While bulls are celebrating, an examination of bitcoin in both the short-term and long-term timeframe reveals that bulls are running out of steam. Indicators look overheated, which makes a retracement down to $9,000 a very likely scenario.
The first cryptocurrency soared from $4,000 levels in March 2019 to close to $14,000 last month. That’s an astronomical ascent of around 245 percent in three months. The steep rise came with very little correction. Without a significant retracement, the long-term health of the uptrend is at risk.
This risk may come into play in the next few days as the market shows signs of bullish exhaustion. First, bitcoin’s price continues to rise, yet volume has significantly declined over the past two weeks.
In addition to that, the weekly RSI indicates that the cryptocurrency is massively overbought. It is approaching RSI resistance of 90. This is a level that has never been breached. In other words, bitcoin has always retraced after tapping this RSI resistance.
As demand and momentum show signs of weakness, it won’t take long before more sellers take notice. When they do, bitcoin will likely correct to $9,000.