Bitcoin Rebounds 11% to $85,000 on Positive US CPI Data

Bitcoin's price briefly crossed the $85,000 mark on March 16, marking an 11% rebound from the previous week's low of $76,000. This recovery comes after a significant downturn that saw Bitcoin's price drop nearly 30% from its all-time high of $109,071 in January. The recent price action has been influenced by various factors, including geopolitical tensions and macroeconomic announcements.

Positive indicators from the US Consumer Price Index (CPI) and Producer Price Index (PPI) reports published last week have spurred a recovery in Bitcoin's price. The CPI data release on March 13 improved investor sentiment, with many opting to hold their positions in anticipation of upcoming macroeconomic announcements. This has led to a significant rebound in Bitcoin's price, reflecting an 11.1% gain from the previous week’s low.

The upcoming Federal Reserve decision on interest rates is a critical event for Bitcoin investors. Historically, lower interest rates have led to increased liquidity in financial markets, often benefiting risk assets ranging from stocks to cryptocurrencies. The next Federal Open Market Committee (FOMC) decision is expected on March 19. If the Fed signals a rate pause or hints at imminent cuts, it could boost investor confidence, potentially driving Bitcoin’s price toward the $100,000 mark. Conversely, a hawkish stance with rate hikes could tighten liquidity, posing challenges for Bitcoin’s upward momentum.

In the derivatives market, bullish sentiment is evident. Over the last 7 days, bull traders have mounted long leverage positions amounting to $4.9 billion, while short leverage positions stand at $3.8 billion, giving bulls a net dominance of $1.1 billion. This substantial long positioning indicates strong market confidence in Bitcoin’s future appreciation. However, it’s essential to monitor these leveraged positions closely, as sudden market shifts could lead to liquidations, amplifying price movements.

Given the 11% BTC price rebound over the past week, the anticipated Fed rate pause may have already been priced in, and many traders could capitalize on the announcement to execute a sell-the-news strategy. In this scenario, BTC could see another downturn below the $80,000 mark, especially with long traders currently holding over-leveraged positions.

Bitcoin price action is showing early signs of a recovery after rebounding from the recent $76,000 low, currently trading at $83,175. The bullish case is supported by a confluence of technical indicators, but the path to $100,000 remains uncertain as key resistance levels and market sentiment present challenges. The Elliott Wave count suggests Bitcoin has completed a corrective leg down, aligning with the 1.618 Fibonacci extension at $76,555. A bounce from this level indicates potential for a relief rally, with immediate targets at the 0.382 Fibonacci retracement level of $89,085, followed by $92,956 (0.5 retracement) and a stronger resistance near $96,827 at the 0.618 level. Additionally, the Parabolic SAR indicator, currently at $97,068, further reinforces this zone as a pivotal area where bullish momentum could face resistance.

However, bearish risks remain prominent. The volume profile shows declining buy-side momentum, suggesting a lack of strong conviction among bulls. More so, the BBP (Bear/Bull Power) indicator remains deeply negative at -10,559, signaling that downward pressure is still in play. If Bitcoin fails to reclaim $89,000 convincingly, it could trigger another sell-off toward the $76,000 support level, potentially exposing the market to further downside. For the week ahead, Bitcoin’s price action hinges on reclaiming $89,000. A decisive close above this level could fuel a rally toward $97,000, but failure to break above could see BTC revisiting $80,000 or lower.