As market inertia leads to bears taking the lead at the monthly close, Bitcoin traders are concerned that BTC prices will return to range lows.
Bitcoin enters late February in a mood of uncertainty; can bulls avoid another drop to $90,000?
As Bitcoin lingers in an increasingly narrow trading range, liquidity is increasing on both sides of the spot price. (Bitcoin $96,003)
As stagflation problems deepen, US inflation data will be released soon, including the Federal Reserve's "preferred" index.
Gold prices look set to hit another all-time high, while a stronger dollar is expected to reverse a multi-week decline.
Bitcoin implied volatility is falling to levels rarely seen in history.
Market sentiment was negative, with analysts warning of impending trouble as network activity waned.
Traders predict Bitcoin price will break $90,000
Bitcoin remains stuck in a tight range after a Bybit hack crushed last week’s upside breakout attempt, data from Cointelegraph Markets Pro and TradingView show.
However, as the current liquidity conditions on the exchange’s order books show, both bulls and bears are likely to initiate a new push.
“We can now see from the liquidation levels that liquidation volume equals downside or upside,” trader CrypNuevo wrote in an X thread on Feb. 23 while discussing this week’s outlook.
“Considering the price is in a LTF downtrend, perhaps there is more upside. $947K and $925K are key.”
Trader Roman is less optimistic, believing Bitcoin will return to the bottom of its multi-month trading range.
He told X’s fans: “Due to a serious lack of strength, attempts to advance have failed many times.”
"It looks like 90k support is coming. If we break 98.4 and close above, this support will be invalidated. The range is very tight so I expect a quick move."
Meanwhile, on the weekly timeframe, trader Luca is eyeing an upcoming test of Bitcoin’s bull support band.
This area is formed by two moving averages and has been acting as support since BTC/USD surpassed its all-time high of $73,800 in early October.
Luca said that amid low financing rates, depressed market sentiment and retail investors reducing their holdings, Bitcoin is expected to rise again.
PCE comes as concerns over stagflation grow
Markets are awaiting the “final piece of the puzzle” this week as U.S. inflation data continues to provide headwinds for risk assets.
The Personal Consumption Expenditure (PCE) index, known as the Federal Reserve’s “preferred” inflation measure, will be released on February 28.
The news comes after the number of Americans filing for unemployment benefits exceeded expectations last week, suggesting that labor market conditions are weakening amid a resurgent inflation gauge. As Cointelegraph previously reported, this points to “stagflation,” which traders are watching closely for developments.
“The possibility of a ‘stagflation’ economic environment, in which slow economic growth is coupled with high inflation levels, is a key concern for investors,” trading firm Mosaic Asset wrote in the latest edition of its regular newsletter (Market Mosaic) on February 23.
“But interestingly, historical data shows that stagflation is not necessarily associated with poor stock market performance.”
Mosaic noted that during the 12 years of stagflation since 1930, the S&P 500 mostly remained in the black despite economic pressures.
"Since 1930, there have been 12 years of economic slowdown but rising inflation. Of those, 75% had positive real stock market returns, with the S&P 500 having an average annual real return of 16.4%," the report said.
Still, the latest estimates from CME Group’s FedWatch tool underscore the market’s lack of confidence in economic policy easing.
For example, while the Federal Reserve has two meetings scheduled during this period, it is unlikely to cut interest rates before July.
Trading resource Kobeissi Letter said of the upcoming data: "With both PPI and CPI inflation rebounding, PCE inflation will be the final piece of the puzzle," predicting that the last week of the month will be "eventful."