CPI was more bearish than expected, and funds from the United States continued to flow out, with the largest outflow of 500 million in a single day. Can Bitcoin hold the key support?
Hi, girls and boys, welcome to Uncle Cat’s crypto world.
As of the time of posting, Bitcoin is priced at around 69,300. Affected by tonight's CPI data, Bitcoin once fell below yesterday's second support, and then rebounded significantly. Although there are no worse results in the technical and macroeconomic aspects for the time being, there is a large outflow of funds from the United States.
Having lost the support of American traders, will Bitcoin rebound and break out again, and can it hold the key support level?
Bitcoin disk analysis:
Affected by the sentiment of the data, the price of Bitcoin fell below 70,000 and then fell again, directly breaking through the first and second supports of yesterday. Although it has rebounded above the second support, it can be seen that under the guidance of negative sentiment, the support strength of this support is still weak. At the same time, we will find that the recent small-level support has deteriorated. However, it is true that in this trading environment, the reduction in liquidity and trading depth will indeed make the small-level time indicators invalid.
For the current rebound resistance, we can directly see that the 72,700 brought by the upper Bollinger Band on the daily level is the first resistance level, followed by the historical high, and then the weekly resistance level. However, at present, no one seems to care about these. During the decline, many people try to chase the short position, and even more pessimistically believe that it will fall back to 50,000. To be honest, on the eve of Bitcoin halving, I am not so optimistic about this sharp decline.
Let’s take a look at the support below:
The first support, 68,500, is a short-term support, which is slightly stronger. The support is provided by the daily Bollinger Band midline, 3-day and weekly EMA7. From a technical point of view, the support is strong, but according to the current actual situation, it has indeed fallen below the rebound in the short term, so we evaluate the strength of this support to be reduced. At the same time, this support is also the trend of the price at the short-term daily level. Once it breaks through and stabilizes, the price will return to the safe range in the short term.
The second support, 66,500, is a short-term support with strong support. This support is simply provided by the upper line of the monthly Bollinger Band, but I still regard this support as the strongest short-term support position. Another reason is that there was a good turnover of chips in this price range before, which will play a certain role in stabilizing the short-term price trend. However, if this position is broken, the monthly line will be broken at a large level, then there will be more room for decline, and Bitcoin will officially enter a correction period.
The third support, 64,000, is a short-term support. The support is generally provided by the lower line of the daily Bollinger Band and the middle line of the 3-day Bollinger Band. Although the third support is supported by many technical aspects, if the second support is broken, the role of the third support will be a little bit negligible. Therefore, I will regard the third support as a support for falling buffer.
From the current technical perspective, although we are not optimistic enough, we don’t need to be overly pessimistic. I would like to borrow a sentence from Mr. Ni: if the price goes up, we don’t have to be bullish, and if it goes down, we don’t have to be bearish. We need to understand the meaning of support and resistance and use them reasonably.
Currently, stimulated by US data, US stocks continue to fall. Although there has been a rebound, the strength of the rebound is weak. On the other hand, the crypto market has ushered in a good rebound, but we still cannot be too optimistic now. The monetary minutes in the early morning will be accompanied by speeches by Federal Reserve officials. If the speeches are again unfavorable to market expectations, sentiment will be even more depressed.
But this is not a direct bearish signal. I think as long as the Fed does not release the remarks of raising interest rates again, even if the expectation of rate cut this year is eliminated, it will not bring too much negative sentiment. But there is normal depression. After all, the current 10-year US Treasury bond has returned to around 4.5%, which will have a suppressive effect on the overall risk market sentiment.
The RSI relative strength index has dropped to around 48. Once the index continues to fall, it will trigger an oversold rebound sentiment.
We will look at the changes in market data later.
Market dynamics and funding changes:
(The data is real-time data. If there are major changes in the short-term market, the data will be significantly biased.)
The current market value is 269.2 million, a decrease of 94 billion compared to yesterday.
The market value of Bitcoin is 134.86 billion, which is 43.2 billion less than yesterday.
Ethereum's market value is 417.2 billion, a decrease of 18.68 billion compared to yesterday.
