Wednesday marked one of Bitcoin’s most powerful rallies in weeks. Within the span of just over 12 hours, the price of the leading cryptocurrency rocketed from $7,700 to a high of $9,000 — a dollar gain of $1,300 and a percentage gain of 17%.
It was a move that shocked Bitcoin investors across the board, with over $80 million worth of BitMEX short and long positions liquidated as this move transpired, data from Skew.com shows.
Chat from Skew.com
BTC has since retraced much of the rally, but Bitcoin’s trajectory during this surge was so steep that the relative strength index (RSI) on short-term time frames approached 100.
High RSI levels are suggestive of a blow-off top, but this is a technical occurrence that marked the start of 2019’s 300% rally, suggesting the same could take place again.
Bitcoin Sees Same RSI Reading That Kicked Off 2019’s Rally
As can be seen in the chart below, the majority of gains Bitcoin has posted over the past 24 hours took place within the span of a few hours time.
Chart from TradingView.com
The trend was so strong that amid the peak of Wednesday’s rally — when Bitcoin was in the midst of attempting to break past $9,000 on some exchanges — a trader observed an unexpected technical occurrence:
Writing in a message published to their Telegram channel, they observed that the RSI of Bitcoin’s one-hour chart hit 96.5 — just a few points shy of the top of the oscillator, 100.
Traditional forms of technical analysis state that whenever the RSI passes the level of 70, it is overbought over the time frame that is being analyzed. The fact that Bitcoin’s one-hour RSI briefly hit 96.5, the trader wrote, means that it was extremely overbought, almost to the point of lunacy.
According to the trader, the last time this metric was this high for BTC was in April 2019, on the day that the cryptocurrency rocketed 25% higher within the span of a few hours. What followed this move was an extended rally from the $4,000s to $14,000 within three months.
History repeating, then, will see Bitcoin enter a full-blown bull market in the coming months.
Far from the Only Positive Sign
The extremely high RSI print is far from the only sign suggesting that BTC will soon be launching into a full-blown bull market.
Per previous reports from Bitcoinist, a crypto chartist remarked that Bitcoin recently accomplished a very important technical feat: it managed to surmount $6,400 without much resistance, then claim the level as support by bouncing off it.
This is important as $6,400 is the Point of Control — a price level on an asset’s chart over a given timeframe where there was the most volume traded and liquidity seen.
Bitcoin managing to recently recapture and confirm $6,400 as support adds credence to the bull case.
On-chain metrics, such as the number of active users of the Bitcoin network and the number of new users of BTC, have also begun to rise, further corroborating the sentiment that a bull rally is right on the horizon for crypto.
Photo by kilarov zaneit on Unsplash