In a span of just 2 to 3 weeks, the recent market decline has sent Bitcoin(BTC) tumbling to $25,168. This abrupt drop is closely linked to the dynamic policy changes by the Federal Reserve and regulatory uncertainties, which have ignited intense fear within the crypto markets.
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As a consequence, Bitcoin has now hit its lowest point on the daily Relative Strength Indicator (RSI) since March 2020 – a period synonymous with the ‘Covid crash’. Meanwhile, the weekly RSI currently rests at 30, a level often associated with signaling an oversold condition.
A Turn for the Worse
Bitcoin, the world’s most renowned cryptocurrency, has once again captured headlines as its price trajectory faces a downward trend. This has led to a classification of Bitcoin’s market sentiment as “oversold,” implying that the asset’s price has sunk below what could be deemed its fair value.
Understanding the RSI Plunge
Evidently, the 14-day Relative Strength Index (RSI), a pivotal market indicator, has plummeted beneath the critical threshold of 30. The RSI operates on a scale of 0 to 100, gauging recent price movements against the average movement over a specific timeframe, usually two weeks. A reading below 30 serves as an indication that the market has entered oversold territory, hinting at a swift and substantial price drop. Conversely, a reading above 70 signals overbought conditions.
It’s important to grasp that oversold or overbought signals don’t automatically predict impending bullish or bearish trends. An RSI reading below 30 doesn’t necessarily promise an immediate bullish reversal. Instead, it primarily suggests a rapid and significant price decline. Conversely, an overbought reading underscores a rapid price surge.
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Meanwhile, the current RSI reading below 30 doesn’t wave a green flag for an immediate bullish shift. Rather, it serves as a robust indication of the burgeoning bearish momentum in the market.
Expert Insights: Bitcoin’s Bearish Turn
Kuptsikevich reveals that Bitcoin’s once-promising trend has taken a bearish twist. He points out a significant event – a substantial drop below not just one, but two pivotal moving averages: the 200-week and 200-day. These averages act as guiding markers in the financial landscape, indicating trends. This drop is seen as a signal of a notable shift towards a bearish trajectory.
Kuptsikevich emphasizes that hovering near the $26,041 mark, Bitcoin is at a crucial crossroads. The next substantial support point seems to be around $24,700. This assessment underscores the pivotal juncture where Bitcoin currently stands.
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