Bitcoin (BTC) Breakout: Conviction Remains Weak

Bitcoin (BTC) has broken out of the descending wedge it has been inside of for nearly a month. However, there does not appear to be much conviction in the breakout so far. Will this change, or are we going to see more sideways price action?

U.S. Spot Bitcoin ETFs see regular outflows

The U.S. Spot Bitcoin ETFs, normally a reliable gauge of crypto market sentiment, are continuing to see net outflows on an almost daily basis now. Although these outflows are not big, and do not compare with the inflows of a couple of weeks ago, they still point to a low conviction level across the market.

Uncertainty over peace talks and inflation

On the geopolitical front, President Trumps administration is talking peace with Russia, and despite push-back from Europe and a war of words with Ukraines leader Zelensky, there is hope that this war can be brought to an end quickly, to save lives, and free up leaders to concentrate on their economies.

From the economic perspective, U.S. Treasury yields are still generally trending lower, and all eyes are on how Trumps tariffs are going to affect the economy, and especially inflation.

Its into this very uncertain environment that Bitcoin has just broken out of its descending wedge. The lack of strength so far in the breakout may just reflect all the incertitude across markets, and therefore, any kind of rally has the potential to end up becoming a damp squib.

Bitcoin breaks out, but will the rally succeed?

Source: TradingView

The 4-hour chart for Bitcoin shows the breakout, but it can be seen that fakeouts through the top and bottom of the descending wedge have happened before. For this particular breakout to succeed, a higher high at $99,000 would need to be made, and then the next resistance at $100,000 would be good to flip back into support.

However, if the breakout is going to be a weak one, and the volume profile at the bottom of the chart is so far suggesting this, the price could eventually roll over and head sideways and down once again.

Bitcoin bull market hangs in the balance

Source: TradingView

That said, it is on the monthly chart where the overall view from above can be really appreciated. Drawing in the Fibonacci levels for this entire bull market, it can be seen that the price is being rejected from the immensely important 1.618 Fibonacci level. Until a candle can close above this level, the bull/bear market hangs in the balance.

Moving down the chart, the Stochastic RSI is shaping for a cross back down of the indicators. There remains another week or so for this to be avoided. It may be that there is still enough time for the 80.00 level to act as support, which it previously did earlier in this bull market.

At the bottom of the chart, the RSI shows the downtrend since early 2021. The indicator line is currently above the downtrend, and has already bounced from it once. A second bounce will be needed in order for Bitcoin to resume its bull run.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Text source: Crypto Daily™

Breaking News