Buying the Retreat in Bitcoin After the Break of $26,000
Traders were unsure about the end of the crypto winter, which started in November 2021 as the establishment opened war on cryptocurrencies. In January we saw a strong bullish reversal in cryptocurrencies which continued for most of February, but toward the end of last month the bullish momentum faded and last week we saw a strong reversal lower.
Bitcoin fell below $20,000 while Ethereum slipped below $1,400. Traders got excited during the bullish reversal early this year, hoping that the crypto winter was over, although after the retreat last week, the uncertainties increased. Was the crypto over and the trend was turning bullish or was the bullish momentum of the last two months just a retrace before the bearish trend resumed again?
Now after the price action of the last several days, markets are leaning more toward the bullish reversal side. The price of Bitcoin (BTC) saw a strong surge above $26,000 following the release of the latest CPI consumer inflation numbers for February.
The CPI inflation MoM rose by 0.4% last month on a seasonally adjusted basis, with the all-items index denoting inflation increasing by 6% YoY, down from 6.4% previously. That caused volatility in financial markets, while the cryptocurrency markets reacted positively, with Bitcoin and Ether (ETH) seeing a surge in price.
The CPI number is used to adjust wages, benefits, and social security payments for inflation, measure economic performance, and set monetary policy, reflecting the spending patterns of consumers on items such as food, housing, transportation, clothing, medical care, and recreation. The shelter index was the largest contributor to the monthly all-items increase, accounting for 70% of February 2023’s CPI increase, with indexes for food, recreation, household furnishings, and operations also contributing.
Bitcoin H1 Chart – Buying the Retreat in BTC
Bitcoin retreating $2,000 lower from the highs
So, BTC surged above $26,000 after the report was released, but we saw a reversal in the evening which sent the price down to $24,000 lows. Although a pin candlestick formed above the 50 SMA (yellow) on the H1 chart, which is a bullish reversing signal and the price started to reverse. We decided to open another buy Bitcoin signal after the previous one hit the take profit target yesterday, so we are long on BTC again now.
Bitcoin BTC Live Chart
[[BTC/USD-graph]]
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