Traders who deal with Bitcoin (BTC) anticipate a temporary rise in value, as one key pricing indicator for the cryptocurrency has reached its lowest point in several months.
As an analyst, I’ve observed some intriguing trends in the BTC/USD market. The data from both CryptoMoon Markets Pro and TradingView suggests that the Bitcoin market is experiencing “oversold” conditions on the Relative Strength Index (RSI), indicating potential for a reversal or recovery in the near future.
BTC price dip sends RSI back to October
Bitcoin tanking 5% in a day has had serious implications for low-timeframe RSI.
Over the course of an hour, the Relative Strength Index (RSI) dropped significantly, going from peak levels of 81.7 on January 6th down to record lows over the next day that hadn’t been seen for nearly three months, reaching 16.6.
In just 24 hours, Bitcoin’s value against the U.S. dollar has plummeted from an “overbought” state to an “oversold” one, which is a relatively uncommon event. The last time the index was this low, Bitcoin was being traded at around $60,000 per unit.
The Relative Strength Index (RSI) gauges the intensity of a market’s trend and offers three crucial markers for analysts: the 30 level considered “oversold,” indicating the market may be undervalued; the 50 midpoint, representing neutral territory where the market is neither overbought nor oversold; and the 70 level, or “overbought” zone, signifying that the market might be overvalued.
In simpler terms, when the price reaches specific thresholds, based on whether it’s rising (uptrend) or falling (downtrend), traders can make educated predictions about what might happen next. Notably, during periods of increasing market sentiment (bull markets), Bitcoin often stays in a state where it’s considered overvalued (overbought).
Following the recent downturn, traders have been prompt in proposing that the Bitcoin price might experience a rebound upwards, given the potential overreaction indicated by the Relative Strength Index (RSI).
Bitcoin Munger noted, as he monitored market activity, that the 1-hour RSI for Bitcoin stands at 16 and the 4-hour indicator is almost back to normal. This observation was made in light of increasing investments into U.S. spot Bitcoin Exchange-Traded Funds (ETFs).
Although it hit fresh lows locally on January 8th, the Relative Strength Index (RSI) showed a contrast to the downward trend in the spot price – an anomaly that historically indicates an upcoming period of price improvement.
David Cox, a trader and portfolio manager, noted that Bitcoin ($BTC) has touched an oversold level indicated by the Relative Strength Index (RSI) over a 6-hour timeframe on its chart…
Bitcoin traders still see new lows in January
According to CryptoMoon’s report, pessimistic predictions for Bitcoin’s price are being discussed as we approach the inauguration of the newly elected U.S. President, Donald Trump.
This refers to a potential revisit of the minimum prices around or slightly below $90,000, possibly accompanied by more significant drops down to $80,000 or even lower.
Enhancing the bearish outlook, renowned trader Bluntz uses the Elliott Wave Theory to foresee potential low points within the subsequent fortnight.
The uploaded chart on X seems to suggest that we can expect new record highs when the market recovers.
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2025-01-08 13:06