The monthly relative strength index (RSI) of Bitcoin (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 has been overbought or oversold. If the RSI exceeds 75, it indicates that the asset is overbought, and if it falls below 30, it means that the asset is oversold.
A pseudonymous trader, known as “Crypto Capo,” noted that Bitcoin’s monthly RSI will close above 80. Historically, if that happened, BTC would have seen a strong rally thereafter.
Although the monthly RSI of Bitcoin is higher than 80, which is technically oversold, the RSI of BTC tends to be oversold for long periods.
Therefore, traders often refer to an oversold RSI on a high time frame chart, such as the monthly Christmas chart, to predict a long rally in the short to medium term. The dealer said:
‘The monthly candle is about to close above 80. If this happens, the bullish trend will continue, with an average return of 1010.87%. Each cycle is shorter. ”
However, the trader emphasized that one indicator cannot accurately predict the price cycle of Bitcoin. Crypto Capo explained that the combination of single indicators could serve as a guideline for the future. He wrote:
‘You can not base a forecast on an indicator. What we are doing is combining different methods to have a guideline for the future, to see what is more likely. Ultimately, we adapt to the price it is currently doing. ”
“Bullish year ahead”
Traders have different perspectives on where Bitcoin is headed in 2021, but most traders remain overwhelmingly bullish.
Michael van de Poppe, analyst at Cointelegraph Markets, said he expects Bitcoin to reach $ 65,000 to $ 85,000 by next year. He set:
“I need to review my view on the potential level of $ BTC at the end of 2021. By this recent boom, I expect it to be between $ 65,000 and 85,000 by the end of 2021. Bullish year ahead.”
Meanwhile, the options market is praising a 22% chance that Bitcoin will reach $ 120,000 by next year, which could also serve as a possible guideline for where BTC is heading in 2021.
In the short term, however, some traders are wary of entering leverage positions. A pseudonymous trader, known as “TheBoot”, said the ideal scenario is to wait until Bitcoin consolidates at $ 25,000 or goes to the next price push. The dealer explain:
‘No hurry to do leverage transactions on $ btc here. It’s best to wait and long 25k or even mid 24k too long. Alternatively, wait for the next leg and then a dive from there. ‘
Cointelegraph reported earlier that whales have been buying Bitcoin more aggressively since Christmas, which could force the interim bull fall for BTC going on in 2021.