Bitcoin, which generally spent February on the rise, showed a strong performance this February and rose above $64,000.
While bullish expectations increased in the market after this rally, The Market Ear analysts warned investors about a possible correction.
Speaking to Coindesk, The Market Ear analysts said that short-term investors are turning to riskier leveraged transactions to maximize their gains for fear of missing out on the rise and to make up for the profit they missed due to initially waiting on the sidelines.
Warning investors not to get caught up in FOMO and enter the market at these levels, analysts said that the RSI indicator gives a signal that it is in the overbought zone and a correction may occur soon.
“Bitcoin's 14-day RSI is at 88.
The RSI is this overbought and we have never seen this level at Bitcoin's current levels.
The RSI has never reached this high before and the Bitcoin price of $60,000. The indicator peaked with a reading between 65 and 75 when Bitcoin was trading above $60,000 in early 2021 and in November 2021.
While such a high RSI level indicates extremely overbought conditions, this, combined with Bitcoin's higher price levels, suggests that the current rally is approaching an unsustainable level.
That's why chasing Bitcoin's rise seems like a trade too late.”
What is the RSI Indicator, What Does Which Level Mean?
Developed by J. Welles Wilder, the RSI is a momentum indicator that measures the speed and change of price movements over a specified period of time, usually 14 days or 14 weeks.
An RSI reading above 70 reflects overbought conditions, or a situation where the asset has seen repeatedly rising prices over an extended period of time or has risen a little too quickly and may soon correct lower.
*This is not investment advice.