As February wraps up, Bitcoin finds itself in a state of uncertainty; will the bulls manage to prevent a further dip to $90,000?
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Liquidity is accumulating on both sides of the spot price as Bitcoin BTCUSD struggles within an increasingly narrow trading range.
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Upcoming US inflation data, including the Fed’s “preferred” index, is raising concerns over stagflation.
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Gold appears poised to achieve yet another record high, while the US dollar is attempting to reverse weeks of decline.
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Bitcoin’s implied volatility is reaching levels not commonly seen in its history.
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Market sentiment is grim, and declining network activity has sparked warnings of potential trouble ahead.
Traders identify BTC price support around $90,000
Data from Cointelegraph Markets Pro and TradingView shows Bitcoin remains locked in a tight range after last week’s attempted breakout was thwarted by the Bybit hack.
Despite this, the potential for a new move by either bulls or bears exists, as indicated by current order book liquidity conditions.
“Current liquidation levels show a balance between potential downside and upside,” trader CrypNuevo noted on X on February 23 regarding the week’s outlook.
“There may be more potential for the upside, considering the price is in a shorter-term downtrend. Key levels are $94.7k and $92.5k.”
Another trader, Roman, was less optimistic, anticipating a drop back to the lower end of the multi-month trading range.
“The numerous failed attempts to rise indicate a significant lack of strength,” he commented to his followers on X.
“It seems likely we’ll touch the 90k support soon unless we break above 98.4 and close above it. The range is extremely tight, so I expect a swift move.”
On weekly timeframes, trader Luca prepared for a potential test of Bitcoin’s bull market support band.
This zone, formed by two moving averages, has acted as support since early October when 
BTCUSD broke past its previous all-time high at $73,800.
Luca speculated that Bitcoin may be set for a resurgence amidst low funding rates, negative sentiment, and a reduction in retail investor exposure.
PCE data arrives as stagflation worries persist
Markets are anticipating the “final piece of the puzzle” this week as US inflation data continues to present challenges for risk assets.
The Personal Consumption Expenditures (PCE) Index, which is recognized as the Federal Reserve’s “preferred” inflation measure, is set for release on February 28.
This follows last week’s initial jobless claims that exceeded expectations, signaling weakening labor-market conditions amidst rebounding inflation indicators. This scenario, as previously reported by Cointelegraph, is suggestive of “stagflation,” and traders are closely monitoring its progression.
“Concerns about a potential ‘stagflation’ economic environment loom large for investors, where slow economic growth coincides with elevated inflation levels,” noted trading firm Mosaic Asset in their latest newsletter, “The Market Mosaic,” on February 23.
“Interestingly, historical data suggests that stagflation does not inherently correlate with poor stock market performance.”
Mosaic pointed out that during 12 stagflation years since 1930, the S&P 500 often ended up higher in spite of economic constraints.
“Historically, in 12 stagflation years, the economic growth slowed while inflation rose; the stock market’s real return was positive in 75% of these cases, yielding an average annual real return of 16.4% in the S&P 500,” they reported.
Recent insights from CME Group’s FedWatch Tool have emphasized a lack of confidence in economic policy easing.
A rate cut is unlikely before July, despite two Fed meetings scheduled before then.
“PCE inflation will be the concluding piece of the puzzle as both PPI and CPI inflation rates are on the rise,” remarked trading resource The Kobeissi Letter regarding the impending data release, predicting an “eventful” last week of the month.
Gold continues to ascend
In contrast to Bitcoin and other altcoins, gold remains unaffected by economic fluctuations.
The precious metal is achieving new record highs and, as of February 24, is working toward its highest-ever daily close.
The US Dollar Index (DXY), which reflects the dollar’s strength against a selection of US trading partner currencies, is working to reverse a downtrend that has been in place since early December.
Typically, a strong dollar exerts downward pressure on risk assets; however, Kobeissi highlights that the current situation appears unique over the long term.
“Since late July, gold prices have risen about 24%, while the US dollar has gained around 2% and the 10-year note yield has increased by approximately 8%,” the firm pointed out on X last week.
“Notably, gold and rates/USD, which usually maintain an inverse relationship, are both rising simultaneously.”
Kobeissi has noted a global surge in gold demand, labeling it the “global safe haven asset” amid concerns regarding US trade policies and tariffs.
“Remarkably, gold is rising along with the S&P 500,” they added.
“In fact, gold’s year-to-date return has significantly outperformed that of the S&P 500. In 2024, gold and the S&P 500 have shown an unprecedented correlation of around 0.81.”
As previously mentioned by Cointelegraph, Bitcoin has often mirrored gold’s bullish trends with an approximate three-month delay.
“Gold is surging, Bitcoin is stagnant. Anticipate a return to summer 2024 vibes,” summarized Charles Edwards, founder of Capriole Investments, to his followers on X this month.
“The pattern persists: Bitcoin will remain dormant. As gold maintains its upward trajectory, Bitcoin typically experiences a larger breakout within 3-6 months.”
Bitcoin volatility metrics hit record lows
Bitcoin’s persistent trading range has produced some rare readings from volatility metrics.
On weekly timelines, realized volatility, which gauges the standard deviation of market returns from the mean, is approaching record lows.
This trend was highlighted over the weekend by on-chain analytics firm Glassnode.
“Bitcoin’s 1-week realized volatility has plummeted to 23.42%, nearing historical lows. In the past four years, it has dipped below this threshold only a handful of times – for instance, in October 2024 (22.88%) and November 2023 (21.35%),” they reported in an X thread.
“Similar volatility compressions in the past have resulted in significant market movements.”
Glassnode noted similar observations from 1-week options realized volatility, which is also nearing multi-year lows.
“The last time implied volatility was this low (2023, early 2024), significant spikes in volatility closely followed. However, longer-term implied volatility remains elevated (3-month: 53.1%, 6-month: 56.25%),” they stated.
The low volatility has remained a point of interest among Bitcoin traders, attributed to the hesitance of buyers and sellers to establish a lasting trend change.
Declining network activity
Both Bitcoin network activity and sentiment are on the decline, leading to concerns about the potential long-term impact on price dynamics.
Active wallet addresses have continued to diminish following the US presidential election, prompting on-chain analytics platform CryptoQuant to draw parallels to BTC price drops witnessed earlier in the current bull cycle.
“Moreover, the accumulation rate of spot Bitcoin ETFs has slowed, with minor capital outflows noted recently,” contributor Avocado_onchain highlighted in a February 23 “Quicktake” blog post.
“The number of UTXOs is also on the decline, with the rate of decrease resembling the correction period experienced in September 2023. If this trend persists, we might encounter signs of an investor exodus akin to the 2017 market cycle peak.”
While the post stated that “a simple decline in UTXOs alone does not signify the end of the current cycle,” lingering sentiment remains an issue.
The Crypto Fear & Greed Index currently stands at 49/100, indicating “neutral” territory after holding steady for much of February.
“As earlier bullish narratives are priced in, any potential for additional upward momentum will hinge on resolving uncertainties or introducing new bullish catalysts,” Avocado_onchain concluded.
This article is not intended as investment advice or recommendations. Every investment and trading action entails risk, and readers are encouraged to conduct their own research before making financial decisions.
