Over the past three days, Bitcoin has shown a cumulative capitalization growth of 25%. At the moment, the asset reached a new local price high of $26k, and trading volumes exceeded the standard level of $35 billion.
The high level of volatility remains in the market for the second week in a row, and therefore we can expect further price movements of the asset. The downward trend proved to be an effective way to gather the necessary liquidity and resume the upward movement.
The movements of market players coincided with important news, which served as an additional catalyst for the movement of the price of Bitcoin. The news about USDC and SVB significantly influenced the fall of BTC, and the recovery movement and the update of the price high would have been much more modest without inflation data.
Fundamental Factors
The key event of the current week was supposed to be the inflation report, which would finally shape investors' expectations regarding the Fed's policy in March. However, on Monday, it became clear that the situation was improving, and BTC resumed its upward movement.
The inflation report allowed for the upward trend to develop significantly. Inflation was down to 6% in February, in line with the expectations and forecasts of investors and analysts. As a result, Bitcoin gained additional fuel and was momentarily as high as $26.5k.
Also, FedWatch reports that the futures market is laying down an 80% chance of a 25 basis point rate hike in March. Recall that after Powell's statements and the renewal of quantitative easing policy, investors were expecting a 50 bps rate hike in March.
However, positive inflation data makes the task much easier for the Fed both in the short and long term. Citigroup experts believe that the regulator will have to end the QT program ahead of schedule in order to keep bank reserves at a sufficient level.
The Fed's concern is that a critical moment has been reached when the need to lower inflation has run into problems in the banking system. However, the resumption of the deflationary movement should make the decision easier, and therefore it is likely that the Fed may soon stop raising rates or curtail QT.
BTC/USD Analysis
The reaction of the Bitcoin market to the current situation can be seen on the charts of the cryptocurrency. The asset received additional investment thanks to situational attention as a savings vehicle, as well as shifts in Fed policy.
The cryptocurrency has fully recouped its fall and has recovered to the $26.5k level. The asset failed to consolidate above this level due to strong response from sellers, which returned BTC to the $24.8k level. Despite the strong response from sellers, there are all reasons to believe that the asset will continue its upward movement.
At the same time, the market expects a local pause associated with a probable profit fixation. More than $500 million worth of BTC has been transferred to exchanges in recent days, according to Glassnode and Santiment. Considering that the price of the asset has grown significantly, we can assume that BTC volumes are being transferred to exchanges for sale.
Technical indicators also signal local success for sellers who managed to bring down the bullish fuse. The main technical metrics are moving sideways, indicating the need for consolidation.
A similar situation is observed on the 4H timeframe, which again confirms the full implementation of yesterday's bullish trend. At the same time, the situation may change dramatically with the opening of the American markets, where abnormal interest in precious metals and BTC continues against the backdrop of anxiety in the banking system.
In any case, Bitcoin is in a bullish position, and soon we will see a retest of $25k with a claim for a final consolidation above this level.
If BTC consolidates above the $24.9k–$25.3k area, the asset will continue its upward movement to the $26k–$26.5k levels. However, given that the cryptocurrency has been moving in a wide range of $20k–$25.3k for more than half a year, a quick breakout of the upper limit will not happen.
