The Bitcoin (BTC) bulls have a little relief as they celebrate after a classic on-chain metric printed its first major divergence in months. The flagship crypto might have stopped just below $40,000. However, this week’s gains have caused a spark that might mean that a major breakout might be coming up for the underlying price strength.
Bitcoin RSI Breaks A 2-Month Tradition
Data acquired from TradingView shows that sustained Bitcoin price action above $37,000 this week has now enabled the relative strength index (RSI) to diverge from a multi-month downtrend.
After rising from $36,700 to $39,280 in February, Bitcoin still does not have the momentum required to challenge the $40,000 resistance.
But all that might change soon. One trader shows that RSI has now exited its drop deep into the ‘oversold’ territory. RSI looks at the way “oversold” or “overbought” an asset is at a particular price point. Based on previous reports, since last November, it has been dropping, culminating in rare lows that were seen just a few times in recent years.
Buy Bitcoin NowOne popular trader and analyst Crypto Ed commented:
“It seems that everyone is watching a trend line. But nobody is paying attention to the RSI….it already broke out of that downtrend! Before you think I’m calling for new ATH’s: we’re not out of the woods yet, but seeing more up short term.”
An accompanying chart indicates that Bitcoin is striving to exit its downtrend, with the RSI already notionally free.
“Groundhog Year” for Bitcoin Price
Analysts say that even a trip back to the highs of $69,000 will not result in a major shift in price performance.
Zooming out a little bit, data shows nearly the entire of 2021 as a consolidation year for the flagship crypto, with the current prices nearly exactly matching those from the same time in 2021.
We have nearly exactly the same #Bitcoin price as 365 days ago. In other words – ranging market. pic.twitter.com/1ITGPIXymQ
— Mikołaj Zakrzowski (@StackSmartly) February 1, 2022
Unlike most of the last 12 months, nonetheless, the available supply has been weakening; with the impact that any price trigger may have major consequences due to there simply being less Bitcoin involved.
The illiquid supply trend is also expected to continue rising ‘relentlessly’ in 2022.
