Why is Bitcoin price stuck?
Bitcoin’s price has been trapped within the $82,400-$85,300 range since March 14, with both bullish and bearish movements proving to be fleeting. The recent fluctuations can be attributed to a combination of economic indicators and geopolitical events that are creating a complex trading environment.
Trade War Fears Offset Pro-Bitcoin News
The current market state reflects a tug-of-war between positive and negative news, leading to Bitcoin’s indecisiveness. On the bullish side, recent developments have sparked optimism. For example, on March 19, the Federal Reserve opted to maintain interest rates at 4.25%-4.50% while indicating a slower pace of balance sheet runoff. This announcement suggested a potential loosening of monetary policy, which is typically bullish for risk assets like Bitcoin. Fed Chair Jerome Powell’s comments on tariffic inflation being "transitory" also temporarily boosted market sentiment.
Additionally, President Donald Trump made headlines by labeling the U.S. as the “undisputed Bitcoin superpower” while advocating for supportive crypto policies, including stablecoin legislation. Furthermore, institutional interest showed signs of growth, with MicroStrategy adding 130 BTC to its portfolio, marking a total of nearly 500,000 BTC held. Senator Cynthia Lummis has even floated the idea of selling U.S. gold reserves to acquire one million BTC over the next five years, highlighting a shifting perspective toward Bitcoin as a strategic financial asset.
Conversely, bearish signals emerged in the form of economic forecasts. The Fed raised its 2025 inflation outlook to 2.8% from 2.5% while downgrading GDP growth projections, escalating concerns of stagflation. A recent breakout attempt by Bitcoin following the Fed’s commentary fizzled out, suggesting a lack of momentum in the market. Ongoing trade tensions and tariff uncertainties further cloud the economic landscape, with officials warning about possible financial crises stemming from pro-crypto policies.
Declining Liquidity Stagnates Bitcoin Market
Accompanying the price stagnation is a noticeable contraction in market liquidity. According to reports from Glassnode, the realized market cap’s growth has plummeted to just 0.67% per month, a stark contrast to the 13.2% seen in December. This subtle shift reveals that capital inflows into Bitcoin are waning, indicative of weakening speculative interest. The Hot Supply metric, which tracks coins held for a week or less, has dropped by over 50%, signaling a decrease in short-term trading activity.
The combination of these factors suggests a transition away from speculative trading, moving Bitcoin toward a more stable equilibrium. Lower liquidity could result in both upside and downside movements being capped, restricting significant price fluctuations.
BTC Price Trapped Inside Ascending Triangle Pattern
From a technical perspective, Bitcoin’s price is also displaying patterns that further constrain its movement. Currently, the price is consolidating within an ascending triangle, which typically signals a potential bullish trend reversal, particularly when forming after a downtrend. The recent breakout attempts have faced resistance, leading to heightened indecision among traders.
Should Bitcoin succeed in breaking through the upper resistance trendline, forecasts suggest a target price of around $91,965 for April. Conversely, any breach below the ascending trendline support could amplify selling pressure and see prices retreat further.
As it stands, Bitcoin’s price action is largely reliant on external economic influences and the resolution of conflicting market signals. Until market participants gain clearer insight on future policy direction and geopolitical stability, Bitcoin may remain ensconced in its current trading range.
These dynamics underline the necessity for careful analysis as market conditions evolve, especially given the inherent risks attached to cryptocurrency investments.
