Bitcoin Weekly RSI Goes Above 90 But Analyst Doesn’t Expect Deeper Pullbacks Like Last Time
It’s only the fifth time in Bitcoin’s history that the weekly RSI hit this level. However, strong spot buying and unlike ever before institutional interest, who owns 16% of BTC’s realized market cap says the digital asset isn't “overheated”.
This week has started much like the last one. After topping out at $28,200 on the weekend, Bitcoin went down to about $25,870 and continues to trade around $27,000.
The weekend before last, Bitcoin topped out at $24,200 and from there we went down to $21,870 and ranged up until Thursday when the Christmas holiday resulted in several ATH breakouts.
This is to be seen if this New Year weekend will see similar action and take us above $30,000.
However, Bitcoin’s weekly RSI has gone above 90 making the crypto asset overbought. A correction could be in order but weekly charts take weeks to play out so it’s to be seen when that will be.
— Jonny Moe (@JonnyMoeTrades) December 28, 2020
According to on-chain analyst Willy Woo, BTC is currently “no more overheated” than when consolidated at $22k-$24k. The rally to $28k was “strongly supported by spot buying” and he only expects about 20% pullbacks than the 30%-40% which we saw in the last cycle.
I think below $26k is the BTFD area.
Very low chance of nuking below $25k considering the current market situation.$BTC
— Ki Young Ju 주기영 (@ki_young_ju) December 29, 2020
“It's kind of unchartered territory that we're in now. And it's a dangerous game to try to put a pin on it or put a number on it at this point,” noted Eric Lam of Bloomberg while pointing out a recent survey from Deutsche Bank which revealed that 40% of survey respondents expecting Bitcoin to be higher next year in the range of $20,000 to just under $50,000 while another 12% see it crossing $100,000.
A monster year
It has been Bitcoin’s more than 270% rally in 2020 that fueled the top-performing US mutual fund and exchange-traded funds, according to data from fund-tracker Morningstar.
This is the same Bitcoin that has been declared dead by the mainstream media and companies nearly 400 times since 2010. Interestingly, in 2020, it was only 11 times that Bitcoin’s “obituary” was written, the lowest since 2012’s at just 1, the same as 2010’s.
Now, everyone wants in on BTC and that’s thanks to all the money printing the central banks around the world are doing.
At $7.4 trillion, the Fed's Balance Sheet hit another new high this week.
Assets are up over $3.2 trillion since the start of the year and the Fed has promised to keep on buying bonds at a rate of $120 billion per month. pic.twitter.com/TQm803eiDA
— Charlie Bilello (@charliebilello) December 29, 2020
16% of Bitcoin’s realized market cap is actually now owned by institutional investors. Out of the $186 million realized market cap, institution AUM is $30 billion while Grayscale has $19 billion, up from $7.6 billion on Nov. 1st.
Moreover, CME has become the largest Bitcoin futures market in terms of open interest with the highest volume recorded on Dec. 28th along with a new ATH in OI.
“It has been a monster year for Bitcoin and for other cryptocurrencies as well,” and at this point in the year, “we're winding down now,” seeing a little drop with concerns about regulatory issues still lurking around. Longer-term, one of the big changes from the last bull cycle is all the new institutional investors' entry, making a big difference from 2017, said Lam.