(NEW YORK)–Bitcoin (BTC) extended its run over the holiday weekend, but it may be starting to show signs of becoming over extended in the short-term.
Bitcoin broke above key $24,000 resistance, but may start finding some profit takers around the $25,000 level as indicators on both the daily and more importantly weekly chart show signs of becoming highly overbought in near-term.
The RSI on BTC weekly chart is now pushing up towards 90, which indicates highly over bought, and at risk for a sharp correction in coming days to weeks.
If it does BTC could try to retrace to find support at its old resistance at around $20,000.
Longer-term the trend for Bitcoin remains bullish as more and more institutions get involved with the cryptocurrency, but for the immediate term traders should tread with caution as things begin to get to bubble levels above $25,000.
JP Morgan Warning on Bitcoin
JPMorgan analysts late last week issued alert to clients indicating that bitcoin was likely “overbought” after the recent rally. They clarified that the flows into the Grayscale Bitcoin Trust “are too big to allow any position unwinding by momentum traders to create sustained negative price dynamics.”
But they emphasized that “a major slowdown in those flows would boost the risk of a bitcoin correction akin to the one in the second half of 2019.
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