After experiencing a brief correction from its new yearly high of $35,300, Bitcoin (BTC) is showing signs of renewed bullish momentum as it approaches the $35,000 mark again. With a key indicator following patterns observed in 2020, there is a potential surge that could propel Bitcoin to reclaim its previous peak of $65,000.
Scott Melker, a prominent crypto investor and host of the ‘Wolf of All Streets’ podcast, highlights the significance of Bitcoin’s overbought Relative Strength Index (RSI) on both lower time frames and the weekly chart. The RSI, which measures the strength and speed of price movements, is currently showing signs of extreme overbought conditions on various lower time frames. While the daily RSI indicates a potential need for a healthy retracement, the weekly RSI entering the overbought zone historically suggests substantial upward movements in a true bull market.
To gain insights into Bitcoin’s potential future trajectory, it is worth revisiting the patterns observed in 2020. During that year, Bitcoin’s RSI went overbought on the weekly chart when the cryptocurrency was trading around $12,000. This historical precedent led to an unprecedented rally, with Bitcoin surging to $65,000. This previous price action highlights the possibility of a similar scenario if true bullish catalysts emerge.
With Bitcoin’s weekly RSI once again entering the overbought territory, there is a growing sentiment among market observers that the cryptocurrency has ample room to run. Scott Melker emphasizes that if significant bullish catalysts materialize, Bitcoin’s potential for further upside becomes virtually limitless. The current RSI readings suggest the potential for an extended price rally, potentially enabling Bitcoin to surpass its current highs and reach the coveted $65,000 level.
Adding to the bullish outlook for BTC, crypto analyst Miles Deutscher notes a notable shift in the Bitcoin market landscape. Volume and open interest in Bitcoin-related futures and options on the Chicago Mercantile Exchange (CME) have risen to multi-month and multi-year highs, indicating growing interest and participation from institutional investors. Moreover, call options open interest has surpassed the peak levels seen during the 2021 bull run. These metrics reflect increased trading activity and liquidity in the Bitcoin derivatives market, suggesting heightened institutional interest.
A surge in trading volume in conjunction with the growing number of call options often precedes significant price movements. Analysts anticipate a potential bullish breakout in the near future given the current market dynamics. The call options open interest, which has recently surpassed $10 billion, further indicates a bullish sentiment among traders and fuels expectations of a potential price surge.
As of the time of writing, Bitcoin is trading at $34,500, successfully reclaiming the level it briefly lost during a recent correction. Over the past 24 hours, Bitcoin has maintained gains of 1.4%.
Bitcoin is demonstrating signs of renewed bullish momentum, with various indicators pointing towards a promising price trajectory ahead. The overbought RSI, patterns observed in 2020, institutional interest, and growing trading activity all contribute to the overall positive sentiment in the market. While there may be the need for healthy retracements along the way, the potential for Bitcoin to surpass its previous peak of $65,000 remains significant. As always, market participants should carefully monitor key indicators and catalysts that could impact Bitcoin’s price in the future.
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