Bitcoin’s price action has grown stagnant over the past few days and weeks, with the cryptocurrency struggling to gain momentum as bulls and bears battle for control of its near-term trend.
Last week, the benchmark digital asset incurred some serious momentum after news broke regarding Square’s acquisition of $50 million worth of BTC.
This news seemed to confirm that the trend of companies holding Bitcoin as a reserve asset is gaining steam, which could provide the asset with further buy-side pressure in the near-term.
Despite the overt strength this event created for the cryptocurrency, it has not been enough to propel it past the key resistance it faces at $11,600 and $12,000. Until these levels are surmounted, its near-term outlook remains unclear.
One trader is now pointing to Bitcoin’s volume profile for insight into where it may trend next.
This metric suggests that $12,000 is a pivotal level that will hold serious influence over BTC, with a break above this level opening up the gates for a move up to highs of $16,500.
Bitcoin Struggles to Build Momentum as It Nears Key Resistance
At the time of writing, Bitcoin is trading down just over 1% at its current price of $11,400. This is around the price at which it has been trading over the past few days, marking a slight decline from recent highs of $11,700 that were briefly tapped a few days ago.
This momentum is quite strong but has been stalling due to the selling pressure at $11,600.
Each time this level is approached, bears move to regain control and push the crypto’s price lower.
Until it is firmly broken above, the crypto may continue extending its ongoing consolidation phase.
BTC Volume Profile Shows Just How Critical $12,000 Is
One analyst recently put forth an analysis of Bitcoin’s volume profile, noting that a break above $12,000 could be all that is needed for the cryptocurrency to rally towards $16,500 – a level that he describes as being a “minor speedbump.”
“Volume profile based on on-chain analysis. 12k is such an important level. It’s pretty much the only resistance left. After that it’s clear skies with only a minor speed bump at 16.5k.”
Image Courtesy of Byzantine General. Source: BTCUSD on CoinPriceWatch.
This analysis bodes well for Bitcoin’s near-term outlook and seems to indicate that a strong upside move could be imminent.
Featured image from Unsplash. Charts from CoinPriceWatch.