Bitcoin’s Monthly Relative Strength Index (RSI) (BTC) shows that the dominant cryptocurrency is ready for another rally.
Is 2021 an ideal time for a Bitcoin rally?
The RSI is a momentum indicator that measures whether an asset is overbought or oversold. When the RSI exceeds 75, it indicates the asset is overbought, and when it drops below 30, it means the asset is oversold.
A pseudonymous trader known as “Crypto Capo” noted that Bitcoin’s monthly RSI will close above 80. Historically, when this happened, BTC saw a strong rally afterward.
While Bitcoin’s monthly RSI is above 80, which is technically oversold, BTC’s RSI tends to be oversold for extended periods during a bull cycle.
Therefore, traders often refer to an oversold RSI on a high timeframe chart, such as the monthly candle chart, to predict an extended rally in the short to medium term. The trader said:
“The monthly candle is about to close above 80. When this happens, the bullish trend continues, with an avg. yield of 1010.87%. Each cycle is shorter. “
However, the trader stressed that one indicator cannot accurately predict Bitcoin’s price cycle. Crypto Capo explained that the combination of a few indicators could serve as a guide for the future. He wrote:
“You cannot base a prediction on an indicator. What we do is combine different methods to have a guideline for the future, to see which is more likely. But in the end, we adapt to what price does in the present. “
“Rising year ahead”
Traders have different perspectives on where Bitcoin is headed in 2021, but most traders remain overwhelmingly optimistic.
Cointelegraph Markets analyst Michael van de Poppe said he expects Bitcoin to hit $ 65,000 to $ 85,000 by the end of next year. He stated:
“I need to revise my view of the $ BTC potential level in late 2021. With this recent rise, I expect it to be between $ 65,000-85,000 by the end of 2021. A bullish year ahead.”
Meanwhile, the options market touts a 22% chance that Bitcoin will hit $ 120,000 next year, which could also serve as a possible guide to where BTC is heading for 2021.
In the short term, however, some traders are cautious when entering leveraged positions. A pseudonymous trader known as “TheBoot” said the ideal scenario is to wait for Bitcoin to consolidate at $ 25,000 or come in after the next price hike. The trader explained:
“Don’t be in a hurry to start leveraging on $ btc imo. It would be best to wait long and low 25k or even mid 24k. You can also wait for the next leg up and then a dive from there. “
Cointelegraph previously reported that whales have been buying Bitcoin more aggressively since Christmas, which could support the interim bull case for BTC in 2021.