Bitcoin has been on a meteoric rise, shattering previous all-time highs and cementing its status as the apex cryptocurrency. However, a closer look at the technicals suggests we may be approaching a juncture where the momentum could stall, potentially leading to a stalemate. Here are three reasons that might cause the Bitcoin/USDT chart to enter a period of consolidation around current levels.
Bitcoin’s recent ascent has been nothing short of spectacular. However, we approach a psychological resistance level as the price hovers around an all-time high. Investors who previously bought at highs might look to break even on their investments, which can lead to increased selling pressure. The current Bitcoin price is $ 72,120 with a 24-hour trading volume of $ 70.08B and a market cap of $ 1.42T; the BTC price increased 0.43% in the last 24 hours., a region where profit-taking behaviour may intensify, creating a temporary ceiling.
Source: CoinmarketCap
The Relative Strength Index (RSI) is a momentum indicator that measures the magnitude of recent price changes to evaluate overbought or oversold conditions. A divergence occurs when the price records a higher high, but the RSI fails to confirm this with its higher high, signalling weakening momentum. While the chart might not explicitly show this divergence, should the RSI demonstrate lower peaks while the price hits higher highs, it would be a classic signal of a potential reversal.
Bitcoin Price: Above Moving Averages, Potential Retraction
Bitcoin’s price is now well above its 50-day and 200-day moving averages, a sign of a robust uptrend. However, historically, when prices extend too far from these averages, they revert to mean values. This phenomenon could cause the price to retreat toward the support levels of these moving averages, found at around $61,250 for the 50-day MA and $49,995 for the 200-day MA.
While Bitcoin’s rally has been impressive, these three technical factors suggest we might be due for a period of consolidation or a pullback around current levels. Investor profit-taking at psychological resistance, weakening momentum signalled by the RSI, and prices extending too far from moving averages could all contribute to a potential stalemate shortly. However, anything can happen in the volatile world of cryptocurrencies, and this potential pause could be a breather before the next leg up.
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Furthermore, the author’s views are for reference only and shall not constitute investment advice. Before purchasing, please ensure you fully understand and assess the products and associated risks.
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