Yesterday, the price of Bitcoin hit a nine-month high of $26,550, hours after the release of US inflation that was in line with market expectations. However, such bearish data, along with the formation of an important resistance level, increases the possibility of a price correction in the current trend.
According to Cointelegraph, while current macroeconomic conditions (declining US inflation) may be in favor of buyers of risky assets such as Bitcoin, a review of some such indicators indicates the possibility of price correction in the short term.
The re-entry of Bitcoin to the exchanges, at the same time as the price jump
The index of capital transfer in exchanges (Exchange Flow) on the analysis platform of China Glassnode on March 13 (March 22) recorded the largest amount of capital inflows to centralized trading platforms since May 2022 (May 1401). This event means the growth of Bitcoin supply in exchanges and increasing the possibility of selling pressure in the market.
A small jump in the “Coin Days Destroyed” index, which measures the weighted value of bitcoins moved, also indicates that older wallets are moving their bitcoins. The growth of this index probably indicates profit storage by long-term investors, which could lead to a price correction.
Also read: What is On Chain Analysis?
Bitcoin funding rates jump and RSI
In addition, the financing rate of Bitcoin Perpetual futures increased with the release of US inflation data. In other words, rising funding rates mean that more traders are betting on the upside with leveraged trading positions, which can increase the risk of a price correction.
The recent jump in Bitcoin price has also caused a significant growth in the Relative Strength Index (RSI), pushing this technical indicator above 82, which generally places the Bitcoin/USD pair in overbought territory for the short term.
The formation of a descending angle pattern
Currently, a large bearish corner pattern is forming on the 4-hour chart of Bitcoin price, depicting a high level of volatility. Both buyers and sellers try to push the price past support and resistance levels with a quick trend reversal.
Buyers failed to break out on March 14 and are now trying to break through the $26,700 resistance. At the same time, there is a possibility that the price will correct towards the bottom of the pattern, i.e. the $19,500 range, in the coming days.
Conversely, if the price of Bitcoin crosses the trend line of the ceiling of the pattern, buyers are likely to try to push the price to $30,000. Bitcoin options and futures market data show that there is a possibility of such an event.
Latest Passing over countries : Spain | Dominica | United Arab Emirates
RCO NEWS
