Bitcoin prices surged past $96,000 following a brief pullback prompted by US GDP contraction of 0.3% in Q1, heightening stagflation fears. Institutional demand saw a slight decline, but indicators suggest a substantial portion of Bitcoin’s supply remains profitable, hinting at potential bullish momentum ahead despite broader economic concerns.
Bitcoin has surged past a vital resistance level, reaching over $96,000 on Thursday after a slight pullback the previous day. This drop was triggered by the news of a 0.3% contraction in the US GDP for the first quarter, which fell short of expectations for a 0.4% growth. This GDP data has raised concerns about stagflation, defined as stagnant economic growth combined with high inflation, a troubling scenario for the crypto market.
The recent pullback resulted from the release of unexpected GDP data on Tuesday, which was the first contraction since 2022. Alongside this, inflation data surpassed forecasts, as indicated by the PCE Price Index sitting at 3.7%, compared to an anticipated 3.1%. Other economic indicators point to a shaky future; oil prices have dipped below $60, and consumer confidence has hit an alarming low of 86, a level not seen since May 2020.
Fears surrounding stagflation could foster a risk-averse sentiment among investors. This, naturally, raises concerns for high-risk assets including Bitcoin while also potentially curtailing retail investor interest. Compounding these issues is the Federal Reserve’s hesitance to cut interest rates, which further complicates the recovery for cryptocurrencies like BTC.
In the immediate aftermath, institutional investment experienced a small drop, with a mild outflow of $56.23 million from US spot Bitcoin ETFs recorded on Tuesday, breaking a streak of inflows that had lasted since April 17. While these outflows are lower than those recorded in February, traders should keep a wary eye on them. A return to February’s outflow levels would likely pressure BTC’s price more severely.
However, there are glimmers of positivity amidst the turmoil. According to CryptoQuant, the portion of Bitcoin supply held at a profit is nearing a historic euphoria threshold. Over 85.8% of Bitcoin’s total supply is currently profitable, inching closer to the 90% mark. Historically, this has signalled bullish sentiment and a confidence boost among investors, even if such euphoria often gives way to subsequent corrections.
As for the price trajectory, Bitcoin’s recent surge surpassed the 200-day Exponential Moving Average at $85,000 and rallied 11.14% through Friday. But it faced challenges to close above its March high of $95,000, lingering around this critical level. At the time of writing, it’s managed to break through that, sitting above $96,000.
Should Bitcoin maintain a daily close beyond $95,000, analysts speculate that it could rally again, with targets set at $97,000 and, possibly, the psychological barrier of $100,000. The Relative Strength Index (RSI) remains at 68, indicating ongoing bullish momentum, although caution is warranted as it approaches the overbought line at 70.
If Bitcoin cannot maintain its position above the $95,000 resistance, a pullback may lead prices down to the $90,000 mark, where some could consider buying back in. In summary, while Bitcoin has seen a lively exploration above significant thresholds, the wider economic climate brings unpredictable risks and merits careful observation before moving forward.
