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An analyst is comparing Bitcoin‘s latest price structure with that of the rally that started in November 2024.
ByWayne Jones
Bitcoin (BTC) has pushed its daily relative strength index (RSI) above 85, a level crypto analyst Sykodelic says has never appeared during a bear market, after the asset reached above $81,000 this week.
The reading is being used to argue that the latest rally looks more like the opening of a new uptrend than a temporary bear-market bounce.
Bitcoin’s RSI Breaks a Historical Pattern
In a post on August 27, Sykodelic pointed to Bitcoin’s 10-year price history and argued that every time the daily RSI moved above 85, it either came near the top of a major uptrend or appeared at the beginning of one.
“Never in Bitcoin’s history has it ever tagged 85+ in a bear market,” the analyst wrote. “Even when Bitcoin was worth $10 in 2011 there was not a 1D RSI reading of 85+ in a bear market.”
However, he did acknowledge that the current move could become the first exception, but added, “But I doubt it.”
The analyst later described the price action as “vertical accumulation,” saying the current structure resembles November 2024, the last time Bitcoin’s daily RSI reached 85. The pattern starts with a move into overbought territory, followed by a rally that gives traders few entries. Price then works through resistance without large pullbacks, with a higher continuation while “everyone expects it to drop again.”
Derivatives activity has also picked up. Arab Chain reported earlier today that Bitcoin open interest on Binance reached about $9.54 billion, its highest level in three months, showing a clear return of activity and liquidity to the futures market.
According to the market watchers, an uptick in open interest coming at the same time that price is increasing could be a reflection of “growing confidence in the bullish trend.” However, it also raises liquidation risk if BTC reverses.
Source: cryptopotato.com