BTC price faces crucial trend battle as Bitcoin RSI confirms breakout

Although Bitcoin (BTC), may not have reached $40,000, this week’s gains helped to spark a stronger breakout in underlying price strength.

BTC/USD 1-hour candle charts (Bitstamp). Source: TradingView

RSI ends a two-month-old tradition

TradingView and Cointelegraph Markets Pro data show that the relative strength index has diverged from a multi-month downtrend by displaying BTC prices above $37,000 each week.

Bitcoin has lost the momentum to challenge $40,000 resistance after moving from $36,700 up to $39,280 by February.

However, this could change soon as one trader shows that RSI is now out of “oversold” territory.

RSI measures how “oversold”, or “overbought,” an asset is at a particular price point. Cointelegraph reported that it has been falling since November. This culminated in rare lows only seen a few times in recent history.

It seems like everyone is following a trend line. However, nobody is paying attention the RSI ….it has already broken out of that downtrend!” Crypto Ed, a popular analyst and trader commented on the latest developments.

“Before I think you think, I’m calling to new ATH’s. We’re not out the woods yet but seeing more up-to-the-minute.”

The accompanying chart shows BTC/USD trying to break its downtrend with RSI still notionally free.

Bitcoin RSI vs. BTC/USD chart. Source: Crypto Ed/Twitter

“Groundhog Year” for BTC price

However, even a return to the $69,000 peak wouldn’t be a significant shift in price performance.

Related: Bitcoin whales bought at $38K after BTC supply per whale reaches 10-year high

Zooming in, the data shows almost all of 2021 as a consolidatory Bitcoin year, with current prices nearly matching those of the same time last year.

The #Bitcoin price is almost the same as it was 365 days ago. Also, the market is open for trading. pic.twitter.com/1ITGPIXymQ
— Mikolaj Zakrzowski (@PrfDude) February 1, 2022

Contrary to the past 12 months, however the supply is decreasing. This means that any price trigger could have more severe consequences due to the fact that there is less BTC.

In 2022, this illiquid supply trend will likely continue to rise “relentlessly”.

https://cointelegraph.com/news/btc-price-faces-crucial-trend-battle-as-bitcoin-rsi-confirms-breakout