the price to repeatedly bounce from the same levels. The formation of these consistent “equal lows” just above $104K reflects bullish accumulation.

One key chart highlights the difference between price movement and open interest on Binance, one of the largest crypto exchanges. While BTC’s price has held steady, open interest—essentially the total number of unsettled futures contracts—has been steadily declining, forming a series of lower lows.

This pattern is a classic sign of market deleveraging, where speculative traders are flushed out and leverage is reduced. According to Taha, this is not a negative sign—in fact, it often lays the groundwork for a more sustainable rally.

Liquidation Levels Point to Clean-Up of Late Longs

Another telling indicator comes from the Binance Liquidation Delta chart. It shows that most recent liquidations have come from long positions—that is, traders betting on prices going up. These forced closures, known as long squeezes, typically happen when prices drop suddenly and trigger stop-losses or margin calls.

Interestingly, there have been very few short liquidations, meaning bearish traders haven’t yet been caught off guard. This dynamic points to a reset in market sentiment, where overly aggressive bulls have been pushed out, and the playing field has been leveled.

Why This Matters for Bitcoin’s Next Move

Market cycles in crypto often follow a familiar pattern: overleveraged positions build up, a correction or shakeout occurs, and then the market resets and begins its next climb. With open interest now fading and leveraged traders being cleared out, Bitcoin may be entering a healthier phase for growth.

Taha points out that historically, Bitcoin tends to rally after the Fed holds or pauses rate hikes, especially when there are signs of liquidation exhaustion and waning speculative activity.

“BTC has shown bullish tendencies following rate stabilization, especially when paired with signs of liquidation exhaustion,” he explained.

Other On-Chain Signals Also Flash Bullish

Beyond liquidation data and open interest trends, other on-chain indicators are also showing promise.

Crypto analyst CryptoGoos recently noted that short-term sellers appear to be losing momentum, another bullish sign. Additionally, the Puell Multiple, a popular market timing tool, indicates that Bitcoin still has room to grow, suggesting that the current pullback may be temporary.

At the same time, there’s an absence of retail euphoria, a common feature of market tops. This suggests that BTC might still be in the early or middle stages of its current rally, rather than nearing a blow-off top.

But There Are Still Risks to Watch

Despite these bullish indicators, the market isn’t without risks. One of the most notable red flags is a significant drop in BTC trading volumes across major exchanges. Volume is often seen as a confirmation tool for price trends—when it declines, it may indicate weakening momentum.

As of writing, Bitcoin is trading at $104,274, up a modest 0.3% over the past 24 hours. While the price remains above support, it hasn’t yet shown the explosive momentum that many bulls are hoping for.

Final Thoughts

Bitcoin holding the $104,000 support level despite macroeconomic headwinds is a positive signal for traders and investors alike. Combined with signs of strong demand, market deleveraging, and limited retail speculation, the foundation may be set for Bitcoin’s next major move.

However, traders should remain cautious. Until volumes pick up and BTC confirms a breakout above recent resistance levels, any upside move may remain limited in the short term.

Still, if history is any guide, this type of post-deleveraging stability—especially after a Fed pause—has often preceded some of Bitcoin’s strongest rallies. All eyes are now on whether BTC can capitalize on this setup.