Bitcoin ($BTC) is predicted to continue its recent bullish momentum and be on the verge of a major bull, as indicated by its 14-week relative strength index (RSI).
This momentum tool, which gauges the pace and variation of price movements, has recently surpassed the 70 mark. Historically, such readings have coincided with the FOMO (fear of missing out) phases witnessed in mid-2019 and late 2020. During these periods, a mix of retail and seasoned traders increased their Bitcoin holdings.
The RSI fluctuates between zero and 100. While the standard calculation period for RSI is 14 days, variations like the 14-week and 14-month RSIs are utilised to capture long-term momentum.
An RSI above 70 can be interpreted as signaling overbought conditions. However, a high RSI on extended duration charts can suggest that bullish momentum is robust. This could hint at Bitcoin experiencing further appreciation in the upcoming weeks, mirroring the trends from 2019 and 2020.
ETFs drive Bitcoin bulls
Bitcoin has seen a 28% increase in October. This was driven by the speculation that U.S. regulators might approve a spot bitcoin ETF, which would lead to increased demand.
Investment firms, including BlackRock and Fidelity, as well as crypto companies like Grayscale, have applied for spot Bitcoin ETFs. The U.S. Securities and Exchange Commission’s (SEC) chair recently said they are reviewing eight to ten of the applications, though the decision timeline remains unspecified.
There’s a growing expectation that BlackRock’s spot ETF might receive approval soon, especially after it appeared on the Depository Trust and Clearing Corporation (DTCC) list. This list provides for post-trade clearance, settlement, custody and information services
However, a DTCC representative said: “Appearing on the list is simply an indication that an agent bank has requested a DTCC identifier for an ETF fund, and that DTCC may process that transaction at an undetermined date in the future following SEC approval.”
Bitcoin’s upcoming halving
Another bullish event in the Bitcoin landscape is the next halving, scheduled for April 2024. This event will cut down the mining rewards from 6.25 BTC to 3.125 BTC per block.
Historically, halvings have led to bull runs for Bitcoin due to reduced supply and increased demand.
However, the effect isn’t immediate. The last BTC halving was in May 2020. By November 2021, BTC reached its peak around the $69,000 level.
At the time of writing, Bitcoin is trading at $34,290, down 1% in the past day, but up 28% in the previous month. According to CoinCodex, it has an RSI rating of 82, which it has attributed to a sell signal.
