Bitcoin Tests $84,000 Support Amid Inflation Concerns

On March 28, Bitcoin faced a critical test as it approached the key support level of $84,000. This movement came in response to the release of U.S. inflation data, which exceeded market expectations. The Personal Consumption Expenditures (PCE) data for February indicated an acceleration in inflation, with core inflation figures surpassing forecasts by 0.1%. This data release raised concerns about the potential for stagflation in the coming years, as noted by analysts.

Despite the inflation warning, Bitcoin initially showed little reaction. However, market participants were prepared for potential volatility. Analysts expressed doubts about the strength of the crypto market, suggesting that Bitcoin was not yet out of the danger zone. Michaël van de Poppe, a trader and analyst, warned that if Bitcoin falls below $84,000, it could test lower levels around $78,000 to $80,000 before potentially rising again. The current market conditions suggest a period of consolidation for Bitcoin after recent gains, with the $84,000 mark serving as a crucial support level.

Investors continued to show interest in Bitcoin, as evidenced by steady inflows into U.S. exchange-traded funds (ETFs) tracking the spot price of Bitcoin. This marked the tenth consecutive day of inflows, the longest streak since December. Analysts noted that while institutional investors were not displaying aggressive risk appetite, there was still demand for Bitcoin in the market. Total net inflows into Bitcoin ETFs on March 27 amounted to $89 million, with Fidelity's FBTC fund leading the way with $97.14 million in inflows. However, the volume of inflows over the past 10 trading days remained relatively modest, indicating a cautious approach by investors.

The ongoing trade war and the potential impact of tariff policies on the market continued to weigh on investor sentiment. Despite some recovery in confidence, the uncertainty surrounding these policies remained a significant factor. The divergence in flows between Bitcoin ETFs and Ethereum ETFs highlighted a clear difference in investor conviction. While Bitcoin continued to attract capital, Ethereum ETFs experienced net outflows almost every day since February 20, indicating a more conservative approach to alternative crypto assets in the face of market uncertainty.