A key technical indicator for Bitcoin is raising eyebrows, suggesting that the price of the flagship cryptocurrency could soon surge after dropping below the $60,000 mark amid a wider market sell-off.
The Relative Strength Index (RSI), a technical indicator meant to chart the current and historical strength or weakness of an asset‘s recent price changes, has dipped into “oversold” territory for Bitcoin, according to popular analyst Ali Martinez, who noted that the last three times it dipped into this territory BTC’s price surged.
Bitcoin entered oversold territory after dipping below $62,000 according to Martinez, but the cryptocurrency kept on dropping to trade at little over $58,000 before recovering, and is now changing hands for $61,100.
Intriguingly, past instances of the RSI reaching oversold levels have been followed by significant price surges for Bitcoin. In August 2023, a similar RSI signal preceded a remarkable 197% rally, while in November 2022 and March 2023 oversold levels were followed by surges of 60% and 62%, respectively.
In the past two years, the #Bitcoin daily RSI has hit oversold territory three times, resulting in $BTC price surges of 60%, 63%, and 198%, respectively. With #BTC now below $62,000 and the RSI in oversold territory again, it might be a prime opportunity to buy the dip! pic.twitter.com/JkJ4IgoeML
— Ali (@ali_charts) June 24, 2024
Given this historical context, the current oversold RSI reading is being interpreted by some analysts as a potential buying opportunity. If Bitcoin follows a similar price trajectory as in past occurrences, a 60% surge would propel the cryptocurrency to a new all-time high above $96,000.
Bitcoin’s price recently fell after Mt. Gox, a once-dominant cryptocurrency exchange, announced plans to distribute billions of dollars’ worth of recovered Bitcoin and Bitcoin Cash to creditors.
The news sent shockwaves through the crypto market and led to a massive price drop, as analysts believe that the BTC – which could range from 65,000 to 140,000 and be worth nearly $9 billion – could be sold by creditors who waited over a decade to get back their funds.
Some analysts, however, believe the impact may be overstated. Alex Thorn, research head at Galaxy Digital, suggested that only around 65,000 Bitcoins will be distributed to individual creditors, many of whom are early adopters unlikely to flood the market.
Featured image via Unsplash.
