Key Points:
This exuberant rally, however, is expected to take a breather, according to the bitcoin Greed & Fear Index (GFI) provided by crypto services provider Matrixport. The index measures the market emotions, with above 90% readings signaling greed or excess optimism, and below 10% figures representing extreme fear or pessimism. In just one week, the index has jumped from under 10% to 93%, indicating that the market may be experiencing exuberance. Although this may suggest that it is time for short-term traders to lock in some gains, the 21-day simple moving average of the index is well short of the 90% mark, implying that the overall trend for the cryptocurrency remains bullish.
In the past, an above 90% reading has coincided with interim bitcoin price tops, while a below 10% print has indicated price rallies. Markus Thielen, head of research and strategy at Matrixport, urges traders to consider taking profits, saying that the current phase of exuberant momentum may soon need to be worked off with some consolidation. Despite this, Thielen believes that the fact that the 21-day moving average (black line) is still rising suggests that bitcoin prices may have more upside potential after the expected consolidation phase.
Several chart analysts suggest that there is a possibility of a rally to $35,000 and higher. Market analyst Josh Olszewicz, for instance, points to the successful bounce on the throwback area and the completion of the falling wedge setup. He believes that there are overhead pivot resistances around $38,000, indicating that the prices may attempt to move towards the mid $30k range and face heavy resistance, followed by a reconsolidation before any move higher.
Bitcoin’s pullback from the mid-April high of $31,000 to the former resistance-turned-support of $25,200 early this month is believed to represent a “throwback”. This pattern often accelerates the price rally, as it has in the past few days.
DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
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