Bitcoin RSI Breaks 4-Month Downtrend

Bitcoin's RSI indicator has finally broken the downtrend that has been ongoing since November 2024. As the price of the premier cryptocurrency nears the highs of the past two weeks, market sentiment remains cautious despite improving technical indicators.

At the start of the week, Bitcoin is heading firmly towards the $90.000$, but most traders are still bracing for a possible price drop, with new multi-month lows on the horizon.

Traders Predict a Decline

Despite the current rise, analysts warn that Bitcoin still has room for another decline. Popular trader CrypNuevo points out in his analysis:

"Market sentiment has recovered after the liquidation of short positions at $87.1k. Now market makers have a good opportunity to shake the market again. In the next 1-2 weeks, we could see a pullback."

Another trader, known as HTL-NL, believes the situation "is not positive" for bullish traders, identifying $90,000 as key resistance before a possible downward reversal.

To consolidate a solid bullish trend, Bitcoin will need to stabilise above some key support lines, including the simple moving average and the 200-day exponential moving average, currently positioned at $85,050 and $85,500 respectively.

Last Week of Q1

The last full week of Q1 2025 begins with signs of recovery in risky assets, as equity markets break a four-week losing streak.

The most anticipated event for traders this week is Friday 28 March (15:30 GMT), when the February PCE report will be released. Known as the Federal Reserve's "preferred" inflation indicator, last month's PCE came in below expectations, and the general consensus expects a similar figure again this time around.

The research firm Bespoke points to positive trends:

"The Fed's inflation model expects both the CPI and PCE to fall below 3% by March. This leaves room for further rate cuts."

According to the latest forecast from the Chicago Mercantile Exchange FedWatch, the likelihood of a cut in the taxes remains unchanged, with the June FOMC as the most likely time for an easing of financial conditions.

However, the optimism could be dampened by the US government's reciprocal tariff agreement, which will take effect on 2 April. During the press conference following the last FOMC meeting, Fed Chairman Jerome Powell called tariffs a "key factor" in raising inflation expectations.

The RSI Signals a Breakout for Bitcoin

The Relative Strength Index (RSI), one of the most important technical indicators, is currently showing breakout signals on both long and short timeframes.

Analysts are closely monitoring the bullish divergences of the RSI, which on weekly charts is breaking the bearish trend that has been in place since November 2024.

Popular analyst Rekt Capital writes in its latest update:

"The daily RSI is showing the first signs of a retest of the bearish trend that began in November 2024 as new support."

According to analyst Matthew Hyland, Bitcoin has confirmed a bullish divergence on the weekly chart for the first time since September last year.