The Bitcoin price remains under pressure after moving into a bear market this month. It has plunged by over 20% from its highest level this year. This crash has led some popular analysts to shift their calls and predict it will crash further. Still, there are a few reasons why Bitcoin price may bounce back and hit its all-time high in March.
Crypto Fear and Greed Index and Market Sentiment
The first reason why the Bitcoin price may bounce back this year is that market sentiment has worsened, pushing many investors to remain on the sidelines. The fear and greed index has moved to the fear zone of 25, while the number of active Bitcoin addresses has dropped in the past few days.
At the same time, some analysts have turned bearish. For example, Ki Young Ju, the founder of CryptoQuant, warned that the crypto bull market was now over. He expects Bitcoin to either consolidate or retreat in the next few months.
At face value, these actions should be bad for Bitcoin price. However, in reality, Bitcoin often moves in the opposite direction with the market sentiment. For example, the recent Bitcoin price crash happened after it moved to the greed area. Also, most altcoins dropped when the altcoin season index jumped.
Further, the Mean Dollar Invested Age (MDIA) indicator has been rising, a sign that investors are not selling.
Bitcoin ETF Inflows Are Rising
The other reason Bitcoin’s price may jump to a new all-time high is that spot BTC ETFs are seeing demand. SoSoValue data shows that weekly inflows have risen to over $500 million even as the coin remained in a bear market. These funds now have over $91 billion in assets, with Blackrock’s IBIT fund having over $46.8 billion in assets.
The rising inflows into spot Bitcoin ETFs are a sign that US investors are upbeat about Bitcoin. The rising Coinbase Bitcoin Premium Index supports this view, as shown below.
Bitcoin Price Has Bullish Technicals
The other main reason why the BTC price may jump to a new all-time high this month is its strong technicals. The weekly chart shows that the Bitcoin price formed a cup-and-handle pattern between November 2021 and late last year. It completed the handle section in November when it went parabolic.
The cup had a depth of 77%. Therefore, by measuring that distance from its upper side, we can estimate that the Bitcoin price target will be USD 122,420, which is about 45% above the current level.
The short-term risk is when the BTC price drops and retests the upper side of the cup and handle pattern. Such price action would be bullish since it would be part of the break-and-retest pattern, a popular continuation sign.
READ MORE: Top 3 Altcoins to Sell as Crypto Fear and Greed Index Crashes
