Bitcoin Surges 2% as U.S. CPI Drops to 2.8%

Bitcoin (BTC) experienced a modest rebound in the past 24 hours, leading the broader cryptocurrency market. This surge followed the release of the U.S. Consumer Price Index (CPI) report, which showed a decrease to 2.8 percent, falling short of the anticipated 2.9 percent. As a result, the flagship cryptocurrency saw a 2 percent increase, trading at approximately $83,282 during the early European session on Thursday, March 13.

The sudden price increase led to a significant decline in the fear of further crypto market capitulation. The Bitcoin fear and greed index, which had been at 34 percent indicating market fear, jumped to around 45 percent, reflecting a more neutral sentiment among traders.

On-chain data from Santiment indicates that since Bitcoin's price dropped below the critical support level of around $92,000, there has been notable exhaustion among traders. Each dip has failed to establish a clear bottom, leading to further downside risks. From a technical analysis perspective, Bitcoin's price could experience a sharp V-shaped reversal in the coming weeks. In the daily timeframe, Bitcoin has formed lower lows, but the Relative Strength Index (RSI) has shown a bullish divergence.

Crypto analyst Ali Martinez suggests that Bitcoin must hold above the 50-week Moving Average (MA) to avoid a historical capitulation towards the 200-week MA. Currently, the 50-week MA is around $75,500, while the 200-week MA is around $46,000. From a bullish perspective, Bitcoin needs to consistently close above the resistance/support range between $92,000 and $95,000 to validate a rally beyond $109,000. More than 1.2 million Bitcoin addresses, out of the 54 million on-chain holders, purchased 726,000 BTCs at around $95,000.

Bitcoin's price is expected to follow gold's price, which has rebounded towards its all-time high. The ongoing adoption of Bitcoin by various nation-states, including the United States, supports the notion that BTC is digital gold. Additionally, U.S. spot BTC ETFs ended a two-week losing streak with a $13.3 million cash inflow on Wednesday. Despite BlackRock’s IBIT losing $47 million on Wednesday, ARKB saved the day with a net cash inflow of about $82.6 million.