Key Gauge Suggests Bitcoin Peak, Though Capital Inflows Point to Ongoing Optimism

Despite strong positioning in options markets, a key momentum indicator is signaling that Bitcoin’s rally may be running out of steam.

The Relative Strength Index (RSI), a technical gauge of price momentum, is showing a bearish divergence on Bitcoin’s 14-month chart. While BTC recently set fresh highs during July–August — climbing above its December peak — the RSI has turned lower, forming a weaker high. Such divergences often point to slowing momentum and the possibility of a bearish reversal.

The risk is amplified by Bitcoin’s struggle against a multi-year trendline resistance connecting the 2017 and 2021 bull market tops. Together, the signals hint that the current cycle could be losing strength.

Still, trader flows tell a different story. Institutions and high-net-worth players appear to be preparing for a strong finish to the year.

“Blocks suggest traders are gearing up for further upside, with notable activity in December BTC call spreads ($125K/$160K). Ethereum’s focus was on $4,800 strikes for September, with additional short-dated pressure,” said Jake Ostrovskis, OTC trader at Wintermute.

Block trades — large deals negotiated off-exchange — show that traders are positioning for Bitcoin to reach as high as $160,000 to $190,000 by year-end.

As of Friday, Bitcoin was trading near $110,500, marking a 4.6% monthly decline, CoinDesk data shows.