The total market value decreased by 94 billion, with Bitcoin and Ethereum decreasing by 61.88 billion, and the rest was the market value drop of 32.12 billion for copycats.
Bitcoin accounts for 50.1% of the market, an increase of 10 basis points compared with yesterday; Ethereum accounts for 15.5%, a decrease of 10 basis points compared with yesterday; and altcoin accounts for 34.4%, which remains unchanged compared with yesterday.
In terms of trading volume:
The total transaction volume is 104.9 billion, which is 7.3 billion less than yesterday.
Bitcoin 32.95 billion, an increase of 2.92 billion compared to yesterday's trading volume.
Ethereum 15.74 billion, a decrease of 3.34 billion compared to yesterday's transaction volume.
The total transaction volume of the copycat platform is 56.21 billion, which is 6.92 billion less than yesterday.
Funding:
The total on-site funds were 155.1 billion, a decrease of 400 million compared with yesterday, and the proportion of funds was 5.76%, an increase of 18 basis points compared with yesterday.
USDT: Market value of 107.31 billion, an increase of 360 million US dollars compared to yesterday; trading volume of 55.2 billion, an increase of 0.14%.
USDC: Market value of 32.585 billion, a decrease of 509 million US dollars compared with yesterday; trading volume of 6.28 billion, a decrease of 6.6%
Today's overall market data continues yesterday's mixed results.
First of all, in terms of market value, as Bitcoin fell, the overall market value declined, and the originally strong ETH was once again weakened, with its market value shrinking more than Bitcoin. On the other hand, the altcoin market fell to the same level as yesterday.
In terms of trading volume, Ethereum and altcoins have shrunk in the decline, which is not a good thing. There are few buy orders and weak sentiment. On the other hand, Bitcoin has increased in trading volume and obviously strengthened buy orders in the decline. Bitcoin's own rebound sentiment is still good. Ethereum altcoins can only wait and see the mood of big brother Bitcoin.
In terms of funds, the on-site retained funds decreased by 400 million, and the net outflow of off-site funds was 149 million. Combined with the on-site retained funds, only 251 million funds were involved in the transaction today.
The participation of on-site funds in transactions shows that the sentiment of some traders is still positive, and the capital inflow into the Asian market is also increasing. However, what is worrying is that U.S. funds have been flowing out for the third consecutive day, and today's single-day outflow may be the largest amount in 24 years.
What is understandable at present is that the market expects the Fed to reduce its interest rate cuts. With the release of CPI data, the US Treasury yields increased, which directly suppressed the sentiment of the risk market, which led to a large-scale capital flight from US traders. Although the current position of Bitcoin is temporarily stable and safe, if the funds are still a large external force, Bitcoin may indeed find it difficult to maintain support.
We will continue to pay attention to the liquidity of US funds this week. The best outcome is that funds begin to flow back after the CPI is released. After all, there are still many enthusiastic traders in the market to drive the rebound of Bitcoin.
Macroeconomics and news:
The CPI data released tonight surprised many people, including myself.
Yesterday, I expected that the CPI data would mostly be the same as the previous value. I really didn't expect that the Federal Reserve would be so drastic in cutting interest rates to meet the market's optimistic expectations.
The CPI is significantly higher than the previous value, which is really impressive. Now the market's expectations for a rate cut in June are basically zero. Then there will be July, September, and even after the election at the end of the year.
Really, if the Fed is shameless enough, it can just wait until the end of the month and push the PCE index higher than the previous value, so that the market can directly estimate that it will cut off the expectation of interest rate cuts this year. However, if inflation really rebounds like this, it also proves that the Fed’s previous actions were in vain. This result is very embarrassing. I don’t believe the Fed can do this.
In other words, we can use semi-core data such as CPI to suppress market expectations.
Moreover, according to this line of thought, using news data to suppress market expectations proves that their actual actions may be just the opposite. Maybe interest rate cuts have been put on the agenda, and everything they are doing now is preparatory work.
Because once the market anticipates the Fed's rate cut rhythm, it will take action in advance, which will make many of the Fed's preparatory work before the rate cut ineffective. Therefore, the Fed uses market sentiment to guide the results, and then directly announces a rate cut at a certain time. Currently, the most likely time is June. Why is it so anxious to let the market give up the expectation of a rate cut in June? Is it possible that the market's expectations have already met the Fed's plan, so it can only guide the market sentiment to shift?
