On March 12, Bitcoin (BTC) experienced a typical sell-off reminiscent of Wall Street dynamics as bearish sentiment overshadowed a positive report on US inflation.
BTC/USD 1-hour chart.
BTC price pulls back at significant bull market trendline
According to data from a market analytics platform, BTC/USD hit a three-day high of $84,437 on Bitstamp before experiencing a reversal.
The January reading of the US Consumer Price Index (CPI) came in lower than expected at 2.8%, as per information from the Bureau of Labor Statistics (BLS), suggesting a slowdown in inflation.
“Core CPI inflation drops to 3.1%, below the anticipated 3.2%,” noted a trading resource in their response on X.
“This marks the first decrease in both Headline and Core CPI since July 2024. Inflation appears to be cooling in the US.”
US CPI 12-month % change.
However, the positive sentiment was short-lived as Wall Street opened with familiar selling pressure across the cryptocurrency markets.
Bitcoin subsequently dropped to $82,400 before consolidating, at the time of this report, hovering around the daily open.
In recent market analysis, a well-known trader and analyst expressed cautious optimism regarding Bitcoin’s performance.
“The latest Bitcoin Daily Close indicates that the price has begun to exit a recently filled CME Gap, converting it into support,” the analyst informed followers on X, referring to the gap between closing and opening prices on CME Group’s Bitcoin futures, an influential factor in short-term pricing.
“Any pullbacks into the top of the CME Gap would signal a post-breakout retest attempt to confirm the exit from this CME Gap. Early signs of that retest are already visible.”
CME Group Bitcoin futures 1-day chart.
Another trader focused on the 200-day simple and exponential moving averages (SMA/EMA)— key support trendlines for the bull market currently positioned at $83,550 and $85,650, respectively.
“The bulls have work to accomplish here to reclaim levels above the Daily 200MA/EMA. Last year, similar conditions lasted for over three months,” part of their analysis on X indicated.
BTC/USD 1-day chart with 200SMA, 200EMA.
Bitcoin ETF outflows indicate “growing caution”
Expanding on broader market conditions, a trading firm suggested that the recent CPI data could influence the Federal Reserve’s interest rate decisions next week.
Related: Bitcoin whales indicate a potential $80K ‘market rebound’ as Binance inflows slow.
“With lingering inflation worries and increasing macro risks, the CPI report will be a crucial factor in determining whether the disinflationary trend continues or if volatility escalates in the short term,” they stated in a recent market update.
The firm identified $82,000 as solid support, while trends among institutional investors suggested a note of caution.
“In the meantime, Bitcoin ETFs experienced a notable net outflow of $153.87 million, primarily from Grayscale’s Bitcoin Trust (GBTC), which recently sold 641 BTC valued at $56.45 million,” they concluded, alluding to netflows from US spot Bitcoin exchange-traded funds (ETFs).
“This reduced GBTC’s total holdings to 195,746 BTC, worth about $17.24 billion. This reflects a growing sense of caution among institutional investors.”
US spot Bitcoin ETF netflows (screenshot).
This article does not provide investment advice or recommendations. All investments and trading activities carry risk, and readers should conduct their own research when making decisions.