Bitcoin’s monthly relative strength index (RSI) (BTC) shows that the dominant cryptocurrency is poised for another high.
2021 is the ideal time for a Bitcoin rally?
The RSI is a momentum indicator that measures whether an asset is overbought or oversold. When the RSI exceeds 75, it indicates that the asset is overbought and, when it falls below 30, it means that the asset is oversold.
A pseudonym trader known as “Crypto Capo” noted that Bitcoin’s monthly RSI is set to close above 80. Historically, when that happened, BTC had a sharp rise afterwards.
Although Bitcoin’s monthly RSI is above 80, which is technically oversold, BTC’s RSI tends to be oversold for extended periods during a bullish cycle.
Therefore, traders often refer to an overrun RSI on a high time period chart, such as the monthly candlestick chart, to predict a prolonged rise in the short and medium term. The merchant said:
“The monthly candle is about to close above 80. When that happens, the upward trend continues, with an average. 1010.87% return. Each cycle is shorter. “
However, the trader emphasized that an indicator cannot accurately predict the Bitcoin price cycle. Crypto Capo explains that the combination of some indicators can serve as a guide for the future. He I wrote:
“You cannot base a forecast on an indicator. What we do is combine several methods to have a guideline for the future, to see what is most likely. But in the end, we adapt to what the price does in the present. “
“Optimistic year ahead”
Traders have different perspectives on Bitcoin’s direction in 2021, but most of them remain overwhelmingly optimistic.
Cointelegraph Markets analyst Michael van de Poppe said he expects Bitcoin to reach $ 65,000 to $ 85,000 by the end of next year. He stated:
“I have to revise my view on the potential level of $ BTC at the end of 2021. Through this recent increase, I expect it to be between $ 65,000-85,000 at the end of 2021. Optimistic year ahead.”
Meanwhile, the options market is estimating a 22% chance that Bitcoin will reach $ 120,000 next year, which could also serve as a potential guideline on where BTC is heading in 2021.
In the short term, however, some traders are cautious about entering leveraged positions. A trader pseudonym known as “TheBoot” said the ideal scenario is to wait for Bitcoin to consolidate at $ 25,000 or enter after the next price increase. The merchant explained:
“No rush to enter leveraged $ btc trades right here. The best would be to wait and long low 25k or even mid 24k. Alternatively, wait for the next step and then take a dip from there.
Cointelegraph previously reported that whales have been buying Bitcoin more aggressively since Christmas, which may support the possibility that BTC will enter 2021 in the medium term.