According to CoinDesk, Bitcoin's Relative Strength Index (RSI) is signaling caution for short-term traders looking to chase the ongoing price rally. The overbought reading on the RSI indicates the potential for a temporary price correction. Bitcoin, the leading cryptocurrency by market value, has gained over 40% in four weeks and is trading just 12% short of its record high near $69,000.
Short-term traders and speculators who missed the early rally often use riskier leveraged products like futures to maximize gains. However, new information suggests that chasing the rally now may be risky. Analysts at The Market Ear stated that Bitcoin's 14-day RSI is at 88, a level never seen before with Bitcoin trading at these absolute levels. They added that chasing the rally at this point looks like a very late trade.
The RSI is a momentum indicator that measures the speed and change of price movements over a set period, usually 14 days or 14 weeks. A reading above 70 reflects overbought conditions, where the asset's price may correct lower soon. The current overbought signal calls for caution among speculators looking for a long entry at the going market rate. However, the overbought reading is of little importance to long-term investors who focus on the big picture. Analysts believe that Bitcoin's big picture is bullish, with the potential to reach a price of $120,000 and higher by September 2025.
