Bitcoin (BTC) regained momentum on Tuesday, climbing back above the $80,000 mark after a nearly 3% drop the previous day. The rebound followed a sharp dip to $76,606 during Asian trading hours, triggering over $955 million in liquidations across the crypto market within 24 hours. Despite this recovery, macroeconomic uncertainty looms large as investors await key U.S. inflation data—Wednesday’s Consumer Price Index (CPI) and Thursday’s Producer Price Index (PPI)—which could significantly influence Bitcoin's short-term trajectory.
Market sentiment remains cautious amid weakening institutional demand and ongoing global trade tensions. With spot Bitcoin ETFs reporting $278.4 million in outflows on Monday alone, and Mt. Gox resuming large-scale BTC transfers, pressure on price stability continues to build.
Bitcoin Bounces Back After Testing Key Support Level
After plunging to a low of $76,606 during Tuesday’s Asian session, Bitcoin staged a recovery, reclaiming the $80,000 level by early European trading. This rebound came on the heels of a 2.8% decline the prior day and followed intense market volatility that led to $955.71 million in total liquidations.
According to Coinglass data, the largest single liquidation occurred on Binance’s BTC/USDT pair, amounting to $5.26 million. Long positions bore the brunt of the downturn, with over $318 million in longs wiped out—indicating a wave of forced selling among leveraged traders.
Agne Linge, Growth Lead at WeFi, noted in an exclusive interview with FXStreet that despite recent developments like national Bitcoin reserve announcements, investor risk appetite remains fragile.
“The same macroeconomic pressures that triggered the early market sell-off are still active,” Linge explained. “Escalating tariffs are expected to amplify inflationary pressures, increasing the likelihood of broader economic ripple effects in the coming weeks.”
She added that while crypto markets have shown resilience, any meaningful rebound may require unexpected catalysts—such as dovish Fed signals or stronger-than-expected macro data.
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Upcoming U.S. Inflation Data Could Drive Volatility
With mixed signals from recent economic reports, markets are bracing for pivotal inflation data that could clarify the Federal Reserve’s next move—and impact risk assets like Bitcoin.
Bitfinex’s Monday report highlighted contradictory indicators: strong job growth and rising wages contrasted with persistent inflation and trade disruptions. The U.S. added 151,000 jobs in February, though unemployment ticked up to 4.1% due to government sector layoffs. Wage growth remains robust, but higher labor costs may delay expectations of multiple rate cuts in 2025.
Eren Sengezer, Chief Analyst for European Markets at FXStreet, observed that concerns over a U.S. economic slowdown sparked equity market selloffs early in the week.
“Traders are closely watching political headlines and stock market reactions,” Sengezer said. “Tuesday brought JOLTS job openings and NFIB business optimism data, but all eyes are now on CPI and PPI.”
A hotter-than-expected CPI print could reinforce hawkish Fed sentiment, pressuring Bitcoin. Conversely, a cooler reading might revive hopes for rate cuts, boosting investor confidence in high-risk assets.
Institutional Demand Shows Signs of Weakness
Institutional interest in Bitcoin has cooled significantly at the start of the week. Data from Coinglass reveals that spot Bitcoin ETFs experienced $278.4 million in net outflows on Monday—adding to last week’s $739.2 million in losses.
This sustained withdrawal suggests waning appetite among large investors, potentially increasing downside pressure if outflows accelerate.
Meanwhile, Mt. Gox resumed its long-anticipated BTC distribution, transferring 11,833.6 BTC—worth over $932 million—on Tuesday. Of this, 11,501.58 BTC ($905 million) was sent to a new wallet, while 332 BTC ($26 million) moved to a hot wallet.
Historically, such large transfers precede market sell-offs, as recipients may offload coins to cover claims or convert to fiat. The mere anticipation of increased supply can trigger bearish sentiment.
However, positive developments offer counterbalance:
- BBVA, a major Spanish bank, received regulatory approval to offer Bitcoin and Ethereum trading services.
- MicroStrategy raised $2.1 billion through a preferred stock issuance to fund further BTC acquisitions.
These moves signal enduring institutional belief in Bitcoin’s long-term value, even amid short-term volatility.
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Technical Outlook: RSI Signals Potential Reversal
Bitcoin closed below its 200-day exponential moving average (EMA) at $85,754 on Sunday, followed by an 8.8% drop on Monday. The subsequent rebound from $76,606 suggests temporary exhaustion of selling pressure.
On the daily chart, the Relative Strength Index (RSI) climbed to 36 after bouncing from oversold territory (30), indicating weakening bearish momentum. A move above the neutral 50 level would confirm bullish reversal potential.
Key levels to watch:
- Support: $73,072 (next major floor if $78,258 breaks)
- Resistance: $85,000 (200-day EMA and psychological barrier)
If bullish momentum strengthens, a retest of $85,000 is possible. Conversely, failure to hold above $78,258 could open the door to further downside.
Frequently Asked Questions (FAQ)
Q: Why did Bitcoin drop below $77,000?
A: The drop was driven by a combination of macro uncertainty, ETF outflows, and leveraged long liquidations. Mt. Gox distribution fears also contributed to selling pressure.
Q: How do CPI and PPI affect Bitcoin?
A: These inflation metrics influence Federal Reserve policy expectations. Higher inflation may delay rate cuts, reducing liquidity and hurting risk assets like BTC.
Q: Are ETF outflows bearish for Bitcoin?
A: Sustained outflows suggest weakening institutional demand, which can increase downside risk—especially during periods of macro stress.
Q: What does the RSI indicate about Bitcoin’s price trend?
A: An RSI bounce from 30 to 36 signals reduced selling pressure. A break above 50 would support a sustained recovery.
Q: Could Mt. Gox distributions crash Bitcoin?
A: While large transfers increase supply risk, actual price impact depends on selling speed and market depth. Gradual distribution may limit shocks.
Q: Is now a good time to buy Bitcoin?
A: Short-term volatility is high. Traders should wait for confirmation—such as RSI above 50 or CPI-driven clarity—before entering new positions.
Final Thoughts: Caution Ahead of Key Data
Bitcoin’s rebound above $80,000 offers temporary relief, but structural challenges remain. Weak ETF flows, Mt. Gox overhangs, and global trade tensions continue to weigh on sentiment.
The upcoming CPI and PPI reports will be critical in shaping near-term direction. A soft inflation print could ignite a relief rally toward $85,000 or higher. Conversely, sticky prices may extend the correction toward $73,000.
Investors should remain vigilant, use risk management strategies, and monitor both on-chain flows and macro developments.
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