Bitcoin (BTC) may have stalled below $40,000, but this week’s rally helped spark a larger surge in price fundamental strength.
BTC/USD Hourly Light Chart (Bit Mark). Source: Trading View
RSI breaks two-month tradition
Data from Cointelegraph Markets Pro and TradingView shows that BTC’s sustained price movement above $37,000 this week has caused the Relative Strength Index (RSI) to deviate from its multi-month bearish trend.
After moving from $36,700 to $39,280 in February, Bitcoin still lacks momentum to challenge the $40k resistance.
However, this may soon change as the trader shows that the RSI has gone deep into the “oversold” zone.
RSI looks at how “oversold” or “overbought” an asset is in a given price category. As reported by Cointelegraph, it has been declining since the end of November, culminating in rare declines that have only been seen a few times in recent years.
“Everyone seems to be following the trend line. But no one cares about the RSI… It really got out of that downtrend!” Well-known trader and analyst Crypto Ed commented on the latest developments.
“Before you think I’m calling for a new NOTE: We’re not out of the woods yet, but we’ll see more in the short term.”
The attached chart shows BTC/USD reluctantly exiting a downtrend with the RSI indicator already available.
Bitcoin RSI vs BTC/USD annotated chart. Source: Crypto Ed / Twitter
Bitcoin Year of the Groundhog Award
However, even a return to the $69,000 peak will not lead to a significant change in price performance.
Related: Whales Buy $38,000 Bitcoin as Bitcoin Whale Trades Hit 10-Year High
Zooming out, the data shows almost all of 2021 as a year of bitcoin consolidation, with current prices almost exactly matching prices for the same period last year.
Unlike much of the past 12 months, the available supply has dwindled, suggesting that any price stimulus could have deeper impacts thanks to bitcoin’s small supply.
This trend of illiquid supplies is expected to continue growing “continuously” in 2022.