Bitcoin price stretches to 6-month high as the bulls eye new record

Summary:

Bitcoin reached $56.5k, its highest price since May over the weekend, as investors position themselves for a solid end to 2021.

Bitcoin reached $56.5k, its highest price since May over the weekend, as investors position themselves for a solid end to 2021. The first ten days of October have been kind for Bitcoin holders. Bitcoin (BTC) is up 25% this month, and more than 35% from the 29th of September, without a material pullback in price.

Despite reports that institutions are increasingly choosing Ethereum (ETH) over BTC, the market leader has recently pulled away from the pack, increasing its crypto market dominance to 45.50%, lifting its market cap to over $1 trillion. As a result, BTC had recovered all of the losses it took in September when the market suffered several China-related setbacks. Even the threat of increasing scrutiny from US regulators has done little to derail the march towards $60k. However, the price is starting to look a little stretched, which may encourage some profit-taking should it squeeze higher from here.

BTC Price Forecast

The daily chart highlights the magnitude of the recent bull run. The Bitcoin price has finished higher in 9 of the last twelve days and above the 50, 100 and 200-day moving averages. Also, the 50-day is higher than the two longer-term indicators, reinforcing the bullish momentum. Additionally, the price action has resulted in a rising trend channel forming.

However, the Relative Strength Index reading of 68.14 is close to overbought, which could encourage some longs to take money off the table. Furthermore, after surging above $55k on Wednesday, the velocity of the rally has slowed. Nonetheless, the chart is constructive and suggests an extension towards the top edge of the trend channel at $63,600. As long as Bitcoiin maintains the early September high of $53k, $63,600 is likely. However, considering the high RSI, rallies could be short-lived. For now, the outlook is cautiously bullish. However, if BTC closes below $53k, it will invalidate this thesis.