There was no rest for weary crypto traders on March 10, as the 7.9% CPI print became the headline of the day, putting pressure on global financial markets and erasing the previous day’s gains in Bitcoin (BTC), as the price dipped back below $40,000.
Data from Cointelegraph Markets Pro and TradingView shows that BTC selling kicked off in early trading hours on Thursday and intensified into midday, with price hitting a low of $38,562 before dip buyers broke back above $39,000 support.
Here’s what analysts have to say about the ongoing price action for BTC and what levels to keep an eye on for a breakout to the upside or a dip to the downside.
“Price compression precedes volatility”
Insight into the recent volatility for Bitcoin was offered by cryptocurrency trader and pseudonymous Twitter user ‘Rekt Capital’, who public the following chart noting that “BTC is still consolidating between the higher green support and the blue resistance of the 50 week EMA.”
According Rekt Capital, “Higher lows and lower highs are compressing price. Price compression precedes volatility.”
As for what it would take to bring back the bullish narrative, Rekt Capital pointed to the green and blue exponential moving average (EMA) lines that have proven to be strong points of resistance over the past two weeks.
Rekt Capital said,
“In order to rise within its macro range, BTC needs to recapture the two key bull market EMAs to confirm bullish momentum.”
BTC holders risk selling at a loss
The oscillating nature of BTC’s price action in recent weeks was disputed by research fund, Stack Funds, which noted in its current weekly report that “Bitcoin has thrashed in recent weeks, trading within the $35,000-$35,000 range. 45,000 with no strong directional drive intact.”
According to Stack Funds, this recent price action “has been mostly news driven” and analysts see no short-term relief as the conflict in Ukraine and persistently rising inflation continue to pose significant headwinds.
The evidence that traders have a low appetite for increasing exposure to current market conditions can be found by looking at Bitcoin’s Earnings Exit Ratio (SOPR)a metric indicating the aggregate realized profits and losses on a particular day.
Stack Funds noted that long-term BTC holder SOPR “trends towards its threshold value of 1.0,” an important level as it draws the line between selling at a profit or selling at a loss.
According to the report, long-term headline SOPR has been trending down since the Bitcoin price peaked in November 2021, and is currently trading “around the 1.5 handle.”
During the two instances shown in the chart above where SOPR trended and traded below the 1.0 threshold in mid-2018 and late 2019, “Bitcoin traded sideways and dipped lower both times.”
Stack Funds said,
“Unless we see some positive catalyst in the markets or a reversal in the SOPR indicator, we expect sideways trading and possibly a possible drop in price action, at least in the short term.”
But it’s not all doom and gloom when it comes to Bitcoin price from an on-chain analysis point of view. In the following graph published Per cryptanalyst and pseudonymous Twitter user ‘Plan C’, the analyst explains that “the number of Bitcoin accumulation addresses has gone parabolic in the last month.”
Plan C defined hoarding addresses as “addresses that have at least 2 incoming dust-free transfers and have NEVER spent BTC funds.”
They are not bullish below $46,000
As for the short-term outlook for Bitcoin, market analyst and Cointelegraph contributor Michaël van de Poppe he pointed that things don’t look bullish below $46,000 and believes “the chances of taking these lows are quite significant.”
These short-term bearish sentiments were recently echoed by David Lifchitz, managing partner and chief investment officer at ExoAlpha, who noted that the recent spike in BTC “came out of nowhere and lasted less than an hour without much follow-up.”
lifchitz said,
“BTC remains stuck in the $33,000-$45,000 range. With no follow-through in the next 48 hours and a possible break above $45,000 towards $50,000, BTC will likely continue to bounce off the range.”
The global cryptocurrency market capitalization now stands at $1.744 trillion and the dominance rate for Bitcoin is 42.6%.
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