Bitcoin appears to be a bit overheated.
After surging past $13,000 on Wednesday for the first time in more than 14 months, price charts followed by technical analysts suggest the largest cryptocurrency may be due for a pause in the wake of the exuberance triggered by the announcement that PayPal Holdings Inc. will let customers use cryptocurrencies.
The rally pushed Bitcoin’s 14-day Relative Strength Index (RSI) reading to 80, a level that chartists consider overbought. Additionally, Bitcoin is well above the upper limit of a trading range that would normally trigger a reversion to the mean, which may indicate the digital coin needs to pause before continuing to advance.
Bitcoin gained as much as 3% to $13,241 during Asian trading hours, before retreating back below $13,000 in New York on Thursday. It has surged about 20% this month.
The trend is keeping advocates bullish even with the muted gains on Thursday.
“Something unanticipated needs to occur to trip up advancing Bitcoin, as we see it, yet the crypto may need a new catalyst to sustain above $14,000, wrote Mike McGlone, a commodity strategist with Bloomberg Intelligence. “Absent a reversal in key metrics showing increasing demand and adoption, breaching resistance should be a matter of time.”
— With assistance by Kenneth Sexton