Bitcoin Nears 'Oversold' Conditions Despite Staying Above $40K: Analysts
Summary:
The article discusses the trend of Bitcoin (BTC) heading towards "oversold" conditions despite its trade above $40,000. Analyst Matthew Hyland noted the lowest level of Bitcoin's relative strength index (RSI) since September. The report also mentions Bitcoin's struggle to bounce back from a 15% fall after launching in the U.S. spot Bitcoin exchange-traded funds. Regarding RSI indications, a potential market turnaround might be imminent. The Bollinger Bands' volatility indicator signals a return of BTC/USD's market volatility.
The steady trend of Bitcoin (BTC) heading towards "oversold" conditions, despite trading above $40,000, is suggested by recent data. Matthew Hyland, an analyst, reported this week that Bitcoin's relative strength index (RSI) had reached its lowest point since September last year. Following the introduction of America's inaugural spot Bitcoin exchange-traded funds (ETFs), Bitcoin's price performance witnessed a 15% decrease and has been struggling to recover since. With growing concerns among traders about the potential of further losses, RSI readings indicate that a turnaround may soon occur.
This week, the classic momentum oscillator reduced to 42.7/100, data from Cointelegraph Markets Pro and TradingView confirms this as the lowest point within the past four months. During this period, the trading rate for BTC/USD was around $25,000. Hyland shared a chart on X (previously Twitter), which suggested a concealed bearish divergence.
Yet, a rapid resurgence of BTC price strength cannot be fully ensured by daily RSI. Having dropped below the 50/100 midpoint, the primary challenge for this measure will be the threshold to the "oversold" zone at 30/100. An acknowledged trader and commentator, Seth, stated his preference for Bitcoin's daily RSI to drop to oversold in a recent X post.
On an hourly basis, the RSI has twice crossed the 30/100 line this week, displaying a recovery and subsequent higher lows. A return of volatility is indicated by Bollinger Bands last week. According to fellow trader Jelle, a return to "overbought" levels above 70 often indicates the commencement of the most significant upsurge on BTC/USD.
In addition to RSI, several other major metrics have drawn the attention of market participants. Among them is Bollinger Bands' volatility indicator, which now showcases BTC/USD entering a volatile state after a period of squeeze on the daily chart. The current prices represent a near approach to the bottom of the widening channel, a region unsurpassed since mid-September last year.
This article should not be regarded as offering trading advice or endorsements. Any trading or investment move carries risk and readers should carry out personal research before making decisions.
Published At
1/16/2024 11:10:00 AM
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