Bitcoin has marked a new all-time high above $80,000.
As CriptoNoticias reported this morning, that means that the digital currency now is in an “exploration zone”. This is what is called the moments in which the price of an asset—in this case, bitcoin—is at prices not previously reached, where there are no supports or resistances that can help make price projections.
The following graph, provided by TradingViewshows how the price of bitcoin has moved since October 1st. There the indicator known as the relative strength index (RSI) is added at the bottom.
It can be seen in the image that the RSI is above 70 points. In technical analysis, this means that the financial asset is in an overbought zone.
Should you be scared? Does it mean bitcoin is going to crash? Calm down, reader! This will not necessarily happen.
When we talk about bitcoin being in an “overbought zone,” we are referring to a condition where, according to the relative strength index (RSI), The asset has had high purchasing demand in a short period of time.
This overbought suggests that many investors have been buying in large quantities, which can drive prices up quickly. However, this is not necessarily dangerous.
That an asset is in an overbought zone simply means that it has risen at high speed and that demand has been strong. Even so, this does not guarantee that the price will fall in the short term. In fact, bitcoin could remain overbought for days or weeks and continue to rise, especially if market sentiment is positive and more people want to buy.
Now, what happens if the price starts to correct? A bearish correction is simply a natural adjustment in price following a strong bullish movement.
Far from being a bad sign, corrections help the market stabilize. In other words, when the price of bitcoin declines slightly, it allows new buyers to join in and those who intended to sell to take profits. This process is healthy because it creates a firmer “floor” for future upward movements.
And, as CriptoNoticias has reported extensively, there are many bullish expectations with bitcoin for the remainder of 2024 and much of 2025.
