Bitcoin (BTC) surged higher this week as US inflation came in line with market expectations in February. On March 14, the BTC/USD pair surged to a new peak for 2023 at $26,550 on the news.
However, while current macroeconomic conditions 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
Glassnode’s exchange flow data recorded the largest inflow to the exchange on March 13th since May 2022. This could mean more supply to exchanges and more selling pressure.
The Coin Days Destroyed 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
Additionally, Bitcoin perpetual swap funding rates are also rising in the latest CPI print. In other words, more traders are betting upwards in leveraged positions, increasing the risk of a correction.
The sharp move marked a significant rise in the technical momentum indicator, the Relative Strength Index (RSI), which climbed to 82. This means that BTC/USD is generally considered “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 $26,700 ceiling level. At the same time, the price is likely to correct towards the bottom of the pattern around $19,500 in the coming days.
Conversely, if Bitcoin price breaks out of the top trendline, the bulls could pile up and push the price towards $30,000. The BTC options and futures market could see some welcome signs for the bulls to make this happen.
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.
