Bitcoin price is showing resilience in the face of adversity and is up nearly 100% from bear market lows. However, it has yet to show signs of an undeniable bull market as it has in the past.
That’s because of just one missing ingredient, according to a new BTCUSD weekly chart.
When cooking, or especially baking, missing even one ingredient can change the end result of the desired dish or dessert. For example, sweets without any sugar just aren’t that sweet. A prime cut of steak doesn’t quite taste as good if it hasn’t had a proper seasoning and sear.
Similarly, a cryptocurrency bull market without the weekly Relative Strength Index at overbought levels, just simply isn’t a Bitcoin bull run. Historically, Bitcoin reaching oversold conditions has been a requirement for a full-bore bullish impulse. The 1W RSI is currently lacking that key signal appears to be preventing the market from pushing dramatically higher.
The term “full-bore” is rather fitting, with Merriam-Webster defining it as “with maximum effort or speed.” The Relative Strength Index provides a read on momentum, by taking a measurement of the speed of price changes within a specific time period. When prices are moving exceedingly fast in one direction, maximum buying or selling effort is required.
This is precisely why reaching overbought or oversold conditions can lead to a reversal – it takes consistently increasing effort to maintain maximum speed. However, in cryptocurrencies, the speculative nature of their pricing can result in extreme phases of FOMO where conditions remain overbought at length. Such phases, called a bullish impulse, show corresponding overbought levels in the RSI historically in BTCUSD.
This particular ingredient is still missing currently in 2023, after is last appearing in 2021 and prior to that 2019. During the 2017 bull run in crypto, Bitcoin repeatedly reached overbought levels, only to return to the zone as it kept soaring higher and higher. Will BTCUSD weekly push higher and finish the recipe? Or is this a sign of a bear market rally?
This chart originally appeared in Issue #11 of CoinChartist (VIP). Subscribe now for free.
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