Bitcoin price has gone up more than $ 5,000 today as a result of a strong rise in FOMO, driven by the news that the Elon Musk-led Tesla had added $ 1.5 billion in BTC to its corporate reserves.
The power of today’s shopping frenzy has pushed the daily Relative Strength Index back above a significant level. A close above it can double the price of the cryptocurrency. Here’s how.
Bitcoin takes off as Tesla buys $ 1.5 billion in BTC
Bitcoin is in what is most important bull market ever. The cryptocurrency is no longer only in the hands of early adopters, tech enthusiasts, evangelists or traders, and is now the focus of hedge funds, institutions and major public companies.
The trend of companies buying Bitcoin to bolster their stamina before the coming economic battle began with NASDAQ-listed software company MicroStrategy. A domino effect has since started, with Jack Dorsey’s Square Inc. adds BTC to their treasury reserves, most recently followed by Tesla.
Related reading | Running Bitcoin: Passing the Torch from Hal Finney to Jack Dorsey
Tesla CEO Elon Musk had previously added Bitcoin and hashtag to his Twitter bio, but has now added $ 1.5 billion worth of Tesla’s holdings in BTC.
The buy alone caused the price action to break well below $ 30,000, and news it was making rounds caused Bitcoin to soar with over $ 5,000 from low to high today.
Even more striking, though, the move will have pushed the daily Relative Strength Index back into bull territory if today’s candle can close at or above its current level.
The Relative Strength Index is back in "overbought" bull territory | BTCUSD on TradingView.com
Crypto prices can double if RSI stays in Bull Zone
The Relative Strength Index is designed to indicate when an asset has been over or over sold. A reading of 70 or 30 suggests that an extreme point has been reached, and a reversal is more likely.
However, with highly trending assets, they can remain overbought or oversold for a significant period of time. In the above example, each daily closure in the overbought area has resulted in at least another week of upward momentum.
The Relative Strength Index could stay overbought until $90K per coin | Source: BTCUSD on TradingView.com
Even more dramatic than the amount of time assets can rise while remaining overbought, in the example above, Bitcoin is up 117% as soon as the RSI closes above 70.
Bitcoin’s price rose $ 5,000 today alone. If so the start of the move and held as the last breakout, the price per BTC could double again in just about a month.
Featured image from Deposit Photos, Charts from TradingView.com