Crypto Markets Analysis: Bitcoin’s Relative Strength Readings Are in Rare Territory

Crypto markets still appear to be operating within a “good economic news equals bad news for asset prices” landscape.

A 15,000 weekly decrease in the number of Americans filing for unemployment insurance points to a stubbornly tight labor market Fed officials want to see loosen. But signs of economic slowdown appeared in housing data, with building permits for December down 1.6% versus expectations for a 3.7% increase. Housing starts fell 1.4% to their lowest level in five months.

Cryptos responded in kind, testing lows but then recovering as investors chewed over the conflicting data. Bitcoin declined temporarily to $20,780 before finding its footing. The largest cryptocurrency by market capitalization was recently trading a little below $21,000. Ether’s price also dropped, to $1,513, before rising to near $1,550.

Unusual RSI readings

BTC’s recent 25% price surge came with a sharp uptick in momentum. A look at past data shows just how unusual the recent Relative Strength Index (RSI) readings are. RSI is a widely watched momentum indicator that looks to identify areas where an asset’s price is potentially overbought or oversold.

Within the last two weeks, BTC has registered three of the 10 highest RSI readings dating to 2019. Its reading of 89.3 on Jan. 14 ranked third, with its readings on Jan. 16 and 17 ranking eighth and ninth, respectively.

ETH RSI Data (CoinDesk)

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