A certified market technician has identified concerning signals in Bitcoin’s technical indicators, suggesting the cryptocurrency may have reached its cycle peak at $109,000. The analysis focuses on the Relative Strength Index (RSI) readings that have notably failed to match historical extremes, despite Bitcoin setting new all-time highs.
In a detailed analysis shared on X (formerly Twitter), CMT-certified analyst Tony Severino points out that Bitcoin’s current market behavior shows significant divergence from previous bull cycles. While some market indicators suggest continued bullish momentum, the RSI’s failure to reach previous extremes raises red flags about the sustainability of current price levels.
Understanding the RSI Divergence
Historical data shows Bitcoin’s monthly RSI typically exceeded 90 during previous market tops. However, the current cycle has failed to replicate these extreme readings, even as Bitcoin surpassed $109,000. This technical divergence, combined with higher price levels, often precedes significant market corrections.
Historical Market Parallels
Severino draws compelling parallels to the S&P 500’s behavior in the late 1960s, where similar RSI divergences preceded significant market downturns. The analyst warns against the common assumption that indicators must reach previous extremes before confirming a market top.
Expert Analysis and Price Implications
Following Trump’s US Inauguration Day, Bitcoin’s surge past $109,000 may represent the cycle peak, according to Severino. This analysis aligns with recent market support tests, suggesting potential downside risks in the coming months.
FAQ Section
Why is the RSI important for Bitcoin analysis?
The RSI helps measure market momentum and potential overbought or oversold conditions, historically providing reliable signals for major market turns in Bitcoin.
What does RSI divergence indicate?
RSI divergence occurs when price makes new highs while the indicator fails to match previous peaks, often signaling weakening momentum and potential trend reversal.
Could Bitcoin still reach higher levels despite the RSI warning?
While possible, historical patterns suggest that such technical divergences often precede significant market corrections rather than continued upside.