Bitcoin is up more than 40% since the start of the year, quickly making up for losses from the 2022 disaster. However, Wolfe Research thinks the time is not yet for crypto bulls. “Bitcoin is still trading at its deepest overbought level in over two years,” the firm’s Rob Ginsberg said in a note this week. “Sometimes these lingering overbought signals can be a sign of momentum, but our feeling is that it is overdue to test the brakes.” The cryptocurrency is on track to end the week higher once again, around 2%, according to Coin Metrics. Overnight on Tuesday, the price rallied 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 gained 39.6% in January, which is the best month since October 2021 and the best January performance since 2013. BTC.CM=mountain 2021 -03-01 Bitcoin about to ‘brake test’? Investor sentiment was boosted in January by lower inflation and optimism about the possibility that the Federal Reserve will soon slow the pace of interest rate hikes to combat inflation. After the Federal Reserve said “de-inflation has begun” at the end of its policy meeting, bitcoin rallied again. Ginsberg said he was “encouraged by this initial breakout attempt” and sees the uptrend as a structural change, but “healthy digestion of profits is essential.” “Extreme overbought like this is simply unsustainable regardless of the security situation,” he said. “Let’s expect bitcoin to fall back into its range before seeing any short-term upside move.” – Michael Bloom of CNBC contributed reporting.