Bitcoin Rebounds on Thin Liquidity, Poised for Volatility Ahead of U.S. CPI

Bitcoin climbed from below $114,000 to near $121,000 last week, driven by positioning shifts in a thin-liquidity environment rather than broad spot buying. Spot trading volume fell 22% to $5.7 billion—close to its statistical low—while the Spot Cumulative Volume Delta flipped 94% toward buy pressure. Derivatives markets saw elevated activity: perpetual CVD rose 88%, funding rates remained high, and options open interest increased 6.7% to $42.4 billion, even as implied volatility dropped by almost a third. ETF flows provided modest relief, with U.S.-listed spot bitcoin ETF outflows halving to $311 million, though weekly trade volume fell 27.7% to $13.7 billion. On-chain metrics improved: active addresses rose 8.4% to 793,000 and fee volume climbed 10%. However, 94.1% of supply is now in profit, suggesting potential profit-taking pressure. Market observers warn that thin order books, bullish derivatives positioning, and optimism over a September Fed rate cut leave Bitcoin primed for sharp moves. Traders will monitor Tuesday’s U.S. CPI release for a catalyst that could sustain or stall the rebound.