Bitcoin has endured an intense rally over the past two weeks. The coin has surged from $11,200 to $13,000 as of this article’s writing, with the rally topping on Saturday evening at $13,350.
While BTC is heading into the weekly close around $13,000, which is a pivotal win for bulls, analysts are wary of a drop from here. Some indications are showing that the cryptocurrency may be overbought in the near term, having rallied over $1,500 in around a week.
Bitcoin Likely to Soon Top: Analysis
Bitcoin may be approaching a medium-term high; analysts fear as some indicators suggest the coin is overbought. One analyst shared the chart on October 25th, noting that the cryptocurrency is currently rubbing up against notable resistance from 2019.
Moreover, the Fisher Transform, a trend indicator, is currently at highs not seen since August, May, and February of this past year. Each of these periods marked short-term highs in the price of Bitcoin.
Chart of BTC’s price action over the past year with analysis by crypto trader Moe (@Moe_momentum_ on Twitter).
JP Morgan Forecasts BTC Could See Short-Term Drop
Analysts from JP Morgan also worried about a retracement.
The firm lately released a report about Bitcoin’s short-term and long-term outlook to its institutional clients. According to copies of the information shared through Twitter, JP Morgan analysts currently believe that the crypto-asset is overvalued per futures data.
The firm cited its market positioning indicator, derived from the trends in the Bitcoin futures market on the CME:
“To infer positioning in bitcoin futures, we use our open interest position proxy methodology, where we look at the cumulative weekly absolute changes in the open interest multiplied by the sign of the futures price change every week.”
As stated in an analysis, the positioning indicator is currently reaching new year-to-date highs. This suggests that Bitcoin looks “rather overbought and vulnerable to profit-taking.”
Significantly, crypto-native derivatives platforms are not yet showing this weakness. With funding rates of leading BTC perpetual futures markets still in the neutral to even negative territory, there may be no consideration for long position holders to close out early.