The price of Bitcoin (BTC) is trading at 71,552 USD after forming a continuous upward pattern on the daily chart, with a breakout expected at 11%.
The CPI report for the United States in March on Friday forecasts that inflation will rise to 3.3% year-on-year. However, the weekly inflow of Bitcoin ETFs, which surged by about 1,300%, and the deeper outflows from exchanges indicate that the demand for BTC may absorb this macro pressure.
The price of Bitcoin has been continuously forming an upward pattern along with a surge in weekly ETF inflows.
From late March to April 7, the price of Bitcoin has formed a cup and handle pattern on the daily chart. This pattern is a continuous upward trend where the rounded bottom represents the cup, and the slight pullback is the handle before a potential breakout. The round bottom of the cup occurred due to the late March correction, and the recent pullback from the peak on April 7 is the handle. Additionally, this pattern indicates a potential breakout of up to 11% if confirmed.
The trading volume behavior aligns with the formation of this pattern. Selling pressure during the handle phase is lower than the buying volume driving the cup's upward movement. A declining volume during the handle phase is normal in this pattern and indicates that sellers are starting to decrease rather than accumulating pressure.
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The image of financial institutions supporting this pattern is evident, with weekly inflows into Bitcoin ETFs skyrocketing from 22.34 million USD in the week ending April 2 to 312.27 million USD in the week ending April 7, an increase of about 1,300%.
This surge comes as Morgan Stanley plans to register the MSBT spot Bitcoin ETF on April 8 with an expense ratio of 0.14%, the lowest among all BTC spot funds.
However, the inflow of ETFs alone has not confirmed whether Spot market participants will have the same confidence in the same direction.
The outflow from the exchange board has intensified, while Spot investors are accumulating.
Spot demand comes alongside ETF movements, as evidenced by the net position indicator on the exchange board, which tracks the volume of Bitcoin flowing in and out. This has decreased from -30,727 BTC on April 6 to -37,472 BTC on April 7. The negative value indicates that more Bitcoin has left the board than entered, and the 22% increase in outflows in a single day shows that each holder may be accelerating the transfer of BTC for quick storage.
The supply on the board is decreasing, causing existing Spot buy orders to become tighter. As money flows into ETFs increases, along with a simultaneous decrease in board balances, the conditions for upward acceleration improve. This combination also indicates that the current situation has real demand support, not just speculation through leverage.
When institutional investors and Spot investors are both supporting the rise of BTC simultaneously, the overall price chart becomes the determinant of whether these factors will lead to a breakout or stagnation.
The price level of Bitcoin to watch before the CPI numbers this Friday.
The neckline of the cup and handle pattern is at 73,238 USD, which corresponds to the Fibonacci 0.618 level. Historically, this area tends to be a zone where corrections based on the proportions of previous cycles often end. Closing above the neckline will confirm this pattern and open the way to a measured target of 78,383 USD or approximately 7% above the neckline, with the maximum target around 11%.
Before reaching the neckline, the price of Bitcoin needs to clearly stand above 71,649 USD, which is the Fibonacci 0.5 level. Closing above this point will signal that the handle structure is complete.
The cup and handle structure after a rapid recovery has the observation that the handle must stand above the midpoint of the cup's depth for the pattern to remain valid. Currently, the handle is still clearly above that midpoint, indicating that the structure is not compromised.
The release of the CPI numbers this Friday leads to two scenarios. If BTC rises even with the CPI at 3.3%, it will strengthen Bitcoin's image as an inflation-hedging asset.
However, if the data prompts investors to sell off, the correction is likely to remain within the handle range rather than break below the structure, as there is still support from ETFs and the aforementioned Spot money flow.
On the downside, the level of 70,060 USD at Fibonacci 0.382 is the first support for Bitcoin. If the price falls below 68,093 USD, it will weaken the handle pattern significantly, and if it drops below 64,915 USD at the base of the cup, it will completely invalidate this pattern.
Currently, the price at 73,238 USD is the dividing point between a confirmed breakout resistance toward 78,383 USD and a return to the handle and possibly retesting support at 68,093 USD again.