Bitcoin Price Reclaims $35,000; Is It Getting Overheated?

Bitcoin, the largest cryptocurrency, surged to an intraday high of $35,200 earlier today on the Bitstamp exchange, marking its highest level since Oct. 24. 

However, the premier cryptocurrency has since pared back some of its gains, currently trading at $34,541, up by 0.9%. 

Today's trading range for Bitcoin was between $34,316 and $35,105, with a market capitalization of $674.6 billion, according to CoinGecko data.

Bullish take: Strong momentum ahead?

According to analysis from Glassnode cofounder, Yann Allemann, Bitcoin's current trajectory suggests promising potential. 

Allemann's observations indicate that Bitcoin's momentum is strong, a viewpoint derived from the cryptocurrency's Relative Strength Index (RSI) surpassing 70. 

Historically, when Bitcoin's RSI exceeds this threshold, it has often been followed by significant price gains, implying the possibility of further appreciation in the near term.

Bearish perspective: Entering overheating territory?

However, not all market analysts are bullish. Data analytics firm CryptoQuant recently posted that Bitcoin is approaching what they term the "overheating zone." 

They referenced previous instances when Bitcoin's futures Open Interest (OI) entered this zone, resulting in significant price drops. 

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Specifically, futures OI entered overheating territory in June 2023, and the cryptocurrency's price fell within two months. 

A similar situation transpired in October 2022, with the OI still in the overheating zone in November, right before the FTX crisis, leading to even more substantial futures liquidations than in August 2023.

Given that the OI has recently entered the overheating zone again, some market watchers are wary of potential price pullbacks.