Overreaction Can Make Bitcoin's Price Drop

JAKARTA - The price of Bitcoin is still holding its highest level in the range of US $ 11,087 or around Rp160 million. It is feared that the sudden strengthening of Bitcoin will cause the cryptocurrency price to drop.

Quoting Coindesk market analysis, at 09.35 WIB, the Bitcoin (BTC) exchange rate began to have a negative correction of 1.63 percent from yesterday's trade. Even though this is the highest level of Bitcoin since August 2019.

"The sudden rally has pushed the 14-day relative strength index (RSI) above 80.00. Measures over 70.00 are considered overbought, which means the bullish move is now overblown," said Eterna Capital co-chief investment officer Asim Ahmad, Thursday, July 30th.

With the range of cryptocurrencies being traded, Bitcoin is still close to 11,100 US dollars per coin and has increased 18 percent from its lows at the level of 9,400 US dollars. This sudden strengthening implies the possibility of a major fall in prices to come.

"More likely it indicates that the bullish move is overblown and vulnerable to consolidation or minor retracements at worst," said Ahmad.

Not only Bitcoin, the second largest cryptocurrency such as Ethereum (ETH) is also still strengthening by around 318 US dollars, after slipping 1.5 percent in the last 24 hours at the close of trading yesterday.

However, Ethereum's dominance in the cryptocurrency market is still correcting quite high, around 12 percent and making it at its highest point throughout 2020. Although based on market analysis, the overall percentage of cryptocurrencies is still relatively stable against the currency market.