Bitcoin Poised for a Breakout as Possibility of a Demand Surge Grows
BITCOIN USD KEY POINTS:
- Bitcoin Prices Continue to Consolidate Within a Symmetrical Triangle Pattern.
- A Potential Demand Surge Could Give Bitcoin the Push it Needs to Test the $30000-$31200 Resistance Area.
- Both the Crypto and Bitcoin Fear and Greed Indexes are Now in Greed Territory. Will we See Another Bullish Cycle Like 2019 and 2021 or Will Deleveraging Play a Part and Push Prices Lower?
Bitcoin continues to consolidate around the $28000 mark following its rally during the banking crisis in March. Price has been ranging between the $26300-$29300 since March 18 and remains delicately poised with a breakout in either direction a possibility.
News came through yesterday that MicroStrategy bought an additional 1045 bitcoins at an average price of $28016 per BTC. Saylor confirmed that MicroStrategy now owns 140k Bitcoins with a value around $4 billion at an average price of $29803. The purchase and accompanying comments by Bitcoin enthusiast and MicroStrategy founder Michael Saylor failed to inspire a bullish breakout.
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VALUE OF FEES HINT AT DEMAND SURGE
The direction of a breakout at this stage is anyone’s guess however according to on-chain analytics firm Glassnode, a key metric is the value of fees which suggests new demand may be entering the market. According to the research by Glassnode the 90-day SMA for fees are currently outpacing the yearly average which further strengthens their belief that a demand spike may be incoming.
The crypto fear and greed index as well as the Bitcoin fear and greed index have both firmly entered the greed territory. Personally, I am leaning toward a bullish breakout, however I am reminded of the famous saying of ‘trade what you see and not what you think”. The technical picture which we will break down shortly provides a case for both a bearish and bullish breakout.
Supporting the bearish narrative, a resurgence in the US Dollar of late may hinder a bullish breakout with key US data releases expected tomorrow. However, the Dollar has seen some upside over the last two days and that has failed to push the price of Bitcoin toward a breakout which strengthens my belief that bulls may take control.
From a technical standpoint BTCUSD has been rangebound since March 18 with price action indicative of a pause and perhaps some degree of uncertainty. We are currently trading within a symmetrical triangle pattern with the apex growing closer by the day.
As mentioned earlier there is a case for both a bullish and bearish breakout by taking a closer look at the technical. There is a double top pattern in play as you can see on the chart below which hints at the possibility of a bearish breakout.
A bearish breakout will bring the key $25000 level back into focus which served as a significant barrier of resistance in the recent past. Price had been stuck below the $25000 mark from June 2022 till the recent break higher on March 17, while the 50-day MA also rests around this level which should provide significant support.
A bullish breakout on the other hand will bring the psychological $30000 level into focus and above that the resistance at around the $31200 handle.
BTCUSD Daily Chart, April 6, 2023.
Source: TradingView, chart prepared by Zain Vawda
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--- Written by Zain Vawda for DailyFX.com
Contact and follow Zain on Twitter: @zvawda
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.