• Bitcoin has seen some mixed price action as of late, with bulls being unable to take control of its trend in the time following its rally up to $28,500
• The rejection here was quite intense, and it has yet to show any signs of strength in the time following this occurrence
• The fact that bulls have guarded against any deeper drawback is positive because it invalidates the possibility that this recent high is a blow-off top
• One trader is now noting that there is an incredibly bullish indicator that is flashing for Bitcoin
• He points to the cryptocurrency’s monthly RSI, noting that a monthly close above a specific level that it is nearing is historically followed by parabolic moves higher
• In the past, these movements have had an average return of 1,010%, but their size and length seem to diminish with time

Bitcoin and the entire crypto market have declined over the past 12 hours, which appears to be the direct result of the pressure that XRP is placing on the market due to its latest selloff.

Where the market trends in the mid-term likely won’t depend on XRP, which means that this latest round of selling pressure may mark a knee-jerk reaction from investors.

One analyst is noting that Bitcoin’s monthly RSI is flashing an incredibly bullish sign for where BTC trends next.

Bitcoin Struggles to Gain Momentum Following $28,500 Rejection

At the time of writing, Bitcoin is trading down just over 1% at its current price of $26,700.

The crypto has been trading between the upper-$26,000 region and the lower-$27,000 region throughout the past few days.

It has yet to garner enough buy-side support to break above the heavy resistance laced throughout the lower-$28,000 region. For now, this peak could mark a blow-off top.

Indicator Suggests BTC is About to Go Parabolic

One trader explained in a recent tweet that Bitcoin could be on the cusp of seeing a parabolic move higher in the days and weeks ahead.

He points to the cryptocurrency’s monthly RSI as an indicator for this possibility.

“BTC – Monthly RSI. Monthly candle is about to close above 80. When this happens, bullish trend continues, with an avg. return of 1010.87%. Each cycle is shorter.”

Image Courtesy of il Capo of Crypto. Source: BTCUSD on TradingView.

The coming few days should shed light on Bitcoin’s trend, as continued weakness could confirm $28,500 as a local high and lead to a deeper retrace.

Featured image from Unsplash.
Charts from TradingView.

The monthly relative strength index (RSI) of Bitcoin (BTC) shows the dominant cryptocurrency is primed for another rally.

Is 2021 an ideal time for a Bitcoin rally?

The RSI is a momentum indicator that measures whether an asset is overbought or oversold. When the RSI surpasses 75, it signals the asset is overbought, and when it drops below 30, it means the asset is oversold.

A pseudonymous trader known as “Crypto Capo” noted that the monthly RSI of Bitcoin is set to close above 80. Historically, when this has happened, BTC has saw a strong rally afterward.

Although the monthly RSI of Bitcoin is above 80, which is technically oversold, BTC’s RSI tends to become oversold for prolonged periods during a bull cycle.

Hence, traders often refer to an oversold RSI on a high time frame chart, like the monthly candle chart, to forecast an extended rally in the short term to medium term. The trader said:

“Monthly candle is about to close above 80. When this happens, bullish trend continues, with an avg. return of 1010.87%. Each cycle is shorter.”

However, the trader emphasized that one indicator cannot accurately predict the price cycle of Bitcoin. Crypto Capo explained that the combination of a few indicators could serve as guidance for the future. He wrote:

“You cannot base a prediction on an indicator. What we do is combining several methods to have a guideline for the future, to see what is more likely. But in the end, we adapt to what the price does in the present.”

“Bullish year ahead”

Traders have differing perspectives on where Bitcoin is headed in 2021, but most traders remain overwhelmingly bullish.

Cointelegraph Markets analyst Michael van de Poppe said he anticipates Bitcoin to reach $65,000 to $85,000 by next year’s end. He stated:

“I’ve got to revise my view on the potential level of $BTC at the end of 2021. Through this recent surge, I’m expecting it to be between $65,000-85,000 at the end of 2021. Bullish year ahead.”

Meanwhile, the options market is pricing in a 22% chance of Bitcoin achieving $120,000 by next year, which could also serve as a potential guideline on where BTC is heading in 2021.

In the short-term, however, some traders are cautious in entering leveraged positions. A pseudonymous trader known as “TheBoot” said the ideal scenario is to wait for Bitcoin to consolidate at $25,000 or enter after the next price upsurge. The trader explained:

“No rush to enter leveraged trades on $btc right here imo. Best would be to wait and long low 25k or even mid 24k. Alternatively, wait for the next leg up and then a dip from there.”

Cointelegraph previously reported that whales have been buying Bitcoin more aggressively since Christmas, which could buoy the mid-term bull case for BTC entering into 2021.