Key takeaways

• BTC is trading above $103k, up 1.5% in the last 24 hours.
• The coin could face further volatility amid weakening institutional demand.

Bitcoin reclaims $103k

The price of Bitcoin has been trading around $103k over the last few hours after rebounding from the $100k key support level on Wednesday. The short-term recovery is marred by the weakening institutional demand, as spot Bitcoin Exchange Traded Funds (ETFs) recorded $137 million in outflows on Wednesday, bringing their losing streak to six days.

Furthermore, on-chain data reveal that Bitcoin could face further selling pressure if the $100k psychological level fails to hold. In its report on Wednesday, CryptoQuant noted that Bitcoin’s price is currently hovering near critical support levels, a breakdown of which could trigger a sharper market correction.

The report added that if Bitcoin faces enough selling pressure in the near term, it could lose its $100k support level and dump towards the next major psychological level at $72k. 

Bitcoin could retest the $100k support level

The BTC/USD 4-hour chart remains bearish and efficient after Bitcoin faced rejection around its previously broken trendline earlier this week and declined 8.18% on Tuesday. The dip saw Bitcoin retest the 50% retracement level at $100,353 before reclaiming the $103k level on Wednesday.

At press time, Bitcoin is trading around the $103k region. The RSI of 38 means that Bitcoin is still facing selling pressure, with the MACD lines also within the bearish region. 

If the support level at $100,350 holds, Bitcoin’s price could rally towards the next resistance level at $106,435 over the coming hours and days. An extended bullish run would allow Bitcoin to reclaim its weekly high above $109k.

However, if the support level fails to hold, Bitcoin could extend its decline toward the next daily support at $97,460. Further downward movement would see BTC trading below $90k for the first time in six months.

A sharp escalation in Middle East tensions sent shockwaves through global financial markets in the early Asian trading hours, triggering a significant spike in oil prices and prompting a flight to safety.

Bitcoin (BTC) was not immune to the turmoil, experiencing a notable price drop as traders scrambled for downside protection, evidenced by a dramatic crash in short-term options skew.

The seven-day skew for Bitcoin options, a key metric that measures the relative cost of bullish calls versus bearish puts listed on Deribit, plummeted to -3.84%.

This marked its lowest point since April 16, according to data from Amberdata.

In practical terms, this means put options, which offer traders protection against price declines, became the most expensive relative to call options in three months.

The surge in demand for these protective puts also dragged the 30-day and 60-day skews into negative territory, signaling a broader shift towards caution among market participants.

Traders typically purchase put options either to hedge existing long positions in the spot or futures markets or to directly profit from an anticipated fall in prices.

The clear preference for puts indicates a growing unease about Bitcoin’s near-term trajectory amidst the heightened geopolitical uncertainty.

Bitcoin’s price reflected this nervousness, falling to its 50-day simple moving average (SMA) at $103,150, extending its 24-hour losses to 4.59%, according to CoinDesk data.

This decline represented a significant retreat from earlier in the week when prices had briefly topped the $110,000 mark.

Market bulls are now likely hoping that the 50-day SMA will provide a crucial support level, as a sustained break below it could attract further selling pressure, a pattern observed when this support level failed back in February.

Oil surges as geopolitical cauldron boils over

The catalyst for this market turbulence was a dramatic escalation in the Middle East.

The per-barrel price of WTI crude oil surged by over 6% to $74.30, reaching its highest level since February 3 and extending its weekly gain to an impressive 13%, according to data from TradingView.

This sharp upward movement in oil prices reportedly followed news of Israeli airstrikes on Iran, which supposedly drew retaliatory missile action from Tehran, though details remained fluid.

Inflationary shadows and Fed policy under scrutiny

Sudden and significant spikes in oil prices tend to have a global inflationary impact, and this latest surge is no exception.

Concerns are now mounting that this could inject fresh inflationary pressures into economies worldwide, at a time when President Donald Trump’s ongoing trade war already threatens to disrupt economic stability and fuel inflation, particularly in net-importer countries.

