Bitcoin (BTC) Getting Overheated as Key Bearish Signal Appears
Bitcoin (BTC) is showing signs of potential overheating as a key bearish signal emerges.
According to the 100eyes Crypto Scanner, a notable bearish divergence has been spotted in the BTC-USDT pairing. This hints at possible downward pressure on the leading digital currency.
This comes amid Bitcoin's price rallying to a remarkable $56,812.57 after a 10.6% increase, according to CoinGecko data.
Understanding bearish divergence
A bearish divergence occurs when the price of an asset, such as Bitcoin, marks a new high, but a related indicator, like the Relative Strength Index (RSI), fails to record a new high.
Godfrey BenjaminThis divergence between the price and momentum indicator often signals a weakening in the prevailing upward trend, suggesting that the rally may not be sustained and a price correction could be imminent.
Specifically, the RSI bearish divergence noted by the 100eyes Crypto Scanner indicates that, despite Bitcoin's recent price gains, the momentum behind these gains is slowing.
In the meantime, the Bitcoin market is experiencing intense speculation based on activity across exchanges, capital flows, derivatives leverage and institutional demand, according to Glassnode.
Bullish case emerges
Despite the bearish signals, there is contrasting sentiment observed on the market, indicating a growing risk appetite among Bitcoin investors.
CryptoQuant has noted that Bitcoin has broken through a key resistance level that had been in place for 2-3 years. This indicates that the only major resistance left is the last cycle's high of $68,000, implying potential for a further upside.
Bearish indicators should not be ignored, but the underlying market dynamics and investor sentiment could support continued growth in Bitcoin's value.
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Dan Burgin