Bitcoin Recovers After CPI Boost, But Bears Still in Control
BTC/USD Prints New Low. Bulls Are Nowhere to Be Seen
Bitcoin is starting to show signs of recovery although the broader picture still favours the bears. Wednesday, the U.S. Consumer Price Index posted better-than-expected numbers, showing that inflation only advanced 0.2% as opposed to the anticipated 0.3% and the previous 0.5%. The yearly numbers came in at 2.8%, which is still above the Fed’s 2.0% target but better than the last reading of 3.0%. This boosted the crypto market and brought Bitcoin higher for the close of Wednesday’s session.
Earlier in the week, Bitcoin and most other major cryptos dropped, mostly due to disappointment coming from President Trump’s Crypto Summit held at the White House. Although this was a historic event, it was interpreted as mostly bearish due to the lack of a clear plan to buy Bitcoin for the Strategic Bitcoin Reserve.
The executive order signed by the President before the summit did not include a buy plan and most likely, people were waiting for such a plan or at least hints about it during the Crypto Summit. When nothing of sorts transpired, retail traders as well as institutional investors decided it was time to dump. The CPI was the first “good” news since the Summit and the markets reacted accordingly.
Full-On Distribution Phase?
Despite the recent green candles on a Daily chart, on-chain analysis firm Glassnode mentioned in its weekly newsletter that Bitcoin is experiencing a prolonged phase of distribution. In other words, people are selling Bitcoin and this is a normal phase as an asset goes through the buy/sell (accumulation/distribution) cycles.
Also according to Glassnode, the selling is not done by a particular group of investors (whales, institutional, etc.), so basically everyone is selling. Many investors are selling at a loss, meaning they are selling below their initial buy point and this almost looks like panic selling, cutting their losses short, and thinking that the price is going to sink even lower.
Another piece of information coming from Glassnode is that during the pullbacks that followed the December peak and until February, investors were buying, which is not the case now. In other words, then people were capitalizing on the dips, being confident the trend would continue, while now they are not adding any new coins to their wallets.
Chart Analysis – BTC/USD
Bitcoin is currently changing hands at $82,000 after recovering from a new low of $76,600. After the previous low ($78,200), reached on February 28, the bulls stepped in swiftly and bought the dip, bringing the price back up above $95K in just a few days. This time, the candles are small and the volume is decreasing, which shows a lack of buying pressure.
As long as Bitcoin is trading below the 50-day EMA and below the bearish trend line, the bias is bearish, with limited upside potential. The nearest support is the low at $76,600, followed by $73,500. If the pair is to make significant advances, we will first need to see a break of the mentioned trend line.
