A closely watched crypto strategist says Bitcoin (BTC) is delivering a bullish outcome that has previously preceded a massive price surge.
Pseudonymous analyst Cheds tells According to its 314,800 followers on social media platform
The RSI is a momentum indicator that traders use to signal a continuation or reversal of a trend.
Cheds says that when Bitcoin gave the same signal in October 2020, Bitcoin skyrocketed and posted gains of more than 5x.
“Observation:
BTC weekly RSI enters the power zone (70+, also known as overbought).
Overbought = bullish.
The last time this happened the price ranged from $12,000 to $64,000.
Although the price context is different, it is worth observing.”
Traditionally, an overbought asset indicates that it is trading well above its fair value, and investors tend to think that a correction is in sight. However, Cheds argues that the opposite applies to Bitcoin.
“Overbought means bullish. The only way to become overbought is to be bullish, and trends tend to continue. Most of BTC’s biggest price gains in the past have been achieved while ‘overbought’ for what it’s worth.”
At the time of writing, Bitcoin is trading at $37,002.
Looking at smart contract platform Ethereum (ETH), Cheds says bulls are likely to flex their muscles once the market’s second-largest cryptocurrency moves above its key price level.
“ETH sideliners can use a $2,150 break-and-hold as a long thesis.”
At the time of writing, Ethereum is worth $2,037.
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Generated image: Midjourney