Bitcoin is staging a fierce comeback this week, shaking off a four-month slump as its Relative Strength Index (RSI) breaks a stubborn downtrend.
Prices hover near two-week highs above $85,000, but traders remain divided: Is this the bull market’s revival or a fleeting rally? With macroeconomic crosswinds and technical signals clashing, the crypto market braces for a pivotal week.
The RSI Breakout: A Technical Turning Point
Bitcoin’s RSI, a key momentum gauge, has shattered a four-month bearish trend, hinting at renewed buying pressure. Historically, such breakouts precede bullish reversals, but analysts warn confirmation is critical. The weekly RSI now eyes former resistance as support, a move last seen in September 2024. Daily RSI levels climb toward two-month highs, testing the 55 mark.
“The RSI breakout signals exhaustion among sellers,” says trader Roman. “But bulls must hold $85,000 to avoid another downward trend.” For now, Bitcoin teeters near $86,500, up 15% from March lows. Yet skepticism lingers as traders await clearer signals.
Why Traders Fear a “Shakeout” Before Rallying?
Despite improving technicals, fear of a sudden drop looms. Analysts like CrypNuevo warn market makers could “shake out” weak hands by driving prices toward $80,000 liquidity zones. Short-term holders, nursing $7 billion in unrealised losses, may panic-sell if volatility spikes.
“The sentiment’s improved, but risks remain,” CrypNuevo tweeted. “A 1-2 week pullback seems likely before recovery resumes.” Others, like HTL-NL, see $90,000 as a ceiling, predicting reversal risks there. Even optimist Arthur Hayes forecasts a 30% correction after Bitcoin potentially peaks near $110,000.
PCE Data and Fed Tariff Views
All eyes turn to March 28’s U.S. Personal Consumption Expenditures (PCE) report. As the Fed’s preferred inflation metric, softer numbers could fuel rate-cut hopes and crypto rallies. However, new tariffs set for April 2 threaten to reignite inflation, complicating the Fed’s plans.
“Goods inflation surged recently, partly due to tariffs,” Fed Chair Jerome Powell noted last week. Bespoke Research adds, “The Fed expects 2%-level inflation by March, paving the way for cuts.” Markets currently price in a 70% chance of a June rate reduction, per CME’s FedWatch Tool.
Stablecoin Reserves Hint at Bullish Liquidity
Binance’s stablecoin reserves just hit a record of $31.8 billion, signalling investor readiness to buy dips. CryptoQuant analysts link the surge to renewed confidence: “Investors are parked in stablecoins, waiting to re-enter,” says Darkfost.
This liquidity could amplify Bitcoin’s rally if bullish triggers emerge. However, some warn stablecoins might exit if volatility spikes, mirroring past cycles. For now, the reserves suggest cautious optimism among traders.
Short-Term Holders: The Market’s Weak Link
Bitcoin’s recent dip to $73,000 rattled short-term holders (STHs), who now hold bags at a loss. Glassnode reports STH unrealised losses near “capitulation” levels, though still below 2021’s $20 billion sell-offs.
“Newcomers are underwater, but panic isn’t extreme yet,” one analyst notes. If Bitcoin holds $85,000, STHs may hold firm. A drop below $80,000, however, could trigger mass exits, pressuring prices further.
Critical Levels to Watch This Week
Traders identify two make-or-break zones: resistance at $90,000 and support near $80,000. Reclaiming the 200-day moving average ($85,050) is vital for bulls, says Rekt Capital. Failure here may invite bears to test March lows.
Altcoins, meanwhile, await Bitcoin’s cue. A sustained RSI breakout could spark rallies in Ethereum and Solana, but macro risks linger. As PCE data approaches, expect choppy swings and potential fireworks.
A High-Stakes Balancing Act
Bitcoin’s RSI breakout offers hope, but the path forward remains fraught. Traders must navigate macro data, Fed policies, and shaky investor sentiment. While $90,000 beckons, the threat of a tariff-driven pullback keeps optimism in check. This week, clarity emerges as a key to answering: Will Bitcoin confirm its bull run or succumb to another shakeout?
