Following the United States Consumer Price Index (CPI) data release, Bitcoin‘s price witnessed a rebound to the $98,000 level, raising investors’ hopes once again. However, this rebound was brief as BTC’s price began to drop a few hours after the upward move. As prices see bearish movements, crypto analysts believe that the drop could extend toward key support levels.
Downside Risks Mounts For Bitcoin
Bitcoin’s price action is under renewed pressure post-US CPI data release on Wednesday as revealed by a recent analysis by Negentropic, a market expert and co-founder of the world-leading on-chain data and financial platform Glassnode.
The event appears to have sparked volatility for the flagship asset just as Negentropic previously predicted, which has fueled market uncertainty. During unfavorable conditions, Bitcoin is at risk of experiencing a price breakdown if it fails to hold key support levels.
Negentropic highlighted that after an inflation report that was more intense than expected, BTC acquired liquidity at the $94,000 level and reached its top at $98,000. However, the crypto asset has currently retraced to the $96,000 mark.
This development comes as BTC has seen declining network performance in the past few days. With weak liquidity coinciding with waning network growth, BTC’s short-term outlook signals bearish signs.
In the event that these negative trends persist, Negentropci is confident that BTC’s next move might be toward the downside, targeting the $92,000 threshold. As a result, the market expert has urged investors to stay vigilant amid these uncertain times.
Daan Crypto Trades, a crypto analyst and investor has also delved into Bitcoin’s liquidity grab following the US CPI data report. According to Daan Crypto Trades, the majority of liquidity acquired by BTC was taken on the lower time frames.
Furthermore, the expert outlined that after all these lower highs in the past few weeks, there is still a lot of untapped liquidity lying higher. Should BTC be able to reverse this local downward trend, it could serve as a trigger for a move to the upside.
In the meantime, the $90,000 level is the danger zone where the analyst expects many longs to be taken out since it is the range low. Also, the level represents an area where Bitcoin’s price has witnessed a rebound several times.
A Change In BTC’s Market Dynamics
Even though BTC’s waning performance has caused minimal losses, CryptoQuant’s verified author Axel Adler Jr believes it is more logical to concentrate on the trend of profit changes rather than the amount of holder losses. During the last consolidation phase near $70,000, it took the market two more months to build a new impulse.
Meanwhile, market dynamics have shifted in the ongoing phase majorly influenced by news surrounding Donald Trump’s administration and recognition of BTC as a strategic reserve. “Essentially, this could significantly accelerate the development of a new trend, unlike in previous macrocycles,” Adler stated.
Featured image from Unsplash, chart from Tradingview.com
