Bitcoin price prediction: BTC fragile recovery continues as derivatives flows drive rally

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Sholanke Dele

05.09.2025

Bitcoin price prediction: BTC fragile recovery continues as derivatives flows drive rally — Bitcoin recovery holds but risks linger

Bitcoin [BTC/USD] is showing resilience after a sharp test of technical levels earlier in the week. The market had rallied through the first three sessions of September, only to be capped on Thursday when the 20-day EMA acted as resistance. That rejection triggered a pullback that forced Bitcoin to close on a bearish note.

• Bitcoin recovery extends above the 20-day EMA after rejection flipped into support.

• Bitcoin open interest climbs while spot volume decline highlights fragile rally.

• Bitcoin RSI approaches 50 level as momentum improves toward bullish shift.

However, price action within that same session also revealed early signs of strength. After dipping to a day low of $109,350, buyers managed to recover ground and lift the close to $110,700, placing Bitcoin price directly on its 50 day EMA. This rebound signalled that support was still present and laid the foundation for today’s continuation.

Bitcoin price dynamic (June - Sept 2025). Source: Tradingview

Friday’s session has extended this recovery, carrying Bitcoin beyond the earlier weekly peak to an eight-day high of $112,900 in the European trading hours. The move represents a 2% gain from the prior day’s close and stretches the week-to-date advance to about 4.3%. Importantly, price is now holding above the 20-day EMA once again, turning what had been resistance into short-term support. The next immediate test lies near $113,300 at the 50-day EMA, a barrier that could open the path to reclaiming a fourteen day high above $113,700 if broken.

Bitcoin open interest rises as declining spot volume questions rally conviction

Beneath the surface, however, the structure of the rally raises questions. On the four-hour chart, spot volume has been declining since the recovery began. At the same time, Bitcoin on-chain data shows open interest rising as price trends higher. This suggests that the current leg up is fuelled primarily by derivatives flows, with traders building leveraged positions rather than strong participation from spot buyers. Such conditions can support quick moves higher but often lack the depth of conviction needed for sustained advances. If momentum falters, leveraged longs could face rapid liquidations, exposing the market to swift downside.

Technically, momentum has improved from a weak footing. The daily RSI has climbed out of bearish territory and is now testing the neutral 50 mark. A break above this level would provide confirmation of a shift towards bullish momentum. Should that occur alongside a successful breach of the 50-day EMA, the probability of Bitcoin extending gains into the weekend will increase. For now, the market holds a fragile balance between technical recovery and the risks inherent in leverage-driven rallies, leaving traders to weigh near-term optimism against the possibility of abrupt reversals.

Bitcoin options expiry worth $11.47B contrasts optimism with spot weakness near $110,000. Price fell below $112,000 support as the expiry event heightens downside pressure.

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