Outside Source
In a recent video, the analyst behind the popular Crypto Banter channel warned viewers that crypto investors are currently falling for “one of the biggest traps ever.” However, he also outlined a scenario in which Bitcoin could be on the cusp of a major breakout.
It’s the oldest trick in the book. […] I’m gonna outline why you should not fall for that trap and how you can identify what it may look like.
The potential trap relates to the relative strength index (RSI), a technical indicator that measures the momentum and velocity of price changes in an asset. The crypto analyst explained that many retail investors mistakenly view low RSI readings as a sign of weakness and an indication to exit positions.
However, the analyst believes this is a misunderstanding of what low RSI levels signify. Looking back historically, some of Bitcoin’s (BTC) largest rallies have kicked off after the RSI dipped into oversold territory below 30.
It’s not a sign of weakness. It’s not a sign of exhaustion. It’s a sign of strength within the market.
In addition to presenting a bullish case based on historical RSI trends, the analyst also pointed to MicroStrategy’s recent $750 million Bitcoin purchase as a potential catalyst. MicroStrategy’s buy marked its third largest Bitcoin acquisition ever.
The analyst believes there are parallels between current conditions and previous instances when significant institutional purchases helped ignite further buying and price rises. If history repeats, a surge of “institutional FOMO” could be on the horizon.
While laying out his bullish scenario, the analyst acknowledged Bitcoin could see a pullback first after failing to clearly break out above $40,000. But he expects any retracement to be limited before the uptrend resumes.
As always in crypto, there are bullish and bearish cases to consider. But this analyst in particular sees the stars aligning for Bitcoin to leave what he believes is “one of the biggest traps ever” in the dust as it embarks on its next major rally.
This article first appeared at crypto.news
