Bitcoin (BTC) Retakes $85,500 After Three-Day Consolidation

Following Trump's appearance at Blockworks' Digital Asset Summit, many short-term traders opted to take profits on their BTC holdings.

Bitcoin (BTC) price rose 2.6% on Sunday, March 23, crossing the $86,000 mark after a three-day consolidation around $84,000.

Rolling off Trump’s appearance at Blockworks’ Digital Asset Summit, many short-term traders booked some profits on their Bitcoin holdings.

However, the recent U.S. Fed rate pause announced on Wednesday saw macro-sensitive capital return to risky assets, and in doing so, brought along persistent buyers for BTC.

This time around, bullish tailwinds from the Fed rate snapshot countered the downward pressure from profit-takers, resulting in a three-day stalemate at the $84,000 level since Thursday.

But as sell-side pressure waned, BTC price clocked in a major breakout on Sunday. The chart above shows BTC rose 2.4%, hitting a daily peak of $85,500.Bitcoin (BTC) reclaims $85,500 as institutional options volume surges 24%

After a prolonged consolidation phase, Bitcoin (BTC) made a major recovery bounce on Sunday.

Following Trump’s appearance at Blockworks’ Digital Asset Summit, many short-term traders opted to take profits on their BTC holdings.

Despite the decline, Bitcoin continues to find buyers, as the recent U.S. Fed rate pause announced on Wednesday prompted macro-sensitive capital to flow toward risky assets.

This shift in sentiment is reflected in broader financial markets. The S&P 500 surged by 32 points following the Fed rate pause, signaling renewed risk appetite.

As Bitcoin mirrors this trend, it has seen a sharp uptick in speculative trading activity from large investors.

Validating this stance, Coinglass derivatives market data shows BTC’s options trading volume skyrocketed 24% in the last 24 hours, pushing total volume above $793 million.BTC options trading volume surges 24%

Options trading is a derivatives market strategy that allows traders to bet on the future price movements of an asset without directly purchasing it. This technique is particularly popular among institutional investors and whales.

With options trading, traders can use leverage to control large positions with relatively small capital, which amplifies returns, especially during periods of market volatility.

Given that options trading volume surged 24% over the last day, it suggests that whales and institutional investors are taking bullish positions on BTC’s near-term price movements.

Why is BTC options trading volume rising?

The renewed interest in BTC options trading aligns with key macroeconomic narratives:Rising U.S. inflation in the first half of 2023 pushed the Federal Reserve to aggressively raise interest rates, impacting global financial markets. As the central bank increases interest rates, opportunities for institutions and wealthy individuals to invest in capital gains channels become limited.

However, recent data showed that inflation is finally cooling down. With both the Consumer Price Index (CPI) and Producer Price Index (PPI) reports displaying a slowdown in inflation, the Federal Reserve opted to maintain interest rates at the previous level.

Moreover, Trump’s statement on Sunday indicated that he is planning to impose tariffs on copper and aluminum imports from Vietnam and China. These tariffs are part of Trump’s broader agenda to reduce the U.S. trade deficit and protect American jobs.

The prospect of new tariffs on copper and aluminum has implications for broader markets. A return of Trump-era trade policies could negatively impact risk-sensitive assets and U.S. equities.

But the good news is that Trump also announced that he is shutting down the Biden administration’s plan to impose tariffs on several types of goods from China. This decision was made in response to concerns raised by U.S. business groups, who argued that the tariffs would harm consumers and businesses.

Overall, Trump’s statements suggest that there might be a shift in macroeconomic policy, which could have implications for Bitcoin’s price trend in the week ahead.Bitcoin price forecast: Data supports bullish outlook, but $90K flip unlikely

Beyond options trading, other key metrics support a positive BTC outlook for the week ahead:

Bitcoin is now trading above key resistance at $85,600, a level previously tested multiple times during May 2023. Breaking this zone could pave the way for a continuation of the bull market.

After a period of consolidation, Bitcoin is showing strong demand above the $86,000 zone, suggesting that buyers might be able to maintain control in the short term.

Institutions appear to be returning to the Bitcoin market after a period of inactivity due to macroeconomic concerns earlier in 2023. This presence could be crucial for propelling Bitcoin toward new highs.

However, despite these bullish signals, the technical chart presents a nuanced picture. While Bitcoin has reclaimed $85,600, the looming death cross—where the 50-day moving average