Bitcoin saw a sharp sell-off on March 12 following the latest U.S. inflation data. After reaching a three-day high of $84,437, BTC/USD quickly reversed course as bearish pressure emerged.
The U.S. Consumer Price Index (CPI) for January came in below expectations at 2.8%, signaling a slowdown in inflation. Core CPI, which excludes volatile food and energy prices, fell to 3.1%—also lower than expected.
“This marks the first decline in both Headline and Core CPI since July 2024. Inflation is cooling down in the US,” noted The Kobeissi Letter, a trading analysis firm.
Despite this seemingly positive data, Wall Street’s opening saw renewed selling pressure across the cryptocurrency market. Bitcoin fell to $82,400 before stabilizing around its daily opening price.
Technical Indicators and Market Trends
Popular crypto analyst Rekt Capital pointed out that Bitcoin has started to exit a previously filled CME Gap—an important price zone linked to Bitcoin futures trading on CME Group. “Any dips into the top of the CME Gap would constitute a post-breakout retest attempt to fully confirm the exit from this CME Gap. Initial signs of that retest occurring already,” he explained.
Other analysts focused on key technical indicators such as the 200-day Simple and Exponential Moving Averages (SMA/EMA), which serve as crucial support levels in bull markets.
“Bulls got work to do here to get back above the Daily 200MA/EMA. Last year we had the same thing and price chopped around these levels for 3+ months,” noted trader Daan Crypto Trades. Currently, these levels sit at $83,550 and $85,650, respectively.
Bitcoin ETF Outflows Indicate Institutional Caution
On the macroeconomic front, trading firm QCP Capital suggested that the CPI data could influence the Federal Reserve’s upcoming decision on interest rates.
“With inflation concerns lingering and macro risks mounting, the CPI print will be a key determinant of whether the disinflationary trend will hold, or volatility intensifies in the near term,” QCP stated in its latest market update.
Institutional investors are also showing signs of caution. Bitcoin exchange-traded funds (ETFs) experienced a significant net outflow of $153.87 million, largely driven by Grayscale’s Bitcoin Trust (GBTC). GBTC offloaded 641 BTC worth $56.45 million, bringing its total holdings down to 195,746 BTC, valued at approximately $17.24 billion.
“This signals growing caution among institutional investors,” QCP concluded.
Looking Ahead: Market Uncertainty Persists
With inflation concerns still present and institutional investors adopting a more cautious approach, Bitcoin’s short-term price action remains uncertain. However, key support levels around $82,000 appear to be holding for now.
As traders and investors navigate these developments, all eyes remain on the Federal Reserve’s upcoming policy decisions and how they might impact broader market sentiment.
