The world's leading cryptocurrency, Bitcoin, has shown remarkable signs of being oversold, according to a key technical analysis indicator.
Bitcoin Shows Strong Oversold Signals Similar to Covid Era Levels
The relative strength index (RSI) for Bitcoin has dropped well below the 30 level, reaching its most oversold value since the dramatic Covid-induced market crash in March 2020.
This trend comes at a time when the cryptocurrency market is grappling with the impact of rising bond yields putting pressure on various risk assets, including cryptocurrencies.
A widely used momentum indicator, the 14-day RSI serves as an indicator of recent price action in relation to an asset's average price action over a given period.
The latest RSI for Bitcoin has dropped significantly below 30, indicating oversold conditions. This essentially means that the price has experienced a rapid decline compared to the last average price action. In other words, the price is expected to move upwards in the future.
Instead, an oversold RSI reading indicates a rapid price drop. Conversely, an RSI above 70 indicates overbought conditions, indicating a rapid rise in prices. After this rapid rise, a decrease is expected.
Bitcoin is trading at $ 26,000 after the sharp decline it experienced in the past few days. Last week, the cryptocurrency had slumped over 10%.
This decline came as the 10-year US inflation-indexed security yield reached nearly 2%, its highest level since 2009.
The fact that indicators such as RSI are at a serious low level strengthens the possibility that the price may move upwards.
*Not investment advice.