This confluence of factors could significantly dent market expectations for Federal Reserve rate cuts.

If inflation re-accelerates, the Fed may be less inclined to ease monetary policy, potentially adding to downside volatility in both stocks and cryptocurrencies.

As of writing, futures tied to the S&P 500 were trading 1.5% lower on the day, reflecting the broader risk-off sentiment.

Traditional markets reel from geopolitical shock

The reaction in traditional markets was swift and pronounced. US stock index futures were down approximately 1.5% across the board following the news from the Middle East.

European market futures mirrored this decline, also trading down by roughly the same margin.

In a classic flight to safety, bond prices moved higher as investors sought refuge from the volatility.

Gold, another traditional safe-haven asset, also saw increased demand, adding about 0.75% in the past hour to trade at $3,428 per ounce.

Crude oil, as previously noted, had soared by an even more dramatic 9% to $74 per barrel in the immediate aftermath of the reports.

The 10-year Treasury yield dipped two basis points to 4.32%, indicating increased demand for US government debt.

Currency markets also reflected the shifting risk landscape, with the US dollar gaining against the euro and the British pound, but losing ground against traditional safe-haven currencies like the Japanese yen and the Swiss franc.

Bitcoin price could soon see a strong pullback above $100K levels after facing strong selling pressure over the past week. Also, retail participation in BTC is once again picking up which could drive it even higher. Investors have now decided to look past the stick inflationary environment amid the hot US PPI and CPI data.

Bitcoin Price Short Squeeze to Send It to $103K

Prominent cryptocurrency analyst Justin Bennett has weighed in on recent Bitcoin price movements, suggesting a possible short squeeze in the near term. In a statement on social media, Bennett noted the current sideways trading pattern for Bitcoin, attributing it to a broader market rally fueled by optimism. Bennet wrote:

“It’s not pretty, but with stocks rallying on hopes and dreams, there’s a decent chance this sideways chop ends with Bitcoin shorts getting squeezed.”

As a result, Bennet stated that Bitcoin show a quick bounce to $103K levels where it faces the next major resistance. As of press time, Bitcoin price traded near the flatline at $96,840 with daily trading volumes down 35% to $32 billion.

BTC Retail Demand Picks Looking Past US PPI and CPI Data

The Bitcoin retail demand seems to be making a strong comeback following a brief period of consolidation. Recent data indicates that retail activity dipped by only 2% over the past 30 days, a significant improvement compared to the 20% decline seen in January.

Market analyst Kyledoops suggested that this resilience, coupled with improving sentiment, could pave the way for the next upward move in Bitcoin price. However, it will be interesting to see how soon this Bitcoin consolidation will end.

Earlier this week on Tuesday, Jerome Powell indicated that quantitative easing is not on the horizon. The following day, inflation ticked up to 3%, and yesterday’s higher-than-expected Producer Price Index (PPI) suggests that inflation remains persistent. These economic signals point to continued tight liquidity conditions, making it less likely that interest rates will be cut in the near term.

Bitcoin Demand Among Institutions Growing

The demand for Bitcoin among institutions and companies has been growing as GameStop showed interest in putting BTC on its balance sheet. “All the liquidity is going into Bitcoin. I haven’t heard any institution say they are buying your favorite altcoin,” noted analyst Ali Martinez.

Matthew Sigel, head of digital assets research at VanEck, noted that 20 US states are currently advancing legislation related to Bitcoin reserves. If all these bills are passed, they could channel approximately $23 billion into the Bitcoin market, which would be equivalent to around 247,000 BTC.

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Bhushan Akolkar

Bhushan is a FinTech enthusiast with a keen understanding of financial markets. His interest in economics and finance has led him to focus on emerging Blockchain technology and cryptocurrency markets. He is committed to continuous learning and stays motivated by sharing the knowledge he acquires. In his free time, Bhushan enjoys reading thriller fiction novels and occasionally explores his culinary skills.

Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.