Bitcoin is overdue for a break before the uptrend continues, according to Wolfe Research

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Bitcoin is up more than 40% year-to-date, rapidly paring losses from its disastrous 2022. However, Wolfe Research believes the time has not yet come for crypto bulls. “Bitcoin is still trading in the deepest overbought condition in over two years,” the company’s Rob Ginsberg said in a note this week. “Sometimes these extended overbought signals can be a sign of momentum, but we have a feeling it’s overdue for a brake check.” The cryptocurrency is set to end the week up again, around 2%, according to Coin Metrics. On Tuesday night, the price climbed to $24,249.70, its highest level since August 17 and close to Wolfe’s secondary target of $24,500. After ending 2022 down 64%, bitcoin jumped 39.6% in January, which was its best month since October 2021 and its best January performance since 2013. Investor confidence was boosted in January by lower inflation and optimism that the Federal Reserve may soon slow its inflation-fighting rate hikes. After the Federal Reserve declared the “disinflationary process has begun” at the end of its policy meeting, bitcoin rose again. Ginsberg said he was “encouraged by this first breakout attempt” and sees the uptrend as a structural shift, but that “healthy earnings digestion is in order.” “Such an extreme overbought condition is simply unsustainable on any security,” he said. “Expect bitcoin to get back into its range before seeing any near-term upside moves.” CNBC’s Michael Bloom contributed reporting.

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