Bitcoin’s price action remains uncertain, as it continues to fluctuate between $95K and $96K over the last 24 hours after a sharp retracement in reaction to the January CPI data release yesterday.
As market participants analyze futures data and economic indicators, the taker buy-sell ratio has shown a reversal, raising speculation about a potential rally.
Taker Buy-Sell Ratio Signals Shift in Market Sentiment For Bitcoin Price
The taker buy-sell ratio, which captures the aggressiveness of buyers and sellers in the Bitcoin futures market, has recently picked up.
The 14-day moving average of this metric has seemingly started to trend up after dropping which may suggest that buyers’ control is bouncing back.
When the ratio rises above 1.0 then it is an indication that buyers are more active in placing their bids than the sellers.
This could very well cause an additional demand for Bitcoin, which in turn may push up Bitcoin prices.
Subsequently, experts have opined that sustained buying interest in the futures market may set the tone for a Bitcoin price surge above the $100k resistance.
CPI Report and Federal Reserve’s Stance on Interest Rates
The January CPI report for January came in yesterday with higher numbers than expected, climbing 0.5% in the month.
For this year, annual inflation rate was 3.0% and the core inflation rate, which excludes the price of food and energy went up to 3.3%.
The data triggered a slump in both, cryptocurrency as well as equity markets.
Analyst Michael van de Poppe had earlier released a chart depicting predictions based on expected outcomes.
A lower than expected inflation figure may lead to higher expectations for further cuts in interest rates from the Federal Reserve which may drop Treasury yields and drive demand for risk assets such as Bitcoin, according to crypto analyst.
On the other hand, firms such as BlackRock and RBC had predicted that the Fed will maintain high interest rates due to inflation in the services sector.
Now, that the CPI data is out, the chances of fed rate cuts are reportedly more remote. The current Fed Chair, Jerome Powell, had also stressed earlier that the central bank is not planning to reduce interest rates anytime soon.
Bitcoin’s Technical Setup and Market Resistance
Currently, the structure of the Bitcoin price movement on the daily chart is the falling wedge pattern, which corresponds to an impending reversal.
The cryptocurrency is maintaining support at a key diagonal trendline near $96,019, where buying activity has been observed during recent market consolidations.
Moreover, the on-chain data reveals that approximately 1.6 million wallets bought 1.57 million BTCs with an average price of $97,200.
A vast majority of these holders are either currently in loss or are practically in the region of breakeven meaning that they will soon sell and apply pressure on Bitcoin price upside momentum.
According to analysts, if Bitcoin manages to break through and stay past $97,700, the path to $101k could open.
At the same time, as per Bitcoin long/short ratio data, about 46% have long positions, and short positions were at about 54%, denoting a turn toward bearish sentiment.
Nevertheless, looking at price trends over the last few days, the OI-weighted funding rate of Bitcoin is in the positive territory at 0.0067%.
Considering current circumstances, Bitcoin may take a downside turn to $92K, owing to increased market fluctuations.
That said, the chances of a rally cannot be denied looking at multiple analyst projections, as the possibility of taker buy-sell ratio rising above 1.0.
Analysts note that if bullish sentiment continues in the derivatives market, it could support a broader Bitcoin price recovery.
