Bitcoin (BTC) continues to break records. The asset's price has already surpassed $120,000, breaking psychological barriers and attracting a massive wave of interest. Overall, everything points to a period of overbought activity that is driving the market into speculative euphoria, unleashing a sense of fear of missing out (FOMO).

However, behind this enthusiasm are technical signs that call for caution. When everyone starts talking about an investment as if it were a sure bet, it's usually time to look at the situation more objectively.

At this stage of the cycle, more than ever, it is worth remembering a market maxim (and one of life itself): trees do not grow to the sky.

A glance at the Bitcoin price chart suggests that there is indeed euphoria and FOMO. The RSI (Relative Strength Index), the most widely used indicator for assessing overbought or oversold conditions in an asset, is currently at 76.18, as shown below:

Bitcoin's RSI is already suggesting overbought conditions. Source: TradingView.

Generally, when this value exceeds 70 points, the asset is considered to have risen too rapidly in a short period of time, deviating from its average value. In these scenarios, pauses, corrections, or even trend reversals have occurred, as happened in 2021 and more recently, in 2024.

But the RSI isn't alone. Another key indicator, the stochastic, is also sending warning signals. It's currently reading 82.34 (blue line) and 89.67 (orange line), both above the 80 threshold, indicating an overbought condition, as shown in the following chart:

  Bitcoin's stochastic indicator also suggests overbought conditions. Source: TradingView.

While it is true that a more direct signal of price correction has not yet occurred, the current levels of both indicators reflect a market in full acceleration, far from its equilibrium zones.

While this combination of indicators doesn't mean the price will crash tomorrow (given that BTC has been overbought for several days before correcting), it does make a clear warning: the market doesn't move in a straight line, and emotions like FOMO can be treacherous.

With BTC now at its peak and above USD 120,000, investors, especially the less cautious ones, feel the need to enter the market before it's too late. But, as has happened in previous cycles, the moments of greatest collective enthusiasm usually coincide with market peaks.

Exit strategies are appropriate

In that vein, it's worth clarifying that Bitcoin won't rise forever and that, yes, a market crash is coming, so it's important to have an exit strategy.

This doesn't mean, of course, that you should sell everything and jump ship. What it suggests is that it's necessary to act rationally. To do this, it's important to have clear strategies and identify target levels for taking profits. This can help protect capital, especially if you don't plan to hold on indefinitely

In fact, holding is a completely valid option, but only if you understand what it entails: being able to tolerate high volatility, potential drops of 50% or more, and having long-term conviction but not everyone is ready for that.

Historically, we've seen cycles where, amid a Bitcoin price boom, the misconception that the asset will never go down again and will continue to rise looms. We saw this in 2017 and 2021, when BTC corrections were a real slap in the face for investors hoping for an “infinite bull run.”

Now, the point isn't to generate fear, but rather realism because while Bitcoin can continue to rise and perhaps even reach 150,000 or more, as various analysts have already projected no one can predict exactly when the cycle will end. What is known is that eventually, probably when no one expects it, there will be a significant correction. And those who don't prepare emotionally and strategically for it will be the ones who end up the worst off.

Another aspect to consider is that indicators aren't designed to predict the future with certainty, but rather to provide context. When the RSI and stochastic indicators simultaneously enter the overbought zone as is happening now the likelihood of a corrective movement increases. While this isn't an urgent sell signal, it is a warning sign to stop trading euphoria.

In times like these, risk management is more important than ambition. It doesn't matter if BTC rises another $20,000 from here. Without a defined strategy, impulsive decisions are likely to be made later. Therefore, it's essential to have clarity about your goals.

In the end, everyone must act according to their own profile and beliefs. If you're in Bitcoin for the financial revolution, for decentralization, or as a store of value, these fluctuations probably won't worry you. But if you're looking for short- or medium-term profits, having a clear roadmap will be vital, especially amid the widespread euphoria.

As I mentioned in the headline of this article, FOMO has entered the chat. But this doesn't have to dictate decisions. Emotion may push you to enter at the top, but strategy is what allows you to exit with profits. Don't let the next pullback surprise you. It's time to prepare, make decisions with a cool head, and remember that, in volatile markets like this, knowing when to exit is more important than winning.