Bitcoin is overdue for a pause before bullish trend continues, says Wolfe Research
Bitcoin has rallied more than 40% since the start of the year, quickly paring losses from its disastrous 2022. However, Wolfe Research thinks it isn’t go time for the crypto bulls just yet. “Bitcoin is still trading at the deepest overbought condition in over two years,” the firm’s Rob Ginsberg said in a note this week. “Sometimes these extended overbought signals can be a sign of momentum, but our sense is that it’s overdue for a brake check.” The cryptocurrency is on pace to finish the week higher again, by about 2%, according to Coin Metrics. Overnight on Tuesday, the price climbed up to $24,249.70, its highest level since Aug. 17 and close to Wolfe’s secondary target of $24,500. After finishing 2022 down 64%, bitcoin surged 39.6% in January, which was its best month since October 2021 and its best January performance since 2013. BTC.CM= mountain 2021-03-01 Bitcoin headed for ‘brake check’? Investor sentiment got a boost in January from lower inflation readings and optimism around the possibility the Federal Reserve will soon slow down its inflation-fighting rate hikes. After the Federal Reserve said the “disinflationary process has started” at the conclusion of its policy meeting, bitcoin rose again. Ginsberg said he’s “encouraged by this initial breakout attempt” and sees the bullish trend as a structural shift, but that a “healthy digestion of gains is in order.” “An overbought condition this extreme simply is unsustainable regardless of the security,” he said. “Expect bitcoin to fall back within its range before seeing any near term upward moves.” — CNBC’s Michael Bloom contributed reporting.