Bitcoin price rally recovered from weekly lows below $80,000 to stabilize above the $81,000 support level, and cooler-than-expected inflation data relieved traders. At the time of writing, the total crypto market cap climbed about 3% to $2.76 trillion, while market sentiment also improved.
The crypto fear and greed index jumped 10 points to 24 to move out of extreme fear territory. Altcoins saw a more substantial rebound, with over a dozen of the top 99 high-cap coins flashing green on the daily charts.
Bitcoin Rallies on Inflation Data
Bitcoin price surged to $84,000, gaining 1% in just 10 minutes after fresh inflation data showed consumer prices rose less than expected in February. A milder-than-expected CPI report eased concerns about the Federal Reserve keeping interest rates higher for longer, sparking a wave of optimism across risk assets. Traders are now betting that the Fed might soften its stance, with rate cuts possibly coming sooner than expected.
The central bank has been closely watching inflation trends, and the Bitcoin price rally, with core inflation cooling to 3.1% from January’s 3.3%, suggests that the pressure to maintain restrictive policy may be easing. Lower interest rates could mean a more vigorous push higher for Bitcoin. A dovish Fed stance weakens the US dollar, making alternative assets like Bitcoin more attractive.
If inflation continues to trend downward, markets could start pricing in rate cuts for later this year, potentially fueling more upside for BTC in the short term.
Bitcoin Faces Bearish Pressure
Despite the mild recovery during the early Asian trading hours on Wednesday, the momentum was short-lived, as selling pressure returned when Wall Street opened. Bitcoin dropped to $81,400, erasing most of its earlier gains and hovering near the daily open. Analysts caution that BTC remains vulnerable, as specific metrics indicate a potential deeper correction.
According to CryptoQuant, the Bitcoin bull-bear market cycle indicator has hit its most bearish level of this cycle, sitting at -0.06, —the lowest since May 2023. Similar levels have historically led to sharp pullbacks or marked the start of a prolonged downtrend.
Another key metric, the MVRV ratio Z-score, has also crossed below its 365-day moving average, and its recent movement suggests that the rally may be running out of fuel. According to CryptoQuant analysts, Bitcoin’s key support lies between $75,000 and $78,000. The price could slide further if this range fails, potentially reaching $63,000.
Bitcoin and Government Spending
One potential catalyst for Bitcoin’s next move is government spending, which Bitget analysts see as a short-term boost. This ties back to the US debt ceiling—the legal borrowing limit for the government. When the debt ceiling is suspended or raised, the government can borrow more money, increasing spending and injecting fresh liquidity into the economy.
According to Ryan Lee, chief analyst at Bitget Research, this extra cash could increase demand for assets like stocks and crypto, helping stabilize the market. With the debt suspension set to end shortly after the White House Crypto Summit, some of this liquidity might flow into digital assets.
However, this relief may be temporary. Key economic concerns—like inflation, interest rates, and geopolitical uncertainty—are still in play. According to Lee, any price surge fueled by liquidity alone might not last without clear resolutions.
Altcoin Market Struggles
The Altcoin Season Index, which measures whether the market is in Altcoin Season based on the performance of the top 100 altcoins against Bitcoin over the past 90 days, dropped 2 points from 16 to 14, with only 11 altcoins in the green. A sign that Bitcoin’s movements continue to dictate the broader market trend.
Despite this, some short-term traders injected liquidity into the market, pushing the total altcoin market cap up 10% to $1.1 trillion at the last check. The top gainers for the day posted modest double-digit gains triggered by individual developments:
Pi network
Pi (PI) bounced back from its recent dip, climbing 21% in the last 24 hours to $1.64 as of press time. Its market cap stood at $11.75 billion, while its daily trading volume jumped 78% to around $772 million. Pi (PI) recorded substantial gains today as investors positioned themselves ahead of Pi Day on March 14, a key milestone for the Pi ecosystem.
Users must transfer their mined Pi to the mainnet before this event to prevent forfeiting most of their holdings as the network transitions from testnet to mainnet.
Celestia
Over the past day, Celestia (TIA) rallied 13.35% to $3.32, as its market cap was $1.85 billion at the time of writing. Its daily trading volume stood at $173.65 million, while its circulating supply was $1.1 billion TIA tokens. Recently, Celestia and Citrea have collaborated to enable the deployment of Bitcoin app chains with scalable, low-cost data availability while leveraging Bitcoin’s liquidity and security.
The development, which allows developers to build more efficient and cost-effective applications on the Bitcoin network, has fueled TIA’s gains as investors anticipate increased adoption and utility within the Bitcoin ecosystem.
Final thoughts
The paper reviews the price swings in Bitcoin and the more significant cryptocurrency industry. Inspired by lower-than-expected inflation numbers, Bitcoin has lately bounced back from weekly lows below $80,000 to steady above the $81,000 support level. A 3% rise in the overall crypto market capital value and better market attitude set off a tsunami of hope.
The crypto fear and greed measure also showed an apparent increase, suggesting less worry among traders. After the CPI report revealed lower-than-expected consumer prices, Bitcoin jumped to $84,000, allaying fears about the Federal Reserve keeping high interest rates for a protracted time.