• The Bitcoin price rally has stalled for five days due to Bitcoin’s Relative Strength Index (RSI) showing severe overheating.
• The stalling of the BTC price at $23,000 could signal a healthy consolidation before a new price rally.
• The upcoming FOMC meeting of the U.S. central bank on February 1 could set the tone for the future of the Bitcoin price.
The Bitcoin price has been in the spotlight recently as it experienced a tremendous surge from $21,000 to $23,000 last Friday. However, the rally has since stalled, causing many investors to question the future of the world’s largest cryptocurrency.
The reasons behind this stalling of the Bitcoin price are diverse. Firstly, Bitcoin’s Relative Strength Index (RSI) on a daily basis showed severe overheating during the recent surge from $21,000 to $23,000. The RSI is a technical indicator that reveals how oversold or overbought a certain asset is. During the recent rally, the daily RSI was near 90 at times but has since cooled to 78 at press time. This could be a sign that a healthy consolidation is taking place, which could be a precursor for a new price rally.
Another factor that could be influencing the Bitcoin price is its correlation with the U.S. Dollar Index (DXY) and the S&P 500. Generally speaking, a weakening dollar is bullish for risk assets like Bitcoin and the S&P 500. However, the weekly chart of the DXY reveals that the dollar index is still holding above its weekly support at 101, which experts consider an extremely crucial support level. If the DXY breaks below this mark, the Bitcoin price could experience a significant boost.
The next FOMC meeting of the U.S. central bank will take place in just one week, on February 1. This meeting could have a significant impact on the future of the Bitcoin price, as it will set the tone for the direction of the U.S. dollar and the global economy. If the FOMC signals that it is likely to keep interest rates low for the foreseeable future, it could lead to a weakening of the dollar and a surge in the price of Bitcoin.
Overall, it is clear that the near-term future of the Bitcoin price is highly dependent on the upcoming FOMC meeting. If the FOMC signals a dovish stance, it could lead to a surge in the Bitcoin price. However, if the FOMC signals that it is likely to hike interest rates soon, it could cause the Bitcoin price to fall. Investors should therefore keep a close eye on the upcoming FOMC meeting and be prepared to take action depending on the outcome.