Bitcoin Indicator Reaches Historical Extreme: Price Sheds Two Thirds Upon Reversal

Bitcoin Indicator Reaches Historical Extreme: Price Sheds Two Thirds Upon Reversal

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Bitcoin price this week reached a high of $19,500, following a six-week, 60% rally. From the moment the first-ever cryptocurrency made it above $12,000, on 3-day timeframes, there were twelve consecutive green candle closes without any red.

The extreme bullish impulse caused one specific technical indicator to reach the highest reading in history – reached only three times prior, all before 2014. Each time, an average correction shaving two-thirds off Bitcoin’s price took place after momentum finally turned downward. Will a historic selloff follow this previously unstoppable rally?

Bitcoin Price Corrects Hard Following Failed Retest Of All-Time High, But More To Come

The price per BTC nearly doubled since the start of September, setting off an explosive FOMO-driven rally that has only just come to an end.

The cryptocurrency went parabolic after breaking back above $12,000 and news that PayPal would be supporting cryptocurrencies. But failure to break its all-time high sent Bitcoin falling back down hard to refuel.

Related Reading | Bitcoin Rally Isn’t Just Institutional Driven, Emerging Markets Are Voting For Revolution

The run up caused the Fisher Transform technical indicator to reach one of four of the highest readings in the cryptocurrency’s just over decade long history.

Interestingly, the extreme deviation of 7.5 or more hasn’t taken place since prior to 2014, back when few even knew what a cryptocurrency was or had heard of Bitcoin. But looking back at these past examples could indicate that a very dangerous situation is brewing.

bitcoin fisher transform zoomed

The Fisher Transform has reached the highest reading in its history for the fourth time ever. | Source: BTCUSD on TradingView.com

Fisher Transform: An Overcorrection Could Be Due For The First Ever Cryptocurrency

During the very first Bitcoin bull market ever, the Fisher Transform indicator reached such an extreme reading three times. The first time the asset ran hot, resulted in a 48% pullback.

The second caused a full 80% retracement, and the third ever started the first Bitcoin

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