Bitcoin, Ethereum, Dogecoin Drop Amid Hotter-Than-Expected CPI Data: Analyst Says The Next Key Level For King Crypto Is $83K

Major cryptocurrencies took a slight breather on Tuesday evening amidst a sudden surge of volatility in the cryptocurrency market.

What Happened: Bitcoin surged above $73,000 for the first time, only to swiftly retreat by nearly 6% before modestly rebounding.

The price of BTC responded to the February Consumer Price Index (CPI) data, surpassing expectations at 0.4% as reported by the U.S. Bureau of Labor Statistics (BLS). The year-on-year rate saw an increase to 3.2%, exceeding the estimated 3.1% and January’s 3.1%.

The volatility in the market has led to the liquidation of over $363 million worth of leveraged derivatives positions across all cryptocurrencies, primarily affecting long positions that were betting on rising prices. 

According to CoinGlass data, this event marks the largest long flush-out since the correction on March 5.

Matrixport, a crypto investment services firm, observed in its Tuesday market update that the rally of Bitcoin was displaying indications of waning momentum.

“We have been bullish on bitcoin since the end of January, but the risk-reward analysis favors a period of consolidation,” Matrixport analysts said. “This bull market still has legs, but the divergence between a declining RSI and still high Bitcoin prices could signal that Bitcoin needs to consolidate before rallying again.

Top Gainer (24 Hour)

The global cryptocurrency market cap now stands at $2.72 trillion, showing a 0.20% decrease in the past 24 hours.

Stocks surged on Tuesday following the release of new U.S. inflation data.

The Dow Jones Industrial Average surged 235.83 points, marking a 0.61% increase, and concluded at 39,005.49. Meanwhile, the S&P 500 edged up 1.12%, achieving a session’s end at 5,175.27, surpassing the previous record high close set on March 7. Additionally, the Nasdaq Composite rose by 1.54%, reaching 16,265.64.

The consumer price index rose by 0.4% in February and 3.2% year over year, according to the Bureau of Labor Statistics. Economists surveyed by Dow Jones had anticipated a 0.4% increase last month and a 3.1% year-over-year uptick. Core inflation, which excludes food and energy from the headline figure, increased by 0.4% in February, surpassing the projected gain of 0.3%.

Investors are now shifting their focus to the upcoming producer price index report set to be released later this week, as well as the Federal Reserve’s next monetary policy meeting scheduled for later this month.

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Analyst Notes: Cryptocurrency analyst Michael Van de Poppe said that Bitcoin has surged to a new all-time high.

"I’m personally seeking for interest from altcoins, making sure that we’re rotating towards #Altcoins afterwards. I do believe that 20-30% corrections are still likely to happen. Today: CPI!"

Bitcoin’s current market structure is exhibiting all the characteristics of a “full-blown” bull market, according to on-chain analyst Willy Woo. 

"The flood of paper Bitcoin seen in the last cycle is now receding. This is bullish. Of note is the 2022 bear [market]… spot investors continued to buy, but the price crashed. Paper BTC flooded the market, producing the price decline. 2023-2024 is marked by a reduction in spot supply and also more importantly paper BTC."

The analyst adds, “BTC at 71k puts us here in visual of the upper and lower bound models. Upper bound right now is 337k. So this bull market is still early, equivalent to 20k of last cycle. Last cycle didn’t hit the upper bound due to the flood of paper BTC, this is less dominant this cycle.”

According to on-chain analyst Ali Martinez the Bitcoin MVRV Pricing Bands shows " the next key price target for $BTC is $83,035!"

Bitcoin MVRV Pricing Bands represent a metric combining market value and realized value to gauge when Bitcoin’s price is above or below its “fair value”, which can signal potential market tops or bottoms. They act as indicators that investors might consider in their decision-making process to identify overbought or oversold conditions.

Photo by Avi Rozen on Shutterstock

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