Bitcoin and other cryptocurrencies experienced fluctuations on Monday, as the largest digital asset reached its recent peak, surpassing levels not seen since early 2022. Technical indicators suggest that a decline in prices may be on the horizon.
The price of Bitcoin has only decreased by less than 1% in the past 24 hours, settling at $48,000. It had previously reached a high of $48,800. Bitcoin is now within reach of its mid-January peak, which was near $49,000. This level is the highest since the cryptocurrency market went through a bear market in the spring of 2022. Bitcoin's recent rally has propelled prices upwards from the $42,000 range.
Analyst Alex Kuptsikevich from broker FxPro warns that caution is mounting as the January peak approaches. Bullish sentiment has become more tempered. The surge in Bitcoin's price during January and its continued strength can be attributed to the approval of spot Bitcoin exchange-traded funds (ETFs) in the United States. Additionally, the overall positive market sentiment has contributed, with the Dow Jones Industrial Average and S&P 500 reaching all-time highs. However, given the substantial gains, many investors are considering taking profits in the crypto market.
Kuptsikevich points out that while Bitcoin had seven consecutive days of gains, the pace slowed down over the weekend. The relative strength index (RSI) for Bitcoin surpassed 70 on the daily timeframe, which could signify that the token is overbought and prompt some traders to sell in the short term. On the other hand, Bitcoin achieved its highest weekly close since early 2022 last week, which could indicate the potential for further gains.
Beyond Bitcoin, Ether, the second-largest cryptocurrency, experienced a 2% drop, settling at $2,475. Other smaller tokens or altcoins, such as Cardano and Polygon, weakened, each losing 4%. Memecoins like Dogecoin and Shiba Inu also followed suit, with Dogecoin experiencing a 4% decrease and Shiba Inu shedding 3%.
In conclusion, the cryptocurrency market, led by Bitcoin, is currently characterized by volatility and uncertainty. Traders and investors are closely monitoring technical indicators as they contemplate potential price movements.