Bitcoin price jumped over $ 5,000 today due to a sharp rise in FOMO, on news that Elon Musk-led Tesla had added $ 1.5 billion in BTC to its corporate reserves.
The strength of today’s buying frenzy has brought the daily Relative Strength Index back above a key level. A conclusion about this could lead to the price of the cryptocurrency doubling. Here is how.
Bitcoin explodes when Tesla purchases $ 1.5 billion in BTC
Bitcoin is in what is possibly the most important bull market of all time. No longer just held by early adopters, tech enthusiasts, evangelists, or traders, cryptocurrency is now the focus of hedge funds, institutions, and large publicly traded companies.
The trend for companies to buy Bitcoin in order to strengthen their resilience in the face of the coming economic struggles began with the NASDAQ-listed software company MicroStrategy. A domino effect has since begun, and Jack Dorseys Square Inc. has added BTC to its treasury reserves, most recently followed by Tesla.
Related reading | Executing Bitcoin: Passing Hal Finney’s torch on to Jack Dorsey
Elon Musk, CEO of Tesla, previously added bitcoin and hashtag to his Twitter bio, but has now topped Tesla’s $ 1.5 billion holdings in BTC.
The purchase alone kept price action from breaking well below $ 30,000, and news that it was rounding saw Bitcoin jump over $ 5,000 from low to high today.
More notably, however, the move has pushed the daily Relative Strength Index back into bull territory if today’s candle can close at or above current levels.
The Relative Strength Index is back in the “overbought” bull territory of BTCUSD on TradingView.com
Crypto prices could double if RSI stays in the bull zone
The Relative Strength Index is designed to signal when an asset is overbought or oversold. A value of 70 or 30 indicates that an extreme point has been reached and the likelihood of a reversal is increased.
However, highly trending assets can remain overbought or oversold for a significant period of time. In the example above, every daily deal in overbought territory has resulted in at least another week of upward movement.
The Relative Strength Index could stay overbought up to $ 90,000 per coin Source: BTCUSD on TradingView.com
More dramatic than the time that wealth can rise while remaining overbought. In the example above, once the RSI hit a closing price above 70, Bitcoin rose another 117%.
Related reading | Bitcoin price that closes above this “hurdle” sends bulls “on the races”
Bitcoin price has already increased by $ 5,000 today alone. If this is just the start of the move and continues as the final breakout, the price per BTC could double again in just about a month or so.
Featured image from deposit photos, charts from TradingView.com
