Bitcoin (BTC) received a substantial boost this week as the United States inflation rate for February was in line with market expectations. On March 14, the BTC/USD pair rose to its 2023 peak at $26,550 following the news.
However, while current macroeconomic conditions may favor risk-averse buyers, certain chain and market indicators point to a potential correction in the near term.
BTC flows back to the exchange as the price rises
On March 13, Glassnode exchange flow data recorded the most significant inflow to the exchange since May 2022. This means more supply on the exchange and higher selling pressure.
The day the coin was destroyed Indicator, which measures the time-weighted transfer of Bitcoin, also showed a small spike, indicating that the old hand is moving the coin. These indicators can signal profit orders by long-term holders, which can lead to corrections.
Bitcoin funding rate, RSI jumps
In addition, the funding rate for Bitcoin perpetual swaps was also raised by the latest Consumer Price Index print. In other words, more traders are betting on the rise with leveraged positions, increasing the risk of a correction.
The sharp price movement has also recorded a significant spike in the Relative Strength Index (RSI), a technical momentum indicator, with a reading of up to 82. This means that BTC/USD is generally considered “overbought” in the short term.
BTC vs. USD is painting a bearish pattern
The price of BTC is currently forming a widening wedge pattern, which represents a higher level of volatility. Both buyers and sellers push prices above support and resistance levels, with a reversal imminent.
Buyers failed to break out of the breakout pattern on March 14, and now face resistance at the ceiling of $26,700. At the same time, there is a possibility that the price will correct back to the bottom of the pattern, around $19,500, in the coming days.
On the contrary, if the Bitcoin price breaks above the upper trendline, the bulls will likely pile up to push the price towards $30,000. There are acceptable signs for bulls that this could happen – namely in the BTC options and futures market.
As reported by Cointelegraph, there is still room to open, as the indicator has not reached its previous peak level.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should do their own research when making decisions.