The price of BTC faces the risk of reversal due to bearish movements on the chain and the challenge of technical resistance levels.
Bitcoin (BTC) experienced a strong rally this week as US inflation in February matched market expectations. On March 14, the BTC/USD pair climbed to its 2023 high of $26,550 following this news.
However, while the current macroeconomic environment may benefit risk-averse consumers, some chain and market indicators point to a possible near-term correction.
BTC flows back into the market when the price rises
On March 13, Glassnode exchange flow data recorded the highest exchange inflows since May 2022. This means more supply on the exchange and more selling pressure.
The day the coin was destroyed the Indicator, which measures time-weighted Bitcoin conversions, also showed a small ball, indicating that the old hand is moving the coin. These indicators can indicate long-term holders’ interest rate orders, which can lead to a correction.
Bitcoin’s currency index, RSI jumps
Additionally, the subsidy rate for Bitcoin perpetual swaps was also raised due to the latest Consumer Price Index. In other words, many traders are betting on the upside with leveraged positions, increasing the risk of a correction.
The strong price movement has also seen a sharp rise in the Relative Strength Index (RSI), an indicator of technical momentum, with a reading of up to 82. This means that BTC/USD is generally considered “overbought” in the short term.
BTC vs. BTC The USD paints a bearish pattern
The price of BTC is currently forming an expanding wedge pattern, representing a higher level of volatility. Both buyers and sellers are pushing prices above support and resistance levels, with a pullback imminent.
Buyers failed to opt out of the demolition process on March 14, and now face a $26,700 block. At the same time, there is a possibility that the price will correct back down in the trend, around $19,500, in the coming days.
Conversely, if Bitcoin price breaks above the upper level, the bulls could pile up to push the price up to $30,000. There are credible signals to the bulls that this could happen – namely in the BTC options and futures market.
As reported by Cointelegraph, there is still room to open, as the indicator has yet to reach its previous peak.