Bitcoin Explodes Above $60K. Halving Euphoria?
RSI Goes Into Extreme Overbought – Cause for Concern?
Bitcoin’s recent rally took the apex cryptocurrency to a high of exactly $64,000 according to TradingView charts, which is just $5K shy of its All-Time High (ATH) of $69,000. Currently, Bitcoin is changing hands at $61,600 and it looks like it has entered a cooling-off period mainly triggered by profit-taking in the spot and futures markets.
The newly approved Bitcoin ETFs showed some interesting movement in the days prior to the breakout and may have acted as a catalyst. On February 29 (the first red day after the big breakout), Grayscale’s ETF discarded more than $598 million, which was its second-largest outflow (the largest was $640 million, recorded on January 22).
Just before the huge outflow, on February 26 (which is the first green candle of the breakout), Grayscale’s ETF had only $22.4 million net outflow.
To simplify the money movement: at the beginning of the rally (when Bitcoin was around $53,000), the money stayed invested and at the end of the rally (roughly $10K higher, around $63,000), the money went out. Part of the reason is that many investors expect the price to make a pullback after a huge move like the one we have just experienced.
Miners Are Getting Hit Hard
Despite the massive rally, the stocks of publicly traded Bitcoin miners dropped as much as 27.5% (CleanSpark) and 25.4% (TeraWulf). These are not the only ones with dents in their stocks but are the most affected.
According to Mitchell Askew, head analyst at Blockware Solutions, the “most logical” explanation is that investors are afraid to commit funds into miner stock because the halving is approaching fast. The halving ETA is April 20 and it will slice the reward for a mined block from 6.25 BTC to 3.125 BTC.
But the miners could catch a break as the halving could send Bitcoin even higher. That’s because the speed at which new coins will be minted will be slower, which will decrease the supply, which in turn could increase the BTC price. The question is: did we just witness the full effects of the halving? Or was the rally a delayed result of the ETF approval?
Chart Analysis – BTC/USD
Bitcoin has been trending up since September of last year. Except for a brief dip below $40,000, we only had higher lows and higher highs – a textbook uptrend. The last move up was also the strongest since this uptrend started and like it or not, a pullback is about to come sooner or later.
The question is: can Bitcoin reach the ATH at $69,000 before the pullback occurs? According to the extreme position of the RSI, the pair is about to correct lower before the ATH. The RSI went above 80 during the last high ($53,015) and above 85 during the current high ($64,000). These are extreme readings of the RSI, considering that an asset is considered overbought above 70.
Given the current situation, it’s more likely that we will see a pullback before the ATH is reached. But then again, the volatility of Bitcoin can disregard any overbought indicator.
