Bitcoin has extended its recent gains, rising over 6% in the past week and briefly pushing above $97,000. This follows a move through the $94,500 resistance zone – a level that had rejected upward attempts several times in the past two months.
Bitcoin’s price rally has been supported by a combination of improving sentiment, lower-than-expected inflation data in the U.S., renewed institutional demand through spot ETFs, and a sharp wave of short liquidations. ETF inflows alone topped $750 million on Tuesday, while nearly $600 million in shorts were cleared in the derivatives markets.
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Overbought Conditions or Breakout Setup?
Despite this strength, several technical indicators now show signs of overheating. The RSI(14) stands slightly above 70, while the faster RSI(7) has reached 83. The MFI(14), which accounts for volume, is at 72. These readings often suggest overbought conditions, though not necessarily an immediate reversal.
Price action has also pushed beyond the upper Bollinger Band, currently near $96,021. Combined with a rising ADX of 30 and a nearly 47% increase in weekly volume, this suggests strong trend momentum – a setup often associated with volatility expansion rather than exhaustion alone.
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Key Resistance and Support Zones
Bitcoin is now approaching the 61.8% Fibonacci retracement level near $97,609. This area may act as resistance in the short term. If buyers manage to clear it with sustained volume, the next major target sits at $102,863 – the 50% retracement level from the broader correction. On the downside, holding above $94,500 remains important for keeping bullish momentum intact.
Volume-weighted average price (VWAP) is currently around $98,485. A decisive move above this level could indicate that the rally is supported by underlying demand, not just short covering.
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Conclusion
Bitcoin’s recent breakout is supported by improved sentiment and rising institutional activity. While technical indicators signal short-term overbought conditions, trend strength and volume remain elevated. Whether Bitcoin can regain $100,000 may depend on its ability to clear resistance near $98,000 and maintain support around $94,500.