Before the real rate cut, before June, I believe that in order to control market expectations, the Federal Reserve will probably make a lot of data outrageous. Just accept it slowly.
If the CPI data is revised again in the future, I estimate that the market will lose trust in US data, and the real action of the US interest rate cut still needs to be considered in combination with more aspects. At least for now, the interest rate cut from the perspective of inflation has been temporarily lost, so we will have to look at other data in the future.
As for the current market, in the short term it has become accustomed to the pace of delayed interest rate cuts. As long as there is no expectation of no interest rate cuts this year, or even the possibility of an interest rate hike, I think the risk market can withstand many negative results.
Although the data has been released, the Federal Reserve’s March monetary minutes will be released in the early morning. Let’s see if there is a chance to gain more useful confidence. I estimate that it will basically consolidate the hawkish remarks after the CPI was extremely high.
In the crypto market, Howard Lutnick, co-founder of Cantor Fitzgerald, publicly stated that stablecoins help consolidate the low hegemony of the US dollar. In fact, I published an article about the battle for stablecoins last year. I think that after the ETF is passed, many US institutions will have a lot of chips. After obtaining pricing power, they must control the stablecoin market. Recently, the US legislature has been emphasizing the supervision of the crypto market, including stablecoins. And Howard Lutnick's point of view is actually correct in a sense, because a large number of stablecoins are settled and anchored in US dollars, which does enhance the use scenarios and usage of the US dollar. This will lead to an increase in the low position of the US dollar. But by the same token, what the United States wants is control. If the mainstream stablecoins are in the hands of the United States, then it will inevitably support it reasonably.
On the contrary, if the United States finds that it lacks control, it will inevitably find ways to restrict or even curb development. At present, the US encryption policy will have to wait until Trump takes office to be re-formulated. Trump supports the encryption market, and the two major parties in the United States are also working hard to win the support of encryption investors for the election. Therefore, it is indeed inappropriate to start restricting the encryption market before the election. However, what is more worrying is that after Trump takes office, will he suddenly change his optimistic support and abandon the donkey after it has done its job?
Market summary:
At present, the technical trend of Bitcoin is not too bad, the support is effective, and it is accompanied by a small rebound. In terms of macroeconomics, the release of basic CPI data has changed the market's expectations, which can be regarded as negative news. There may not be worse news in the short term.
However, the current data, especially the capital side, is not very good. The massive outflow of US funds is a bit worrying. In fact, the main force behind this round of Bitcoin's rise is US traders, and if the large amount of US funds leave the market and continue to flow out, it may really be unfavorable to the trend of Bitcoin. Of course, this is not bearish, but just a reminder to everyone that the current situation is really not necessarily bullish if it rises, and not necessarily bearish if it falls.
Especially in contract trading, pay attention to the support and rebound resistance. If the support fails or the resistance level cannot be broken, it is just another round of range fluctuations at different time levels. Therefore, if the contract position is too awkward, it may face a bad result. Again, since the general trend has not changed, you can buy at the support position, but don't blindly short at the high point. This is my personal advice.
As for spot, the current situation is still awkward. If the key position is not broken, reducing or clearing the position may lead to being unable to get on the train later. If the position is too heavy, once it falls below the support, the cottage may be in a miserable situation. So pay close attention to the situation of the second support level mentioned today. If it is not broken, there is no need to panic about the spot. We will see after it breaks.
From the end of March to the beginning of April, I have been giving you encouragement and recharging your faith. This does not mean that my views will always be correct, but at present, there is indeed no sufficient reason to be bearish. Even if the short-term key support is broken, it only proves that the short-term downside risk and downside space will increase, but the sideways fluctuation of Bitcoin does not mean that the altcoins will collectively dive. Therefore, it is enough to judge the trend reasonably and adjust the positions reasonably.
My ideal adjustment opportunity is to adjust my position after the Bitcoin halving takes place. This is the current expectation. As the Bitcoin halving takes place, I will adjust at any time.
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Finally, thank you all for your continued attention to Uncle Cat and thank you for your continued support.