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Home Cryptocurrency news Bitcoin

Bitcoin RSI Hits Highest Since June 2019 Top, May Signal Bull Market

Tony Spilotro by Tony Spilotro
9 months ago
in Bitcoin, Cryptocurrency news, Technical analysis
Reading Time: 2min read
bitcoin rsi bull market
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The latest rally in Bitcoin has caused the Relative Strength Index to reach shocking highs. Such a reading would typically indicate a pullback is due, however, it can also be a signal that the bull market is back in full force.

Comparing the RSI to past Bitcoin bear and bull cycles, provides clues as to what may happen next for Bitcoin price, as the asset inches ever closer to its block reward halving.

Bitcoin Price RSI Reaches Insanely Overbought Conditions Following Latest Rally

After a chaotic collapse in mid-March on a day now known as Black Thursday, Bitcoin plummeted to under $4,000.

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The drop caused shock and awe across the crypto space, as the record-breaking collapse wiped out all of 2020’s gains and then some.

Once the low was hit, Bitcoin price has been on a strong and steady rise ever since. The first-ever cryptocurrency is up nearly 150% from the lows, rocketing to over $9,400 in an overnight push last night.

The explosive rally has caused the RSI to reach the highest level since the June 2019 top when Bitcoin reached $14,000.

Such an overbought reading on the technical analysis indicator created by J. Welles Wilder Jr. who also created the Parabolic SAR, and Average Directional Index, would normally suggest a pullback or reversal is due.

But when it comes to Bitcoin, RSI readings that high may be a sign the bull market is back.

bitcoin rsi bull market

Relative Strength Index Remains Overbought in Bull Markets

The Relative Strength Index – or RSI for short – is a momentum indicator that measures the strength of price action, letting analysts understand when assets become highly overbought or oversold.

The indicator provides a visual representation on a line chart that oscillates back and forth. When an asset reaches 70, it is considered overbought, and 30 represents oversold levels.

Traders can adjust this according to risk appetite, but the idea remains the same: any extreme deviations above 70 or below 30 mean a change in direction is likely.

Related Reading | Bitcoin Price Sets Longest Stretch of Positive Weekly Growth Since May 2017 

But when it comes to Bitcoin during a bull market, the RSI can reach wild extremes, and the price can keep rising for a lot longer than expected.

In the chart above, each red verticle line represents a large spike in RSI during a bull market. Notice how each peak in RSI rises far above the 70 mark, and oftentimes, the price keeps on rising, even if the RSI is dropping.

RSI peaking ahead of the price of an asset often signals a divergence and is a more accurate sign of a reversal during a bull market than simply reaching overbought conditions.

At the top of the 2017 bull market, RSI peaked ahead of the $20,000 top, and RSI never reached that high again, until the 2019 June top, and again now. Is the bull market truly back for Bitcoin?

Tags: bitcoinbtcusdcryptoRelative Strength IndexRSI
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Tony Spilotro

Tony Spilotro

I'm Tony Spilotro. Behind the pseudonym, I'm a digital media executive and global remote work leader with a decade of content experience and excellent. Here, I explore my newfound passions pertaining to privacy, finance, economics, politics, cryptography, property rights, and other libertarian-esque views. I am a Bitcoin evangelist, maximalist, and educator whenever I can be, helping to spread its message of freedom from government control, monetary policy mismanagement, and passing the buck - literally – to future generations. My journey from a curious retail crypto investor to a serious Bitcoin advocate, trader, and technical analyst is an unusual one, but life-changing nonetheless and has become less about money and more about a long-overdue revolution. While a firm believer in the laws governing math and science, I am profoundly fascinated by the impact of astrology and astronomy including moon and solar cycles and planetary alignment and their ability to influence and potentially predict markets. It hasn't yet clicked for me as to how to put anything to use, but I consider it my current rabbit hole I can't yet dig out of. My perspective of growing up alongside the internet, the dot com era, the Great Recession, and roots in video games collecting coins and rare items caused Bitcoin to immediately make sense to me. Through all of these lenses, I seek to produce content that is educational and entertaining, and I thank you sincerely for taking the time to read what I have to say. Please follow me on Twitter and feel free to drop me a line if you would like to work together.

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