While Bitcoin moving above its 200-day moving average has been seen as a bullish sign by many, a recent report by Bloomberg indicates that the surge has pushed Bitcoin into overbought territory, citing the GTI Global Strength Indicator (GSI), a price strength indicator that compares individual upward or downward movements of successive closing prices.
According to the analysis, the GSI is currently at levels last seen during the historic 2017 bull run that saw Bitcoin run as high as $20,000.
The report notes that while there are many theories as to why the crypto market broke out this week, it was likely due to Bitcoin’s technicals being primed for a run.
“The market got so compressed, volatility was so low, it just went poof! It broke out. It was released from the cage,” said Bloomberg Intelligence analyst Mike McGlone. “Now it’s a question of duration and I suspect when you have such a massive bubble, you’ll always have an overhang of people who need to sell.”
While no one truly knows where Bitcoin is heading next, Bloomberg did cite David Tawil, president of crypto hedge fund ProChain Capital, to support a bearish thesis.
“It’s nice to see a positive move as opposed to a negative move, certainly,” said Tawil. “But at the same time, for investor purposes, it’s not a particularly comforting move. Certainly, an investor would much rather see a gradual rise with constant floors in terms of downside being established, as opposed to a very, very quick run-up. It could easily be easy come, easy go.”
Bitcoin is currently up 0.06% on the day to $ 5,170, giving the largest digital currency a $91.2 billion market cap — roughly 50.5% of the total crypto market.
Disclaimer: This article’s author has cryptocurrency holdings that can be tracked here. This article is for informational purposes only and should not be taken as investment advice. Always conduct your own due diligence before making investments.