Bitcoin has undergone a strong correction since the $24,300 highs seen this past weekend. The leading cryptocurrency currently trades for $22,600 though fell as low as $21,800 around 24 hours ago.
BTC is down 5% in the past 24 hours. Bitcoin is outperforming most cryptocurrencies, which appear to be plunging as a result of a strong dominance move. This dominance move may have been triggered by the rumor that the U.S. SEC will finally be pursuing legal action against Ripple regarding XRP.
Analysts think that Bitcoin may have formed a local to medium-term high after the peak this past weekend.
Related Reading: Here’s Why Ethereum’s DeFi Market May Be Near A Bottom
Bitcoin Likely Forming a Top in Near to Medium Term
Bitcoin may have formed a medium-term high after peaking at $24,300 this past weekend, some analysts have said.
The chart below was shared recently by a leading trader. It shows that on a medium-term basis, Bitcoin may have found a top due to a strong surge in the weekly relative strength index (RSI) and the stochastic RSI. Both indicators are currently in an extremely overbought range, suggesting that a pullback for this market is due.
Of course, as the trader caveats, these indicators can stay overbought for extended periods of time. They have just shown him that it is ok to be cautious with further longs in the current environment:
“Weekly RSI and Stoch RSI significantly overbought. It has been a trending market and oscillators can remain overbought – but I’m just being cautious here…. Local top?”
Chart of BTC's price action over the past few years with an analysis by crypto trader "TraderXO" (@Trader_XO on Twitter).
Source: BTCUSD from TradingView.com
Related Reading: Tyler Winklevoss: A “Tsunami” of Capital Is Coming For Bitcoin
While Bitcoin’s price action is weak, the on-chain fundamentals remain strong. Rafael Schultze Kraft, CTO of Glassnode, recently noted that with the number of BTC held on exchanges decreasing, he thinks a supply-side liquidity crisis is playing out:
“#Bitcoin is in a supply and liquidity crisis. This is extremely bullish! And highly underrated. I believe we will see this significantly reflected in Bitcoin’s price in the upcoming months. Let’s take a look at the data.”
Chart of BTC's price action over the past decade with an on-chain analysis of BTC on exchanges from Rafael Schutlze Kraft, CTO of Glassnode Chart from Glassnode, a crypto data source
Analysts think that further accumulation by long-term investors will only force Bitcoin higher over time.
Related Reading: 3 BTC On-Chain Trends Show a Macro Bull Market Is Brewing
Featured Image from Shutterstock Price tags: xbtusd, btcusd, btcusdt Charts from TradingView.com Analyst: BTC Could Be Forming a Local Top as Indicators Overbought