Bitcoin Selling Spikes to October Levels
Bitcoin traders anticipate a short-term rebound as one key price indicator hits its lowest levels in several months.
Data from TradingView shows that Bitcoin’s BTC/USD relative strength index (RSI) has entered deeply “oversold” territory.
Bitcoin's 5% drop in a single day significantly impacted low-timeframe RSI readings.
On the hourly chart, RSI plunged from local highs of 81.7 on Jan. 6 to three-month lows of just 16.6 the following day.
This rapid decline is unusual, moving BTC/USD from “overbought” to “oversold” conditions in just 24 hours.
The last time RSI reached such low levels, Bitcoin was trading at $60,000.
RSI, which measures trend strength, includes three critical thresholds: 30 (oversold), 50 (midpoint), and 70 (overbought)
Crossing these levels can offer insights into potential future price movements.
During bull markets, Bitcoin often remains in “overbought” territory for extended periods.
Following the recent drop, traders were quick to suggest that Bitcoin’s price might be due for a relief bounce, driven by the RSI’s sharp overreaction.
“1-hour Bitcoin RSI is at 16 and 4-hour almost completely reset,” commentator Bitcoin Munger noted in a post on X, while observing inflows to U.S. spot Bitcoin ETFs.
Despite hitting new local lows on Jan. 8, RSI began diverging from the spot price’s downtrend, a classic signal that often precedes price relief.
“Bitcoin #BTC $BTCUSD has reached the next RSI(5) oversold point on the 6-hour chart…,” trader and portfolio manager David Cox added, referencing other low-timeframe RSI metrics.
Bearish price targets for Bitcoin remain in focus ahead of U.S. President-elect Donald Trump’s inauguration.
These forecasts include a potential return to range lows near or below $90,000, with deeper corrections to $80,000 or even lower.
Adding weight to these bearish outlooks, popular trader Bluntz used Elliott Wave Theory to predict further declines, with new lows potentially materializing within the next two weeks.
Sources:
https://cointelegraph.com/news/bitcoin-hourly-rsi-most-overbought-since-60k-btc-price
https://www.tradingview.com/symbols/BTCUSD/?exchange=BINANCE
https://x.com/ShardiB2/status/1876738561266897355
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