The fall in the price of BTC brings the RSI back to October
Bitcoin BTC92,263 € has fallen 5% in one day, which has had severe consequences for the RSI.
In the hourly chart, the RSI dropped from local highs of 81.7 on January 6 to three-month lows of just 16.6 a day later.
Such a rapid decline is rare, taking the BTC/USD pair from "overbought" to "oversold" in 24 hours. The last time the index measured this low, BTC/USD was trading at $60,000.
The RSI measures the strength of the trend and contains three key levels for observers: the 30 limit of "oversold", the midpoint of 50, and the 70 threshold of "overbought".
When the price crosses these levels, depending on the direction, traders can make inferences about the future of a particular bullish or bearish trend. During bull markets, Bitcoin often spends long periods in "overbought" territory.
With the latest drop, traders quickly suggested that the price of BTC was due for a relief bounce upward against an RSI overreaction.
"The 1-hour RSI of Bitcoin is at 16 and the 4-hour RSI is almost completely reset," reported Bitcoin commentator Munger in a post on X while observing the inflows to the US spot Bitcoin exchange-traded funds (
$ETH ).
Despite making new local lows on January 8, the RSI contrasted with the bearish trend of the spot price, a divergence that classically precedes price relief.
"Bitcoin
$BTC $BTCUSD has reached the next RSI(5) oversold point on the 6-hour chart...", continued trader and portfolio manager David Cox about other RSI readings in the lower time frame.
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