Bitcoin Volatility Continues

Bitcoin prices are starting the week on a tentative footing as traders brace for a slew of high-level US data. A surge higher in BTC last week gave bulls hope that the recent correction lower was a temporary blip, closing the gap from last Sunday’s open. However, with that bullish momentum seen fading through the end of the day on Friday, BTC futures are starting the week around 6% down from those highs. There is plenty of mixed opinion surrounding current BTC price action with some players warning the market is at the start of a trend reversal lower while others point to the prospect of a breakout higher and a fresh bull phase.

US Data on Watch

Looking ahead this week, US data will be pivotal for BTC price direction. If we see fresh weakness in inflation readings, this should further drive-up near-term Fed easing expectations, leading to a weaker USD and stronger risk appetite boosting crypto demand. However, should we see any upside surprise, this could well complicate the near-term picture and will likely see fresh unease across risk markets as traders scale back their Fed easing expectations. In this scenario, BTC is likely to trade lower near-term.

Institutional Demand

One interesting aspect of the recent pullback in Bitcoin, which bodes well for bulls, is the institutional demand seen. With big names now able to access the market via ETFs, the recent decline saw record ETF demand suggesting appetite from large players to position for fresh upside. While these flows remain in place, any fresh BTC downside is likely to see a similar boomerang effect, keeping the focus on further upside for now.

Technical Views

BTC

For now, the recovery rally in BTC has been capped into the 60,695 level. With price holding above 57,215, however, the focus remains on further upside and a fresh attempt at testing the bear channel highs with 69,255 the broader target for bulls. To the downside, 53,525 remains key support to watch if we break below 57,215.