A chain of block erupters used for Bitcoin mining is pictured at the Plug and Play Tech Center in Sunnyvale, California, October 28, 2013.

REUTERS/Stephen Lam

• Bitcoin's massive leap since Wednesday may have gone too far, too fast.
• The world's most popular cryptocurrency surged above $13,000 on Wednesday and continued to climb through the week after PayPal announced its users will soon be able to buy, sell, and hold bitcoin.
• Yet the token's 14-day Relative Strength Index passed 80 in Thursday trading.
• RSI is a popular gauge of price momentum, and readings over 70 typically signal an asset is overbought.
• Watch bitcoin trade live here.

Bitcoin's rally through the week might have moved too quickly for investors.

The world's largest cryptocurrency on Wednesday leaped above $13,000 for the first time since July 2019 and hovers around that level as new backers rush to the digital token. The surge began when PayPal announced Wednesday morning that its users will soon be able to buy, hold, and sell cryptocurrencies on its platform. Billionaire investor Mike Novogratz called PayPal's move "the biggest news of the year in crypto."

Yet the coin's 14-day Relative Strength Index suggests the rally got ahead of itself. The popular technical measure is used to gauge an asset's momentum and determine whether it's overbought or oversold.

Bitcoin's RSI jumped above 80 in Thursday trading and remained there in early Friday trading. Values above 70 suggest the asset is overbought and might be due for a reversal.

Read more: A fund manager at a $468 billion firm pinpoints 7 portfolio moves to make right now in anticipation of a Biden presidency and Democrat-run government

The cryptocurrency traded above $13,000 early Friday before falling slightly. Though its momentum has slowed since Wednesday's uptick, the coin remains near its 2020 high and is up roughly 20% this month alone.

Much of the new interest in bitcoin stems from its potential use as a hedge against inflation. The Federal Reserve's updated policy framework signals policymakers will pursue temporary bouts of price growth above 2%. The strategy has investors searching for insulated assets, and bitcoin's decoupling from monetary policy has led some financial industry titans to back the volatile asset.

Hedge-fund manager Paul Tudor Jones deemed the coin "the best inflation trade" on Thursday, adding that he thinks its rally is only in its "first inning."

Bitcoin traded at $12,959.14 as of 8:30 a.m. ET Friday, up 79% year-to-date.

Now read more markets coverage from Markets Insider and Business Insider:

US weekly jobless claims fall more than expected to 787,000 as labor-market rebound shows strength

Wall Street's first-half profits rocketed 82% to their highest since 2009

Don't put too much energy into predicting the result -- 5 key tips for clients from strategists at JPMorgan's $1.9 trillion asset management arm with less than two weeks to go to the election