- Bitcoin’s price makes a modest recovery on Tuesday following a nearly 3% drop the day before.
- US spot ETF data continues to indicate weakness, with an outflow of $278.40 million recorded on Monday.
- Upcoming US CPI data on Wednesday and PPI data on Thursday may spark increased volatility for riskier assets like Bitcoin.
On Tuesday, Bitcoin (BTC) showed a slight recovery, trading above $80,000 after a nearly 3% decline the previous day. Institutional investor sentiment remains weak, as evidenced by a $278.40 million outflow in the US spot Exchange Traded Fund (ETF) data on Monday. The approaching US macroeconomic indicators, including CPI on Wednesday and PPI on Thursday, are expected to create more volatility for assets deemed risky, such as Bitcoin.
Bitcoin rebounds after dipping to $76,606
During the Asian trading session on Tuesday, Bitcoin’s price fell to a low of $76,606 but managed to recover, trading above $80,000 in early European trading, after experiencing a near 3% drop the previous day. This recent correction has resulted in significant liquidations across the cryptocurrency market, amounting to $955.71 million over the last 24 hours. The largest liquidation occurred on Binance for the BTCUSDT pair, totaling $5.26 million, with a cumulative $318.13 million liquidated in Bitcoin alone, according to data from Coinglass.
Liquidation Heatmap chart. Source: Coinglass
In a recent interview, an industry expert stated, “The cryptocurrency market continues to show a risk-on mentality, yet investor confidence remains tentative given recent developments.”
The expert elaborated that since volatility emerged on March 3, there has been a sustained trend of sell-offs despite the announcement regarding a Bitcoin reserve in the United States. Recent market data indicates significant liquidation losses over the last few days, predominantly impacting long traders as the sell-off accompanied a drop in open interest.
It was further noted that the same underlying issues that initiated the previous downturn in the cryptocurrency market are still influencing it. The ongoing trade tensions between the United States, China, Mexico, and Canada continue to dampen investor morale.
“The rising tariffs are likely to escalate inflationary pressures, suggesting a potential broader macroeconomic impact in the weeks ahead. The market has been affected by these trends, and any prospects for a short-term rebound will likely depend on unforeseen catalysts,” the expert remarked.
US macroeconomic data on the horizon could lead to increased volatility for BTC
A report from Bitfinex on Monday emphasizes the indefinite trajectory of current macroeconomic conditions. Data from the US job market, productivity, and manufacturing sector has been mixed, showcasing steady job growth, rising wages, and efficiency improvements that are countered by inflationary challenges, trade disruptions, and cautious corporate expansion.
Further analysis reveals that the job market in the US remains robust, with 151,000 jobs added in February; however, the unemployment rate increased to 4.1% due to reductions in government jobs. While wage growth is strong, rising labor costs and inflationary issues may complicate expectations for multiple Federal Reserve rate cuts this year.
An analyst reported, “Fears of an economic downturn in the US and its potential ramifications for the global economy triggered a sell-off in major stock indices at the beginning of the week.”
On Tuesday, the US economic calendar will include the NFIB Business Optimism Index for February and JOLTS Job Openings data for January. Investors are also advised to keep a watchful eye on political developments and stock market performance.
With the upcoming releases of the US macro data—Consumer Price Index (CPI) on Wednesday and Producer Price Index (PPI) on Thursday—risk assets such as Bitcoin could face further volatility.
Weakening institutional demand for Bitcoin
As the week gets underway, Bitcoin’s appeal to institutional investors appears to be declining. Coinglass reports show an outflow of $278.40 million from Bitcoin spot ETFs on Monday, following a previous week’s cumulative outflow of $739.2 million. Should these outflows persist or escalate, it could lead to additional downward pressure on Bitcoin’s price.
Total Bitcoin Spot ETF net inflow chart. Source: Coinglass
Data from Lookonchain indicates that the defunct exchange Mt. Gox transferred an additional 11,833.6 BTC worth over $932 million on Tuesday, following a previous transfer of 12,000 BTC valued at more than $1 billion last week. In Tuesday’s transaction, 11,501.58 BTC (approximately $905.06 million) went to a new wallet, while 332 BTC (around $26.13 million) was moved to a warm wallet.
Traders should be wary, as large transfers of Bitcoin to wallets often indicate intentions to sell or distribute, which can generate bearish sentiment as market participants brace for increased supply.
Despite the cautious outlook, there are positive indicators for Bitcoin, such as the Spanish bank BBVA receiving approval to offer trading services for Bitcoin and Ethereum, as well as MicroStrategy’s impressive $21 billion capital raise through its 8.00% Series A Perpetual Strike Preferred Stock issuance.
Bitcoin Price Outlook: RSI rebounds from oversold levels
Bitcoin’s price fell below its 200-day Exponential Moving Average (EMA) at $85,754 on Sunday and dropped 8.80% by Monday. At the time of writing on Tuesday, it had touched a low of $76,606 during Asian trading but later recovered, trading above $80,000 during early European trading.
If Bitcoin continues to trend downward and closes beneath $78,258 (the low from February 28), it could extend its decline, re-testing support at $73,072.
The Relative Strength Index (RSI) on the daily chart shows a reading of 36, trending upwards after bouncing off 30 on Monday, indicating diminishing bearish pressure and a possibility of exiting oversold conditions. However, the RSI must surpass the neutral level of 50 to sustain any rally in recovery.
BTC/USDT daily chart
Should positive momentum build, Bitcoin could see its recovery extend all the way to $85,000.
Frequently Asked Questions: Bitcoin, Altcoins, and Stablecoins
Bitcoin is the top cryptocurrency by market capitalization, functioning as a digital currency intended for transactional purposes. It operates without the influence of any single individual, group, or entity, thereby removing the need for intermediaries in financial transactions.
Altcoins refer to any cryptocurrency other than Bitcoin, although some classify Ethereum as a non-altcoin due to the forking dynamics between the two. If this holds true, Litecoin, forked from Bitcoin’s code, is considered the first altcoin, perceived as an “enhanced” version of Bitcoin.
Stablecoins are cryptocurrencies designed to maintain a stable value, supported by reserves of the asset they correspond to. By pegging their value to a commodity or financial instrument, such as the US Dollar (USD), and regulating supply through algorithms or demand, stablecoins aim to facilitate trading and investing in cryptocurrencies while providing a stable store of value amid overall crypto volatility.
Bitcoin dominance represents the ratio of Bitcoin’s market capitalization to the total market capitalization of all cryptocurrencies combined. It offers insights into Bitcoin’s attraction among investors. High BTC dominance often coincides with a bull market when investors prefer more stable and established cryptocurrencies like Bitcoin. Conversely, a decline in BTC dominance indicates that investors are reallocating their capital and profits to altcoins in search of higher returns, often resulting in a surge of altcoin rallies.