Bitcoin is up more than 40% year-to-date, quickly paring losses from its disastrous 2022. However, Wolfe Research believes that it is not yet time for crypto bulls. “Bitcoin is still trading in the deepest overbought condition in two years,” the firm’s CEO Rob Ginsberg said in a note this week. “Sometimes these extended overbought signals can be a sign of momentum, but our perception is that it’s overdue for a brake check.” The cryptocurrency is on pace to end the week higher again, up about 2%, according to Coin Metrics. The price rose to $24,249.70 overnight Tuesday, the highest level since Aug. 17 and close to Wolfe’s secondary target of $24,500. After ending 2022 down 64%, Bitcoin rallied 39.6% in January, its best month since October 2021 and its best January performance since 2013. In January, investor sentiment was boosted by low inflation and optimism that the Federal Reserve will soon slow rate hikes to fight inflation. After the Federal Reserve announced that “the disinflationary process has begun” at the end of its policy meeting, Bitcoin rallied again. Ginsberg said he was “encouraged by this initial breakout experience” and viewed the uptrend as a structural shift, but needed “a healthy digestion of earnings.” “This overbought condition is simply unsustainable regardless of security,” he said. “Wait for Bitcoin to fall back into its range before seeing near-term upside.” — CNBC’s Michael Bloom contributed to the report.
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