Bitcoin (BTC) surged higher this week as US inflation in February was in line with market expectations. On March 14, the BTC/USD pair surged to its 2023 peak of $26,550 on the news.
However, while current macroeconomic conditions may favor risk-on buyers, certain on-chain and market indicators point to a possible correction in the short term.
When the price rises, BTC will flow back to exchanges
On March 13th, Glassnode’s exchange flow data recorded inflows to the most important exchanges since May 2022. This could mean more supply on exchanges and more selling pressure.
The Coin Breaking Days indicator, which measures Bitcoin’s time-weighted transfers, also shows small spikes, indicating that old hands are moving the coin. Indicators may indicate profit bookings by long-term holders, which may lead to corrections.
Bitcoin Funding Rate, RSI Soars
Moreover, Bitcoin perpetual swap funding rates are also rising with the latest print of the Consumer Price Index. In other words, more traders are betting upwards in leveraged positions, increasing the risk of a correction.
The sharp move marked a significant surge in the technical momentum indicator, the Relative Strength Index (RSI), which climbed to 82. This means that BTC/USD is generally viewed as ‘overbought’ in the short term.
BTC vs USD Draws a Bearish Pattern
BTC price is currently forming an expanding wedge pattern indicating increased volatility. Both buyers and sellers are pushing the price above support and resistance levels and a reversal is coming soon.
Buyers failed to breakout the pattern on March 14 and are now facing resistance at the upper end of $26,700. At the same time, the price is likely to return to the bottom of the pattern near his $19,500 level in the coming days.
Conversely, if Bitcoin price breaks out of the top trendline, it is likely that the bulls will surge and push the price to $30,000. In particular, it is the BTC options and futures market.
As Cointelegraph reported, the metric has yet to reach its previous peak levels, so there is still room to perform.
This article does not contain investment advice or recommendations. All investment and trading moves involve risk and readers should conduct their own research when making decisions.
