On March 10, weary crypto traders had no rest as the headline of the day was a staggering 7.9% CPI that put pressure on global financial markets and wiped out the previous day’s gains in bitcoin (BTC) as the price fell below 40,000 dollars. .
Data from Cointelegraph Markets Pro and TradingView shows that BTC’s sell-off began in the early hours of trading on Thursday and intensified towards noon as the price hit a low of $38,562 before buyers offered it again above support at $39,000.
1-day BTC/USDT chart. Source: Trading View
Here’s what analysts have to say about the ongoing BTC price fluctuation and what levels to watch for in the event of a bullish breakout or bearish downturn.
“Price contraction precedes volatility”
Information about the recent bitcoin volatility was offered by a crypto trader and Twitter user under the pseudonym “Rekt Capital” who published The following chart notes that “BTC is still consolidating between the green higher minimum support and the blue 50-week EMA resistance.”
Weekly BTC/USD chart. Source: Twitter
According to Rekt Capital, “Higher lows and lower highs squeeze price. Price contraction precedes volatility.”
As for what it will take to restore the bullish narrative, Rekt Capital pointed to the green and blue exponential moving average (EMA) lines, which have proven to be strong resistance points over the past two weeks.
Rekt Captial said:
“In order to move higher within its macro range, BTC needs to recover two key bull market EMAs to confirm the bullish momentum.”
BTC holders risk selling at a loss
The oscillatory nature of BTC’s price action in recent weeks has been discussed by research fund Stack Funds, which noted in its current weekly report that “Bitcoin has been fluctuating over the past few weeks, trading in the $35,000 to $45,000 range without strong directional momentum. ”
According to Stack Funds, this recent price action “was mainly driven by the news” and analysts see no relief in the near term as the conflict in Ukraine and persistently rising inflation continue to pose significant headwinds.
Evidence that traders are not inclined to increase their exposure to current market conditions can be found by looking at the Bitcoin Spent Profits Ratio (SOPR), a metric that shows the cumulative gains and losses realized on a given day.
Stack Funds noted that the long-term holder of the BTC SOPR “is aiming for its 1.0 threshold,” an important level as it marks the defining line between selling at a profit or selling at a loss.
Long-term bitcoin holder SOPR. Source: Stack Funds
According to the report, the SOPR long-term holder has been on a downward trend since the price of bitcoin peaked in November 2021, and is currently trading at “around 1.5”.
In the two cases shown in the chart above, when SOPR fluctuated and traded below the 1.0 threshold in mid-2018 and late 2019, “Bitcoin traded sideways and fell further both times.”
Stack Funds said:
“Unless we see any positive catalyst in the markets or a reversal in the SOPR indicator, we expect sideways trading and possibly a potential drop in prices, at least in the short term.”
But not everything is so hopeless when it comes to the price of bitcoin in terms of chain analysis. On the next chart published A cryptanalyst and Twitter user under the pseudonym “Plan C” explains that “the number of bitcoin hoarding addresses has gone parabolic over the past month.”
The number of unique BTC accumulation addresses. Source: Twitter
Plan C defined hoarding addresses as “addresses that have at least 2 incoming transfers without dust and have NEVER spent BTC funds.”
Connected: Bitcoin Fakes $40k Breakout as US Consumer Price Inflation Data Conforms to 7.9% Estimates
Not optimistic below $46,000
As for Bitcoin’s immediate outlook, market analyst and Cointelegraph contributor Mikael van de Poppe marked that things below $46,000 do not look optimistic, and he believes that “the chances of hitting those lows are quite significant.”
1-day BTC/USDT chart. Source: Twitter
This near-term bearish sentiment was recently echoed by David Lifshitz, Managing Partner and Chief Investment Officer of ExoAlpha, who noted that the recent BTC surge “came out of nowhere and lasted less than one hour without much follow-up.”
Lifshitz said,
“BTC is still stuck in the $33,000 to $45,000 range. Without any follow-up action within the next 48 hours and a possible break above $45,000 to $50,000, BTC is likely to continue hovering in this range.”
The total market capitalization of cryptocurrencies currently stands at $1.744 trillion, with a Bitcoin dominance rate of 42.6%.
The views and opinions expressed here are solely those of the author and do not necessarily reflect those of Cointelegraph.com. Every investment and trading step involves risk, you should do your own research when making a decision.