Bitcoin (BTC) is in a new ‘major rally’ as its market strength replicates the conditions that followed the 2018 bear market. According to the latest analysis, BTC will continue to rise ‘after some consolidation’ thanks to important signals from the relative strength index (RSI).
Bitcoin shows an unprecedented bullish divergence
cryptocoin.comAs you follow, BTC price increases continue. For this reason, Bitcoin bulls are feeling increasingly secure despite widespread mistrust about the longevity of the current rally. For crypto analyst Crypto Wolf, an important phenomenon currently underway is what sets Bitcoin’s latest rally apart from the rest. According to the analyst, BTC printed a long-awaited bullish divergence on the weekly timeframes of the RSI on January 18. This is something that has never happened before. Crypto Wolf puts it this way:
BTC posted a rare weekly RSI bullish divergence. This has never happened in BTC history. A rare opportunity in life.
The RSI is a key indicator used by traders to determine whether an asset is overbought or oversold at a particular price. “The tech was there, the graphics were bottoming out,” Wolf said. However, as usual, the majority were in full bear mode,” he adds.
Analyst: First some consolidation, then…
However, Bitcoin is beginning to repeat the kind of renaissance that was last seen at the end of the previous bear market in early 2019. Trader and analyst Trader Tardigrade, also known as Alan on social media, predicts that the good days will continue for a while. “BTC repeats the pattern in RSI and Price Action to the bottom of 2019,” he told his followers last week. In addition, the analyst made the following statement:
On the daily chart, the 1st RSI is strong bullish trend towards the Overbought zone 2. BTC had a significant drop before that 3. The immediate buyers bought BTC. After some consolidation, the big rally will follow.
Meanwhile, the daily RSI was close to 87 at the time of writing, according to data from TradingView. This is the highest level since January 2021, months before BTC set all-time highs of $58,000 in April and $69,000 in November.
“Below $20,000 for Bitcoin is very unlikely!”
Crypto analyst Tone Vays says that Bitcoin’s pullback below the key psychological level of $20,000 is now unlikely to happen. Vays states that the probability of a drop below $20,000 has drastically decreased after BTC rallied above $22,000. In this context, the analyst makes the following statement:
If Bitcoin breaks above yesterday’s high of $21,650, I think it is very, very, very unlikely to go below $20,000 now.
Looking at the weekly Bitcoin chart, Vays says one indicator shows BTC has more upside potential in the long run. “The RSI is very, very good. The RSI has plenty of room to the upside. It didn’t even break its previous high swing. So the weekly RSI is still barely rising,” he says. Vays also believes that the bear market bottomed out when Bitcoin dropped below $16,000 in November. In this regard, he states:
The funding rate just told you ‘Hey, this is probably the lowest point’ because of the BitMEX funding rate. Funding rates are actually a great indicator. To me this indicated that the decline was likely, certainly not, but very likely.
Market participants are keeping a close eye on the funding rate as it shows whether traders are bullish or bearish in crypto. Extremely negative funding rates, similar to those witnessed in November 2022, suggested that traders were betting heavily that crypto would continue to decline. This too was a setup for a strong backlash.
“Whales are behind BTC price increase”
Santiment claims that one of the main reasons for such a significant price increase is the recent activity of a sizable high-end whale herd. The company’s analysts estimate that these wallets can hold 1,000-10,000 Bitcoins. They have jointly purchased $1.46 billion worth of BTC over the past two weeks. This means exactly 64,638 cryptocurrencies. Between February and December last year, these whales were busy selling their Bitcoins. In the last 15 days, they have resumed their aggressive buying.
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