Cryptocurrency analyst Benjamin Cowen is raising concerns about the future of Bitcoin (BTC) as he analyzes the historical behavior of a key indicator. In a recent video shared with his large following on YouTube, Cowen points to the Relative Strength Index (RSI) on Bitcoin’s weekly timeframe as a potential signal of a bearish turn.
The RSI is a popular momentum oscillator that ranges from zero to 100, used to determine overbought or oversold conditions. An RSI reading above 70 suggests overbought conditions, while a reading below 30 indicates oversold conditions. Cowen highlights that the current RSI on Bitcoin’s weekly chart is teetering on a critical support level that has historically signaled the end of a cycle when breached.
Drawing parallels between the current market cycle and the 2016-2017 cycle, Cowen emphasizes the significance of Bitcoin’s weekly RSI support level, which is currently hovering around 44. At the time of writing, Bitcoin is priced at $86,096, with the weekly RSI at 50.
Cowen speculates that if Bitcoin fails to hold the RSI support level on the weekly timeframe, it could indicate underlying issues in the US economy. This scenario might prompt intervention from the Federal Reserve, potentially leading to a loosening of monetary policy.
The analyst suggests that a breakdown in the weekly RSI below 44 could signal a shift towards a more interventionist stance from the Fed. With inflation emerging as a key concern in the current economic landscape, the Fed may be cautious in its approach to supporting markets, waiting for signs of inflation easing before taking significant action.
As investors and traders closely monitor Bitcoin’s RSI levels and market dynamics, the potential implications of a breakdown in the RSI support level could have far-reaching consequences for both the cryptocurrency market and broader economic landscape.
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Image Source: Midjourney