While Bitcoin’s price is looking good, analysts are taking time to study what may have caused the recent surge and where it is headed. Bloomberg in its analysis
on April 10 revealed that the most popular cryptocurrency is heading for a crash since it is exhibiting the same signs that led to the bear market in the first place.
Index Has Been Raised to an Extreme Overbought Level
Per the report, the Bloomberg Galaxy Crypto Index was raised in accordance with the recent price spike in some of the most popular cryptocurrencies. However, the index is at a level that is similar to that of January 2018 before the price plunge occurred. The indicator is showing an extreme overbought level and it is the highest since January 2018.
The media also outlined that the last time the index’s level was at that point, it declined by 65 percent within the next three months. Moreover, Bitcoin’s price spiking while its trading volume and transactions on exchanges are underwhelming is another factor that will lead to a decline in price. In their opinion, a highly speculative market that is rallying on a declining trading volume is not healthy.
Mike McGlone, Bloomberg’s Intelligence analyst said:
Typically you need good, strong volume and transactions to indicate an enduring trend…Bulls appear to be grasping at straws or what best fits their more emotional less rational views, positions…The emotional enthusiasm the past week appears too extreme.
Crypto Index Shows 25 Percent Increment Since Price Surge
On the other hand, the Bloomberg Galaxy Crypto Index showed a 25 percent increment since Bitcoins’s price spike began on April 2. Nonetheless, the index is down by 80 percent in comparison to its all-time high. Likewise, three major assets, Bitcoin, Ethereum, and XRP have contributed mostly to the weightings of the index. Bitcoin, Ether, and XRP account for 30 percent, 28.3 percent, and 27.8 percent, respectively.
Like Bloomberg, CCN recently revealed that the daily Relative Strength Indicator (RSI) has moved to 87 which is an extremely overbought level. 70 usually indicates that the virtual asset is overbought and around 30 shows it is oversold. Thus, at that RSI value, the tendency of its price devaluing is high.
Of recent, Richard Heart, a Bitcoin billionaire also made reference to the last bear market where there was a capitulation candle, a price surge, and then another capitulation candle. Heart believes that the same might be the case this time around, where another capitulation wick will be evident. He, however, noted that this is the beginning of the bear market’s end.