March 31 is a crucial day for Bitcoin's value for three reasons: Bitcoin options' quarterly settlement day, the release of the US Personal Consumption Expenditure (PCE) price index, and BTC's monthly close candle, potentially signaling a bear cycle breakout.
Deribit, the largest crypto options exchange by trading volume and open interest, settled over $4 billion worth of Bitcoin options at 8:00 am UTC (4:00 am EST). During this time, Bitcoin's price dipped below $28,000, reaching a low of $27,512.
Pseudonymous analyst @52kskew claimed that the selling was driven by Deribit. However, notable supply support was observed on Bitstamp and other exchanges. The analyst shared a chart and added:
Deribit CVD & Delta showing the price impact of option expiry. Typically, occurs when large options open interest is near expiry & books need to be balanced out (delta neutral or hedged).
Bitcoin Rises Above $28,000 Following Core PCE Data Release The PCE, released at 8:30 am EST, is the Federal Reserve's preferred inflation metric and was the most crucial macro data point of the week. The Bitcoin and crypto markets initially reacted positively to the updated inflation data. The US Bureau of Economic Analysis (BEA) reported that the core PCE price index's annual rate was 4.6% in February, while the expectation and previous reading were 4.7%.
Furthermore, core PCE services excluding housing saw the smallest increase in February since July last year. The monthly Core PCE rate was reported at 0.3%, with the forecast at 0.4% and the last report as high as 0.6%.
US personal spending in February (MoM) was also reported at 0.2% (estimate 0.3%, prior 2.0%). Additionally, the US PCE price index for February (YoY) came in at 5.0% (estimate 5.1%, prior report 5.3%).
In general, any inflation slowdown is a positive sign, indicating that the Federal Reserve's aggressive monetary policy tightening over the past year has had a mild impact. Consequently, Bitcoin's price is currently reacting bullishly to the news.
However, the reaction is subdued. While inflation is decelerating, which is beneficial for financial markets, personal spending data shows the economy is also slowing, raising recession fears.
Moreover, the inflation slowdown isn't substantial enough. PCE at 5% and core inflation at 4.6% are still far from a stable 2%. Nick Timiraos of the Wall Street Journal tweeted that core PCE inflation in February was +4.6% over the past 12 months, +4.9% over the past 3 months, and +4.5% over the past 6 months, annualized - demonstrating slow progress.
Bitcoin traders should also monitor the monthly candlestick close on the Bitcoin chart. As Rekt Capital notes, BTC could break its multi-year downtrend and re-enter bullish territory.
At the time of writing, Bitcoin was trading at $28,537, attempting to break above the $28,540 resistance.
