Bitcoin poised for a breakout as the possibility of a demand surge grows

BITCOIN USD KEY POINTS:

• Bitcoin Prices Continue to consolidate within a Symmetrical triangle pattern.
• A potential increase in demand can provide Bitcoin push it Needs to test the resistance area $30000-$31200.
• Both crypto and Bitcoin Fear and greed indices are now in greed territory. Will we see another bullish cycle like 2019 and 2021 or will deleveraging play a role and push prices lower?

READ MORE: Ethereum (ETH/USD) breaks higher as Shanghai upgrade approaches

Bitcoin continues to consolidate around the $28,000 mark after the rally during the banking crisis in March. The price has been between $26,300-$29,300 since March 18 and remains delicately poised with a breakout in either direction a possibility.

News came through yesterday that MicroStrategy bought another 1045 bitcoins at an average price of $28016 per BTC. Saylor confirmed that MicroStrategy now owns 140,000 Bitcoins worth about $4 billion at an average price of $29,803. The purchase and accompanying comments from Bitcoin enthusiast and MicroStrategy founder Michael Saylor failed to inspire a bullish breakout.

VALUE OF FEES TIPS ON INQUIRY

The direction of a breakout at this stage is anyone’s guess, but according to analyst firm Glassnode in the chain, a key asset is the value of fees that suggest new demand may be entering the market. According to research from Glassnode, the 90-day SMA for fees is currently exceeding the annual average, which further strengthens their belief that an increase in demand may be coming.

The Crypto Fear and Greed Index as well as the Bitcoin Fear and Greed Index have both entered well into greed territory. Personally, I’m leaning towards a bullish breakout, but I’m reminded of the famous saying about “trade what you see and not what you think”. The technical picture that we will break down shortly makes a case for both bearish and bullish breakouts.

Supporting the bearish narrative, a recent uptick in the US dollar could prevent a bullish breakout with key US data releases expected tomorrow. However, the dollar has seen some upside over the past two days and it has failed to push the price of Bitcoin towards a breakout which reinforces my belief that bulls can take control.

TECHNICAL OUTLOOK

From a technical standpoint, BTCUSD has been range bound since March 18 with price action indicating a pause and perhaps some degree of uncertainty. We are currently trading within a symmetrical triangle pattern with the top growing closer each day.

As mentioned earlier, there is a case for both bullish and bearish breakouts by looking at the technicals. There is a double top pattern in play as you can see on the chart below which suggests the possibility of a bearish breakout.

A bearish breakout will bring the key $25,000 level back into focus which acted as a significant barrier to resistance in the recent past. The price had held below the $25000 mark from June 2022 until the last 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, would bring the psychological $30,000 level into focus and above it the resistance of around the $31,200 handle.

BTCUSD Daily chart, April 6, 2023.

Source: TradingView, chart prepared by Zain Vawda

— Written by Zain Vawda for DailyFX.com

Contact and follow Zain on Twitter: @zvawda