Oversold RSI on Bitcoin: A Record High Since the Collapse of FTX Crypto Exchange
– Bitcoin’s daily time frame chart recorded the lowest value of the Relative Strength Index (RSI) indicator since November 2022, a period related to the collapse of cryptocurrency exchange FTX.
– An oversold RSI indicates a weak phase for an asset in the market.
– The RSI indicator, invented by J. Welles Wilder in the 1970s, is a useful tool to understand the strength of bulls or bears in the market.
– When the RSI exceeds 70, it suggests that rises may soon end, while breaking the 30 threshold indicates that declines no longer have adequate strength to continue.
– During the FTX collapse, Bitcoin’s RSI touched a similar value to the current one, and prices increased by 95% until mid-April 2023.
Bull Run Approaching?
– The RSI indicator can remain in an oversold or overbought condition for several days or weeks, creating confusion for cryptocurrency traders.
– Prices eventually correct their trajectory during these imbalances, but the timing and manner of the correction is unknown.
– Heavy exposure with leverage positions during these events can bring profits or severe losses depending on predicting the movements correctly.
– It is uncertain whether we are in the anticipatory phase of Bitcoin’s next bull run or if there are still weeks/months of declines ahead.
– Market volumes are currently low, and heavy movements like the recent decline could be the result of manipulation by whales.
Hot Take
While the oversold RSI on Bitcoin suggests a potential bull run in the future, it is important to remain cautious. The timing and manner of price corrections during imbalances are uncertain. Market volumes are low, and manipulation by whales may be influencing recent movements. It is necessary to wait for the return of financial big names and big money within the cryptocurrency market before having a clearer interpretation of Bitcoin’s price action.
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