Bitcoin Approaches All Time Highs, but Is Overbought at Current Levels


Bitcoin is up over 56% for the year-to-date. This week it's still climbing and is nearly 9% higher for the month, leaving it just shy of all-time highs. The cryptocurrency is currently trading around the $66,650 level. The digital currency is benefitting from inflows and the recently approved Bitcoin exchange-traded funds.

Risk instruments, which include bitcoin, have benefitted from strong risk-on sentiment as markets close in on the end of Q1 2024 and one would be justified in thinking that new highs may be seen shortly. The crypto industry is benefitting from a positivity which has been driven by the approval of the first US spot Bitcoin ETFs, which have attracted capital flows. The fact that mainstream managers manage these funds e.g. BlackRock has added an air of positivity sending prices skyward. One reason for this is that the ETF's are backed by the token itself.

According to research from Galaxy, a crypto financial service, Bitcoin ETF inflows were clocked at $1.77bn in the last week of February.

However, there is a reason to be cautious at current levels. The weekly RSI is at 90, suggesting an overbought condition. At some stage this overbought condition will need to normalise, which may see a pullback in Bitcoin. The longer the RSI stays overbought the greater the danger of a significant pullback as the indicator regulates.

Russell Shor

Senior Market Specialist

Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.

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