Bitcoin – $14,000 and Rising

For anyone looking for a post record high sell-off, even that failed to offer those who missed the latest rally to enter the fray. At the time of writing, Bitcoin is up 3.55% at 14106.88 and is behaving like a devil possessed this week.

Those who had given a more conservative estimate on how Bitcoin will likely end the year may have started licking their wounds by now, assuming we don’t see a $4,000 drop between now and the end of the year.

The solace for those who had called for Bitcoin to close the year at $10,000 comes from the fact that few would have expected such a rush of institutional money into Bitcoin at current levels and it’s not likely to come to an end today or tomorrow.

In fact, the narrow bid-offer spreads and low fees offered by Bitcoin exchanges are even plucking investors out of the more traditional fiat currency trading. With the exception of last year’s cable flash crash, a normal day in the cryptocurrency markets is far more of a rollercoaster experience than trading any of the G7s.

Even a Trump impeachment might not give rise to a Dollar move akin to a Bitcoin or Litecoin intraday shift, which can be as much as 20% before the markets even batter an eyelid.

Get Into Cryptocurrency Trading Today

When considering the volatility and the fact that traders from far and wide are looking to get into the Bitcoin game, one does wonder whether even the most experienced fiat currency trader is well equipped to tackle the cryptoworld and Bitcoin in particular.

If we take a look at Bitcoin’s Relative Strength Index (“RSI”), which is a momentum indicator that compares the magnitude of recent gains and losses over a 14 day period, to measure the speed and change of price movements, it’s sitting at above 90. This may sound like an impressive number to those looking for another reason to jump on the Bitcoin Bandwagon, but a high RSI does not necessarily mean that Bitcoin is an opportunity that shouldn’t go begging.

With the RSI values in the range of 0 to 100, the general consensus is that any RSI value that sits at 70 or above is considered overbought/overvalued and set up to take a tumble, while any RSI at 30 or below is thought to be oversold / undervalued and likely to make a move up.

The recent surge to $14,000 will have contributed to the high RSI, but for even those looking to eliminate large jumps, even making the RSI less sensitive to extremes, by taking the overbought / overvalued end of the scale to 80, it’s still not enough to suggest a continued upward momentum.

References have been made to 2013 and when the RSI hit current levels that resulted in a Bitcoin collapse. The technical numbers certainly would suggest that a correction is on the cards and, even without the technicals, just looking at the latest chart one questions how much longer Bitcoin can move until the technical analysts are vindicated with their doomsday forecasts.

While institutional money is pouring in, the RSI may continue to be a traders’ worst nightmare however and going short could go horribly wrong for those who bet their shirts on the formula that has worked wonders in the more developed asset classes. That is not to say a crash is not imminent, but when and if such an event happens remains to be seen.

Even JPMorgan Chase reversed its recent stance on Bitcoin, suggesting that it could be the new gold. It’s ironic considering the fact that it wasn’t long ago that the bank’s CEO had called Bitcoin a fraud, whilst also calling people who buy Bitcoin as being stupid. Back in September, JPMorgan Chase and Morgan Stanley were reported to have purchased around €3m of XBTs on the mid-September dip. Perhaps Jamie Dimon’s daughter pulled him aside and suggested that he should take get in on the action. If he had, he would have bought at around $8,000 and that would have been a 75% profit….

If the non-believers are being converted, then how is the Bitcoin hourly chart going to look tomorrow? It’s been looking toppy for days, weeks and even months…

Buy & Sell Cryptocurrency Instantly