Bitcoin has rebounded to over $82,000, driven by recent favorable inflation data. Analysts suggest that easing financial conditions might lead to a price recovery in March. Current market sentiment is extremely bearish, yet this could set the stage for a turnaround as liquidity improves.
On February 28, Bitcoin (BTC) surged back above $82,000, igniting optimism among analysts who predict a price rebound in March. The cryptocurrency’s rise followed a more than 5% jump from its recent low of $78,197. This upturn coincided with favorable US macroeconomic data, specifically the Personal Consumption Expenditures (PCE) index, which aligns with the Federal Reserve’s inflation metrics. The January report showed an inflation rate of 0.3%, with year-on-year inflation at 2.5%, signaling potential relief for the market.
Many traders sensed a signal of relief as earlier inflation spikes began to wane, contributing to a decline in US dollar strength, which peaked at highs not seen in two weeks. According to The Kobeissi Letter, this marked the first drop in PCE inflation since September 2024. While the data was described as “constructive,” potential interest rate cuts have not significantly changed, with the odds at just 5.5% for the March Federal Reserve meeting, hinting at an ongoing state of volatility in the market.
Analysts like Julien Bittel at Global Macro Investor see this macro backdrop as encouraging news for Bitcoin enthusiasts. He noted that current market conditions largely reflect the tightening seen in late 2022. Bittel expressed confidence that ongoing market fears won’t last much longer, predicting a reversal in fortunes with signs of easing financial conditions appearing.
Bittel’s analysis highlighted a 23 RSI for Bitcoin, indicating extreme oversold conditions, which he believes already captures market sentiment. With tightened financial conditions already priced into Bitcoin’s current standing, he anticipates a transformation as liquidity begins to flow back into the market next month, setting the stage for recovery in both crypto and broader economic data.
Bitcoin’s recent price increase signals potential recovery as macroeconomic trends align favorably. With positive inflation data and easing financial conditions, analysts are optimistic about BTC’s trajectory moving forward. The sentiment of market participants, indicating extreme bearishness, suggests a possible reversal could be on the horizon for Bitcoin and other risk assets.
Original Source: cointelegraph.com
