Bitcoin has been struggling since the launch of bitcoin ETFs and may continue to for some time, according to Wolfe Research. The cryptocurrency has fallen 9% since the Securities and Exchange Commission gave bitcoin ETFs the green light to begin trading in the U.S. on Jan. 10. This is just the beginning of what may be a disappointing first quarter of the year, Wolfe’s Rob Ginsberg said in a note Wednesday. “Bitcoin now faces resistance on multiple fronts,” he said. “Is it going to tank? Probably not. But much like it responded previously at the top of this trading range, we expect consolidation and decline to follow, which is why we would recommend taking some profit at these levels.” “Bitcoin is at the top of its trading range,” he added. “This, in unison with the bearish relative strength index (RSI) divergence and deteriorating momentum lead us to believe it would be prudent to take some chips off the table here.” BTC.CM= ETH.CM= mountain 2024-01-10 Bitcoin (BTC) and ether (ETH) since Jan. 10 The RSI is a momentum indicator that measures the speed and change of price movements. It recently showed a bitcoin pullback could be in sight. An RSI reading of 70 and higher indicates that an asset is overbought, while a reading of 30 suggests it’s oversold. Ginsberg added that bitcoin is overbought on a long-term weekly basis too, a condition that the cryptocurrency has seen only twice before. Both times marked peaks, he said. There are still plenty of good opportunities in the crypto market, however. While bitcoin has been falling, ether has risen 12% in the same period since Jan. 10, as investors sold bitcoin on the long awaited ETF approval news in favor of an underperformer with a good narrative still in play. Ether advanced just 90% in 2023 compared to bitcoin’s 157%. Investors are now awaiting the SEC’s decision on whether spot ether ETFs will be allowed to trade in the U.S., which is due in the spring. “Ethereum has reclaimed leadership in the space, which we foresee continuing over the near- to mid-term,” Ginsberg said. “[It] has seen rapid improvement since the fake breakdown the coin exhibited back in October. [The] next major level of resistance from here lies above $3,500.” Ether has been trading at around the $2,500 level. —CNBC’s Michael Bloom contributed reporting.
Wolfe says it’s time to take some profit in bitcoin, sees further consolidation on the horizon
