Bitcoin (BTC) starts the week with volatility and new all-time highs, as price discovery continues to be a challenge for bulls. The battle between selling pressure at key psychological levels and the relentless demand from spot ETFs creates a state of flux for Bitcoin. The influence of ETF buying has caught many off guard, with even long-term bulls reconsidering their price predictions for BTC/USD. While some believe that $1 million is a conservative estimate in the long term, others warn that the bull run may lead to a price top sooner than expected. Meanwhile, miners are taking advantage of the current price levels to lock in profits ahead of the block subsidy halving in April. This article provides a detailed analysis of these factors and their potential impact on Bitcoin’s price volatility.
Bitcoin experienced high volatility leading up to the weekly close on March 10, with the highest price of $69,000 quickly followed by a drop to $67,120. A relief bounce then pushed Bitcoin to new all-time highs during the March 11 Asia trading session. However, the $70,000 level continues to act as a strong resistance, with large sell orders preventing a breakout. Traders are closely watching the $63,500 to $65,500 range to maintain the current upward trend. On-chain analytics also reveal movement of coins that had been dormant for up to a decade, indicating increased activity in the market.
In terms of U.S. macroeconomic data, the Consumer Price Index (CPI) report for February is expected to have an impact on short-term trading across risk assets. Bitcoin’s reaction to CPI figures remains mixed, as the market remains uncertain about inflation and the Federal Reserve’s policy decisions. The upcoming Fed meeting will be influenced by the CPI report, and traders are eager to see if it will set the tone for a rate cut. The current probability of a rate cut is low, according to CME Group’s FedWatch Tool. Other important data to watch this week includes the Producer Price Index (PPI) and jobless claims.
The resumption of buying by spot ETFs is eagerly awaited by Bitcoin market observers. The successful launch of ETFs has transformed the BTC price trajectory, and many expect this trend to continue. While there are reservations about the sustainability of ETF demand, institutions are optimistic about the future of Bitcoin. Cathie Wood, CEO of ARK Invest, has brought forward the firm’s $1 million price target for BTC in 2023. Major U.S. wirehouses like Morgan Stanley and UBS are expected to approve Bitcoin soon, which could have a significant price impact.
Miners have been selling their BTC holdings despite the upcoming block subsidy halving, which will reduce their revenue by 50%. This has surprised many market participants, as it goes against expectations. However, with the recent price surge, miner revenues have increased. The Puell Multiple, a measure of coin issuance value against its moving average, has reached some of its highest levels in six years. While this indicates a potential macro top, it is not as high as previous cycle peaks. Bitcoin hodlers are holding onto their coins and not selling, as long-term holders (LTHs) are still at unrealized profit levels that typically occur before the cycle peak.
Overall, Bitcoin’s price volatility is influenced by various factors, including ETF buying, macroeconomic data, and miner activity. The market remains uncertain about the future price trajectory of BTC, with predictions ranging from $1 million to a potential price top. Traders and investors need to conduct their own research and exercise caution when making investment decisions.