Recent market analysis reveals a notable bullish reversal pattern on Bitcoin's daily chart, coinciding with growing anticipation surrounding the upcoming U.S. inflation data. These developments are crucial for risk assets, particularly Bitcoin, which experienced a drastic decline from its peak of $100,000 last month to values slipping below $80,000 this week.
The downturn can largely be attributed to several determining factors. Market sentiment on Wall Street has remained risk-averse, driven by the increasing pressures of U.S. economic policy, including tariffs imposed by President Donald Trump, which have created caution among investors. Additionally, there is increasing anxiety regarding the possibility of a U.S.
economic recession, further driving sentiment against riskier assets like cryptocurrencies. Compounding these issues, the anticipated lack of new Bitcoin purchases under Trump's strategic reserve plan has aggravated the downward trend. On Tuesday, Bitcoin's price dipped below $80,000, observed as a significant multi-month low.
Intriguingly, the Relative Strength Index (RSI) did not mirror this decline. Instead, it formed a series of higher lows, diverging from the price chart's lower lows—an indicator known as bullish RSI divergence. This phenomenon suggests that even as prices are decreasing, the prevailing momentum of selling pressure is becoming less intense.
Therefore, a forthcoming bullish reversal could be on the horizon. The timing of this potential reversal is critical, as it aligns with the imminent release of the U.S. February Consumer Price Index (CPI), which is widely anticipated to demonstrate positive trends. Given the bullish RSI divergence displayed by Bitcoin, market experts believe that there might be a ready response from investors to react positively to the CPI data, especially if it shows signs of moderation.
Investors are keenly observing these developments, as they could inform future trading strategies and influence market dynamics in the looming sessions..