Bitcoin Eyes Q1 Close Near Highs as Traders Brace for Possible Pullback

Bitcoin Eyes Q1 Close Near Highs as Traders Brace for Possible Pullback

As the first quarter of 2025 winds down, Bitcoin is trading near two-week highs, buoyed by improving technical indicators. However, despite the uptick in price, market sentiment among traders remains cautious and divided.

Market Braces for Another Dip

Data from Cointelegraph Markets Pro and TradingView shows BTC/USD is on the verge of testing local highs. But many analysts warn that a retracement could be looming. Although Bitcoin has gained nearly 15% from its multimonth lows earlier in March, some traders expect the rally to falter.

Popular trader CrypNuevo suggested in a recent X (formerly Twitter) post that this recovery phase might be setting the stage for another market shakeout. He pointed to the $80,000 level as a likely downside target, warning traders to be wary of risks.

Similarly, trader HTL-NL noted the near-term outlook “doesn’t look good” for bulls, predicting a ceiling near $90,000 before a potential reversal. Meanwhile, former BitMEX CEO Arthur Hayes added to the conversation, speculating that BTC could rally to $110,000 before experiencing a sharp 30% correction.

Trader Roman also echoed a bearish short-term outlook, suggesting that Bitcoin may dip again before retesting the $88K–$90K resistance zone.

Key Technical Levels in Focus

A successful recovery, many analysts say, would require Bitcoin to reclaim key long-term support levels — notably the 200-day simple and exponential moving averages, which currently sit at $85,050 and $85,500 respectively.

Macro Events and Market Mood

This week marks the final full trading week of Q1, coinciding with the release of the U.S. Personal Consumption Expenditures (PCE) index on March 28. The PCE is the Federal Reserve’s preferred inflation metric and has implications for monetary policy. Market expectations suggest the report will show inflation cooling, which could bolster risk-on sentiment and support assets like Bitcoin.

Financial research firm Bespoke noted that the Fed’s own model now projects both headline and core inflation to dip below 3% by March — potentially paving the way for interest rate cuts. However, the optimism may be dampened by a reciprocal U.S. tariff policy set to take effect on April 2, which Fed Chair Jerome Powell acknowledged could be inflating goods prices.

RSI Signals a Breakout

Despite the cautious sentiment, Bitcoin’s Relative Strength Index (RSI) is flashing bullish signals. The RSI, a key momentum indicator, is attempting to break out of a long-standing downtrend on both daily and weekly timeframes.

Analyst Rekt Capital pointed out that the RSI may be confirming former resistance as new support — a bullish pattern often seen in early-stage rallies. Analyst Matthew Hyland also highlighted a bullish divergence forming on the weekly RSI for the first time since September 2024.

Short-Term Holders Under Pressure

On-chain analytics from Glassnode show that Bitcoin’s short-term holders (STHs) — those holding BTC for less than six months — are currently facing significant unrealized losses. Many of these newer investors have capitulated during recent dips, contributing to $7 billion in 30-day realized losses, the largest sustained loss event in this cycle, though still less severe than past cycles.

Stablecoins Point to Confidence

Amid the volatility, there are signs of growing investor confidence — especially on Binance. On March 21, the exchange saw its ERC-20 stablecoin reserves hit a record high above $31.8 billion, according to CryptoQuant.

Analysts interpret this as a bullish signal, suggesting that investors are preparing dry powder for future entries into the market. As Binance remains the highest-volume exchange globally, the influx of stablecoins could indicate readiness for a renewed buying wave.