Bitcoin fell to around $65,000 on Thursday amid a wave of selloffs driven by strongly bearish sentiment, but a technical indicator suggests the cryptocurrency could be poised for not just a bounce, but a major move higher.
Bitcoin’s daily Relative Strength Index (RSI), which is a popularly used momentum oscillator that assesses whether an asset is oversold or overbought, hit 17.6 (on a scale of 0 to 100) on Thursday, highly oversold conditions that were surpassed in BTC’s modern era by the 2020 Covid crash, when it fell to 15.6, and the 2018 market bottom, when it fell to 9.5.
On both previous occasions, bitcoin rewarded buyers with violent bullish moves. In 2018, BTC quadrupled in the following 8 months, from $3,150 to $13,800. In 2020, bitcoin skyrocketed from $3,900 to a cycle high of $65,000 just over a year later.
Thursday’s market massacre wiped out more than $1.5 billion in crypto derivatives. While the temptation might be to sell when an asset is weak, astute traders will see oversold territories as an opportunity, especially since liquidity between $70,000 and $80,000 has effectively been eliminated.
