Crypto Markets Analysis: A Fresh Look at Bitcoin Price Charts After Biggest Rally in 9 Months

This week's sudden burst in the crypto markets means it's time to reassess key levels on bitcoin’s price charts.

Bitcoin (BTC) rose 12.5% over the most recent seven days, its best weekly performance since March, and ether (ETH) rose 12.15%, a welcome change from what had been persistently flat trading for most of the prior month.

Momentum grew in both assets all week; neither had a negative trading day. BTC in particular built to a crescendo on Thursday as the largest cryptocurrency by market capitalization rose 5% following the release of the U.S. consumer price index for December,showing inflation slowed during the month.

On a relative basis, bitcoin’s seven-day performance was eighth among the top 20 cryptocurrencies by market capitalization. ETH was not far behind, finishing 12th in the group for the second consecutive week.

Solana (SOL) completed a second consecutive week of strong performance, registering a 26% increase, on the heels of a 35% advance in the prior week. Avalanche (AVAX) led the way among the group, increasing 34%.

The laggards on the week were TONCOIN and LEO, falling -0.71% and 1.29%, respectively.

Bitcoin enters new area of support

From a chart watchers’ perspective, there are two opposing points:

• Bitcoin’s rise to $19,000 moves it to a key area of potential new support.
• Bitcoin’s rise to $19,000 also moves it to historically overbought levels.

Point one can be seen using the Visible Range Volume Profile tool, which shows BTC moving from one high-volume node area near $16,700 to another high-volume node area near $19,200.

The significance is that areas of high volume imply areas of high price agreement. These areas often serve as levels of support and/or resistance, and help explain why BTC prices were mired between $16,000 and $17,000 for so long.

Point two is illustrated via BTC’s current Relative Strength Index (RSI) reading of 84. The RSI is a momentum indicator ranging from 0 to 100. Readings of 30 and below imply that an asset is overpriced. By contrast, readings of 70 and above imply that an asset may be overpriced.

BTC’s current reading is its highest reading since January 2021. Since 2018, BTC’s RSI has been higher than 84 just 25 times.

This isn’t to say that an asset can’t stay overbought for extended periods. The 91 RSI level reached on Jan 8., 2021 was followed by a 15% increase in price 30 days later. It should be monitored.

CoinDesk Market Index sector performance

CoinDesk’s CMI sector performance shows the CoinDesk Culture and Entertainment (CNE) sector continuing to lead the way on both a weekly and monthly basis.

The CoinDesk Currency sector (CCY) trails the group on the month, while the CoinDesk Digitization sector (DTZ) has been the laggard for this week.