Bitcoin hits $14.7K — 3 reasons this rally may see new all-time highs


From November to December in 2017, the price of Bitcoin (BTC) experienced a parabolic uptrend to a new all-time high at $20,000.

There are three reasons Bitcoin might see a similar trend in the upcoming months. First, the post-halving cycle is coming into effect. Second, the relative strength index (RSI) shows room for a bigger rally. Third, the rally is not overheated, at least in the derivatives market.

Long-term RSI shows Bitcoin not overbought

PlanB, the creator of the Stock to Flow (S2F) indicator, shared a long-term RSI chart of Bitcoin. The indicator, which measures whether an asset is overbought or oversold, shows BTC is still at a neutral level.

Bitcoin relative strength index (RSI). Source: PlanB

Although Bitcoin has rallied from $10,500 to $14,600 within a month, the RSI shows there is room for more upside.

For instance, in December 2017, the RSI of Bitcoin surpassed 95 points. When the RSI exceeds 75 points, traders start to consider the asset to be overbought. Currently, the long-term RSI of BTC shows it is under 70 points.

Post-halving cycle is materializing like the past

In 2017, one of the primary narratives around the upsurge of Bitcoin was its halving in 2016. A block reward halving, which occurs approximately every four years, causes the rate at which BTC is produced by miners to drop by half.

The slower production of Bitcoin leads to an overall drop in BTC inflows into exchanges, leading the supply to drop.

The latest halving occurred in May 2020, and in 2017, Bitcoin started to rally months after the activation of the halving. The ongoing rally of Bitcoin goes in line with its previous macro rallies.

Not an overheated rally, fewer sellers in the spot market

Throughout the past five days, the funding rate of Bitcoin has stayed negative on major exchanges, particularly on Binance Futures. This shows that the majority of the futures market has been shorting BTC.