Too Far, Too Fast
Last week, Ethereum World News suggested that Bitcoin (BTC) is overbought, citing an array of technical analyses and investor opinions. In one case, Bloomberg reported that the GTI Global Strength Indicator, a measure of market strength that is similar to the widely-used Relative Strength Index, accentuated that BTC was the most overbought since late-2017 and early-2018. In another case, one trader warned that if Bitcoin is too continuing following its long-term trend, a bout of capitulation could bring BTC to $3,000 or even lower in the coming weeks.
While buying pressure has slowed since our reports, leading to a minor pullback in trend indicators, some analysts are still convinced that BTC (and other digital assets for that matter) moved up too far, too fast.
TradingShot, an analyst on TradingView, recently claimed that Bitcoin’s daily Relative Strength Index (RSI) output currently reads an 83. Each and every time BTC’s one-day RSI sat above 83, a 30% drop came in the coming days. Case in point, in summer of 2017, BTC fell from $3,000 to $1,700 after its RSI peaked at 84, partially due to a series of China-related news. At the top of the bubble in late-2017, which was when Bitcoin breached $20,000, RSI reached 90, leading to a 47% drawdown in the coming months.
Thus, if history does repeat itself, a move to $3,800 is entirely possible, before a continuation of the ongoing bull trend.
Funnily enough, some have claimed that it is irrational to call for a 30% drop from here. Crypto Thies, the analyst in question in a recent report from this outlet, recently explained that his technical measures signal for new highs in this rally, compared to a drastic pullback. More specifically, he wrote that while he is confident that BTC will eventually return to $4,700, he expects for a Bitcoin to head higher in the coming weeks. He looks to the fact that the Bollinger Bands (BB), a measure used to depict trading ranges, have begun to squeeze on the one-week chart, along with BTC’s two-week candle breaking above its middle BB could suggest a move to the high BB, currently sitting at $8,400, in the near future.
Long-Term, Bitcoin Is Doing Just Fine Though
While TradingShot is sure that Bitcoin is currently overbought, long-term, RSI readings are doing just fine. In fact, they purportedly resemble that seen prior to previous cryptocurrency recoveries, all underscored by the block reward reductions (halvings).
CryptoTytan recently explained that Bitcoin has historically seen oversold (sub-30) readings on its one-week RSI prior to a rally into halving events. And with the on-week RSI recently hitting oversold in December’s move, Tytan claims that he believes that BTC could eventually shoot past its all-time high, calling this pattern an “algorithm that works.”
- Source: First Appeared Here
- Published Time: 2019-04-08 00:14:39
The views and opinions expressed in the article Crypto Overbought, Bitcoin (BTC) Could Drop To $3,800 do not reflect that of 48coins, nor of its originally published source. Article does not constitute financial advice. Kindly proceed with caution and always do your own research.
Summarizing the article Crypto Overbought, Bitcoin (BTC) Could Drop To $3,800 – top prominent words: algorithm that works; halving the price
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