Bitcoin (BTC) may not have broken above $40,000, but this week’s gains helped generate a more significant break in underlying price strength.
RSI breaks a two-month tradition
Data from Cointelegraph Markets Pro and TradingView shows that BTC’s sustained price action above $37,000 this week has allowed the relative strength index (RSI) to turn away from a multi-month downtrend.
After surging from $36,700 to $39,280 in February, Bitcoin still lacks the necessary momentum to challenge the $40,000 resistance.
However, that could soon change as one trader shows that the RSI has now broken out of its dip into “oversold” territory.
RSI looks at how “oversold” or “overbought” an asset is at a given price point. As Cointelegraph reported, since late November, it has been sinking, culminating in rare lows seen only a few times in recent years.
“It seems that everyone is seeing a trend line. But no one is paying attention to the RSI…it’s already out of that downtrend!” Popular trader and Crypto analyst Ed commented on the latest developments.
“Before you think I’m asking for new ATHs: We’re not out of the woods yet, but we see more in the near term.”
“Year of the groundhog” by BTC price
However, even a trip back to the $69,000 peak would not constitute a major change in price performance.
Related: Bitcoin Whales Buy at $38K as BTC Supply Per Whale Hits 10-Year High
Zooming out, the data shows almost all of 2021 as a year of consolidation for Bitcoin, with current almost exactly matching that of the same period last year.
However, unlike much of the previous 12 months, the available supply has been shrinking, implying that any price trigger could have deeper consequences thanks to there simply being less BTC involved.
This illiquid supply trend is further expected to continue upward “relentlessly” in 2022.