4 Signs Bitcoin Price Rally Could Top $26K For Now
Bitcoin (BTC) received a significant boost this week as US inflation levels for February came in line with market expectations. On March 14, the BTC/USD pair rose to a new 2023 high of $26,550 following the news.
However, while macroeconomic conditions currently favor risk buyers, certain chain and market indicators hint at a potential near-term correction.
BTC flows back to exchanges as prices rise
Glassnode’s exchange flow data recorded the largest influx to exchanges on March 13 since May 2022. This means more offers on exchanges and potentially higher selling pressure.
The Coin Days Destroyed indicator, which measures the time-weighted transfers of Bitcoin, also shows a small spike, indicating that old hands are moving coins. The indicators may signal profit booking by long-term owners, which may lead to a correction.
Bitcoin Funding Rates, RSI Jumps
Also, the funding rate for Bitcoin perpetual swaps is now also elevated with the latest CPI print. In other words, more traders are betting on the upside with leveraged positions, increasing the risk of a correction.
The sharp price movement has also registered a significant peak in the Relative Strength Index (RSI), a technical momentum indicator, with a reading of a whopping 82. This means that BTC/USD is generally considered “overbought” in the short term.
BTC vs. The USD paints a bearish pattern
The BTC price is currently forming an expanding wedge pattern, which shows the increased level of volatility. Both buyers and sellers are pushing the price beyond support and resistance levels with the reversals coming quickly.
Buyers failed to stage a pattern breakout on March 14 and now face resistance at the ceiling of the $26,700 level. At the same time, there is a chance that the price will correct back towards the bottom of the pattern around $19,500 in the coming days.
On the contrary, if the Bitcoin price breaks above the upper trend line, the bulls are likely to pile in to push the price higher towards $30,000. There are potentially welcome signs for the bulls for this to happen, namely in the BTC options and futures markets.
As Cointelegraph reported, there is still room to run as indicators have yet to reach past highs.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.