Bitcoin (BTC) price breaks above its key resistance level, trading above $96,000

Bitcoin (BTC) price is breaking above its key resistance level, trading above $96,000 at the time of writing on Thursday, following a mild pullback the previous day.

Bitcoin (BTC) price is rising after a mild pullback on Tuesday. The decline came as US GDP data showed a contraction of 0.3% in Q1, spurring recession fears.

Bitcoin price rebounds to reclaim $96K following mild pullback

Bitcoin (BTC) price has risen again to reclaim the $96,000 level, recovering from a brief pullback on Tuesday. This mild correction in Bitcoin’s price was primarily caused by the US GDP data released on Tuesday.

The world’s largest economy experienced an unexpected contraction in the first quarter of 2023, with output falling at an annualized pace of 0.3%. This went against economists’ predictions of a 0.4% growth and marked the first instance of a decline since early 2022.

The unexpected contraction in GDP came alongside inflation data exceeding forecasts, as shown by the PCE Price Index, which rose 3.7% compared to the expected 3.1%. Moreover, retail sales also fell by 0.7%, displaying a weaker-than-expected performance.

These figures suggest that the US economy might be entering a stage of stagflation – when the economy is characterized by stagnant growth and high inflation. This scenario typically occurs during periods of geopolitical instability or following a major economic crisis.

Stagflation fears will likely drive a risk-off sentiment in the market, which does not bode well for risky assets such as Bitcoin. Additionally, high inflation reduces retail investor participation, and the US Federal Reserve’s (Fed) reluctance to cut rates immediately adds to the headwinds.

Bitcoin price chart

Meanwhile, institutional demand for Bitcoin declined slightly on Wednesday after the cryptocurrency faced difficulties breaking through the key resistance level.

According to the data from SoSoValue shown below, US spot Bitcoin ETFs recorded a mild outflow of $56.23 million on Tuesday. This marks a small setback from the prior day’s inflows, breaking a continuous streak since April 17.

However, these outflows are lower than those seen during February, which caused BTC prices to fall sharply. Traders should be cautious if the outflow levels match those of February as this could weigh on BTC price further.

Some signs of optimism

CryptoQuant data shows that the Bitcoin supply in profit is approaching a historic euphoria threshold. Bitcoin Supply in profit refers to the percentage of BTC’s total supply that holders currently hold are in profit. A large portion of the supply in profit is generally seen as a positive sign, suggesting a strong bullish outlook and confidence among investors.

Currently, the metric stands at above 85.8%, approaching its key level of 90%. Throughout history, when the supply in profit crossed the 90% threshold, it consistently triggered euphoric phases. However, these euphoric phases are usually short-lived and are often followed by short- to medium-term corrections.

Bitcoin percentage supply in profit chart

Bitcoin Price Forecast: BTC traders await a decisive breakout

Bitcoin price broke above its 200-day Exponential Moving Average (EMA) at $85,000 early last week, rallying 11.14% through Friday.

However, BTC failed to close above its March high of $95,000 and remained in a tight range around this level for five days. If BTC manages to close above the $95,000 resistance on a daily basis, it could extend the rally to retest its next daily resistance at $97,000.

A successful close above this level could open the door for additional gains to reach the psychological resistance at $100,000.

The Relative Strength Index (RSI) on the daily chart is still in overbought territory, suggesting that bullish momentum remains strong. However, traders should be cautious as the chances of a pullback are high as it approaches its overbought level at 70. Another possibility is that the RSI could remain above the overbought levels and continue driving the price up.

BTC/USDT daily chart

But if BTC fails to close above the $95,000 resistance level and faces a pullback, it could extend the decline to find support around the $90,000 psychological level. A break below this level could continue the sell-off to the next support at $85,000, which coincides with the 200-day EMA.