While Bitcoin has exceeded its 200-day moving average seen as a bullish sign by many, a recent report by Bloomberg indicates that the wave has pushed Bitcoin into the overbought zone, citing the GTI Global Strength Indicator (GSI), a price strength indicator that compares individual upward or downward movements of consecutive closing prices.
According to the analysis, the GSI is currently at the level that was last seen during the historic bull run of 2017, in which Bitcoin could run as high as $ 20,000.
The report notes that although there are many theories about why the cryptomarket broke out this week, this was probably due to the fact that Bitcoins technicals were ready for a run.
"The market was so compressed, the volatility was so low that it just went puff! It broke out. It was released from the cage," says Bloomberg Intelligence analyst Mike McGlone. "Now it's a matter of expensive and I suspect that when you have such a huge bubble, you always have an overhang of people who have to sell."
Although no one really knows where Bitcoin is next, Bloomberg called David Tawil, president of crypto hedge fund ProChain Capital, to support a bearish thesis.
"It's nice to see a positive move as opposed to a negative move," Tawil said. "But at the same time it is not a particularly reassuring step for investor purposes. Certainly, an investor would rather see a gradual rise with constant floors in terms of downward determination, as opposed to a very, very fast approach. It could easily be easy, easy to go. "
Bitcoin is currently up 0.06% on the day to $ 5,170, bringing the largest digital currency to a market capitalization of $ 91.2 billion – roughly 50.5% of the total cryptomarket.
More: Bitcoin the most remaining since Record Run, Technical Gauge Says
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Disclaimer: the author of this article has cryptocurrency holdings followed here. This article is for informational purposes only and should not be construed as investment advice. Always perform your own due diligence before you invest.