Analysts from The Market Ear recently pointed out that Bitcoin is currently showing overbought conditions based on two technical indicators, the RSI and the 200 MA. They suggest that Bitcoin may experience a significant pullback in the near future.
This week, the price of Bitcoin surged from around $51,000 to $64,000, a 22.9% increase. With the continuous inflow of funds into the US Bitcoin spot ETF and the upcoming Bitcoin halving in April, it seems that breaking historical highs is not far away.
However, despite the market’s surprise at this surge, some analysts have expressed concerns about a potential pullback and bearish outlook.
According to a research report released by The Market Ear on the 29th, analysts pointed out that the RSI of Bitcoin in the past two weeks has reached 88, a level that Bitcoin has never reached in the price range of $60,000. This may indicate that Bitcoin is severely overbought.
However, a closer look at the chart shows that when Bitcoin reached its peak during the bull market in 2021, the RSI was gradually declining. Usually, the real decline occurs some time after the high point. Therefore, relying solely on the overbought condition when entering the high point of the RSI may result in a delay in short-term trends.
It is worth mentioning that analysts have also noted that the correlation between Bitcoin and various fundamental factors has weakened. These factors include the monetary policy of the US Federal Reserve, the depreciation of the US dollar, hedging tools, and inflation. Currently, the market seems to ignore these fundamental factors, as data shows a surge in the inflow of funds into financial products, including Bitcoin spot ETFs, in the past few weeks.
Overall, analysts suggest that Bitcoin may experience a significant pullback in the near future due to its overbought conditions based on technical indicators and the weakening correlation with fundamental factors.