The top cryptocurrency’s meteoric rise often attracts short-term traders and speculators who missed out on the early rally and are using riskier leveraged products such as futures in an attempt to catch up. Buying Bitcoin at current levels may be a late step; the technical characteristics of Bitcoin (BTC) indicate that it is overbought, writes Coindesk. Let us recall that Bitcoin is preparing to repeat its price record, set on November 10, 2021 at $68.7 thousand, after a February growth of more than 40%.
Our analysts looked at one of the main indicators of technical analysis – the relative strength index (RSI) on the 14-day Bitcoin chart, which reached 88, which was a record high in the history of observations. Never before has the RSI reached such extreme values along with the rise in the price of Bitcoin above $60 thousand. In November 2021, when Bitcoin was at the maximum of the previous bull market cycle, the RSI indicator reached values in the range of 65-75, analysts note. As a reminder, RSI is a momentum indicator that measures the speed and change of price movements over a specified period, usually 14 days or 14 weeks. A value of 70 is traditionally considered an overbought signal, which can lead to a price correction. However, the RSI is not an infallible indicator, analysts warn. Markets can maintain an upward trajectory for days and weeks even if the RSI remains above 70.
Overall, analysts are optimistic about Bitcoin’s long-term prospects. The rise in the price of the first cryptocurrency is facilitated by the halving scheduled for April, which is considered a bullish factor for the long-term prospects for the Bitcoin price, and the growing acceptance of Bitcoin on Wall Street, where spot Bitcoin exchange-traded funds (ETFs) recently appeared. But JPMorgan analysts warn about the risk of the Bitcoin price falling to $42,000 after the halving scheduled for April, The Block writes, citing the bank’s report. According to the report’s authors, the Bitcoin rate may drop to $42 thousand after the April halving, as a result of which the miners’ reward for the mined block of transactions will decrease from the current 6.25 BTC to 3.125 BTC. This will negatively affect the profitability of cryptocurrency mining, the bank believes.
The Bitcoin halving, scheduled for April, involves halving the reward of miners for a confirmed block of transactions in the Bitcoin network. The halving is generally considered bullish for the long-term outlook for Bitcoin, but miners with high transaction costs could face serious difficulties if the price of Bitcoin does not rise high enough to cover their costs. JPMorgan’s current estimate of the cost of mining Bitcoin is $26,500, and after the halving it could almost double, to $53,000. “The cost of mining has historically served as a lower bound for the price of Bitcoin,” analysts noted.
Also, law enforcement officials from Montana, Arkansas, Iowa, Mississippi, Nebraska, Ohio, South Dakota and Texas on Thursday filed a joint amicus brief – or friend-of-the-court brief – in the SEC’s lawsuit against Kraken, along with a number of industry lobbyists and other participants. Saying the SEC’s lawsuit could even harm consumers, the state’s AGS argued that the agency is expanding the definition of an “investment contract” and that cryptocurrencies “are not automatically securities.” The statement, which echoes some of the arguments made by Kraken as well as other crypto companies, said the states filed documents not in support of the exchange, but rather in opposition to the federal regulator. “States have a strong interest in preventing the potential crowding out of consumer protection and other state laws by the SEC’s attempt to regulate cryptoassets as securities,” the statement said. “…The SEC’s use of these unfettered powers exposes consumers to risk, potentially preempting state laws better tailored to the specific risks of non-securities products. Some state laws are more protective of consumers than federal securities laws.”
In the past, state court cases have helped clarify the definition of investment contracts, the case said. If the SEC wins its lawsuit, it may be able to overturn state consumer protection laws as well as state regulations related to cryptocurrencies, the statement said. Recall that the SEC sued Kraken last fall, alleging that the exchange failed register as a securities broker, clearing house or trading platform. The SEC filed a similar complaint against companies such as Coinbase, Binance and the US subsidiary of Bittrex. While Bittrex has settled the case, Coinbase and Binance are still at risk.
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