Bitcoin Shows Bullish RSI Divergence Ahead of U.S. CPI Release
Bitcoin has shown a bullish RSI divergence on its daily chart, suggesting a potential market reversal as the U.S. CPI report approaches. The price has dropped significantly from $100,000 to under $80,000 due to various macroeconomic concerns. A positive CPI reading could bolster expectations for Federal Reserve rate cuts, further impacting Bitcoin’s trajectory.
A bullish divergence pattern has emerged on Bitcoin’s daily price chart, suggesting a potential reversal in market momentum. As market participants await the U.S. consumer price index (CPI) report, expectations of a soft inflation reading may provide support for risk assets. This shift marks a notable change from previous forecasts, which indicated only one cut by the Federal Reserve this year.
Bitcoin has experienced a significant decline, dropping from $100,000 last month to under $80,000 recently. This decline stemmed from various factors, including market aversion on Wall Street, concerns regarding tariffs proposed by former President Trump, and fears of a U.S. recession, compounded by a lack of new purchases under Trump’s strategic reserve plan.
Despite Bitcoin’s price decrease to multi-month lows, the relative strength index (RSI), a key momentum oscillator, showed a bullish divergence. While prices fell, the RSI indicated a higher low, signaling weakening selling momentum, which may foreshadow an upcoming bullish trend.
The timing of this bullish divergence is critical, coinciding with the release of the U.S. CPI report for February. The report is anticipated to demonstrate a monthly increase of 0.3% for both headline and core CPI, suggesting a slight moderation in rates from January figures.
In summary, Bitcoin’s formation of a bullish RSI divergence could indicate an upcoming reversal in its price trend as market participants anticipate favorable inflation data. Given that expectations have shifted significantly regarding Federal Reserve rate cuts this year, the incoming CPI release may further influence market sentiment and Bitcoin’s momentum.
Original Source: www.coindesk.com
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