Bitcoin (BTC) may have stopped short of $40,000, but this weekโs gains have helped spark a more significant breakout for underlying price strength.
RSI breaks a two-month tradition
Data from Cointelegraph Markets Pro and TradingViewย shows that sustained BTC price action above $37,000 this week has allowed the relative strength index (RSI) to diverge from a multi-month downtrend.
After going from $36,700 to $39,280 in February, Bitcoin still lacks the momentum needed to challenge $40,000 resistance.
That could soon change, however, as one trader shows that RSI has now exited its dive deep into โoversoldโ territory.
RSI looks at how โoversoldโ or โoverboughtโ an asset is at a given price point. As Cointelegraph reported, since late November, itย has been sinking, culminating in rare lows seen only a handful of times in recent years.
โIt seems that everyone is watching a trend line. But nobody is paying attention to the RSI….it already broke out of that downtrend!โ popular trader and analyst Crypto Ed commented on the latest events.
โBefore you think Iโm calling for new ATHโs: weโre not out of the woods yet, but seeing more up short term.โ
An accompanying chart shows BTC/USD fighting to exit its own downtrend, with RSI already notionally free.
โGroundhog Yearโ for BTC price
Even a trip back to the $69,000 peak would not constitute a major shift in price performance, however.
Related:ย Bitcoin whales buy at $38K as BTC supply per whale hits 10-year high
Zooming out, data depicts almost the whole of 2021 as a consolidatory year for Bitcoin, with current prices almost exactly matching those from the same period last year.
We have nearly exactly the same #Bitcoin price as 365 days ago. In other words – ranging market. pic.twitter.com/1ITGPIXymQ
โ Mikoลaj Zakrzowski (@PrfDude) February 1, 2022
Unlike much of the previous 12 months, however, the available supply has been dwindling, with the implication that any price trigger could have deeper consequences thanks to there simply being less BTC involved.
This illiquid supply trend is further expected to continue upwardย โrelentlesslyโ in 2022.ย
