Bitcoin: RSI Reaches Levels Unseen Since $40,000 USD
The recent price correction of Bitcoin has brought the Relative Strength Index (RSI) to levels not observed since the cryptocurrency was valued at $40,000 USD.
Over the weekend, Bitcoin’s daily RSI dropped to a little over 42 points, a level unseen since January 25th.
Summary
- RSI index tracks Bitcoin’s correction below $65,000 USD
- Comparison with previous months
- The weekend phenomenon
The RSI index tracks Bitcoin’s correction below $65,000 USD.
The RSI is an index that measures the relative strength of prices and is widely used by traders. It ranges between 0 and 100.
When the RSI exceeds 70, it is considered overbought, while a drop below 30 indicates oversold conditions.
Between February 9, 2024, and March 14, the price of Bitcoin remained mostly in the overbought territory for over a month. However, it has not reached those levels since March 15.
On March 14, 2024, Bitcoin hit its all-time high price of approximately $73,800 USD.
Since then, the daily RSI has never fallen below 45 points, with only three brief drops below the 50 mark.
However, due to the rapid correction following news of Iran’s attack on Israel, the RSI hit a low of 42 on Saturday.
Comparison with previous months
The last time the daily RSI of Bitcoin fell below 45 points was on January 25th, when the price was around $40,000 and the RSI stood at 38.
It is worth noting that the last time the price of Bitcoin was in oversold territory was in August 2023 before Grayscale won the case against the SEC, potentially paving the way for approved Bitcoin spot ETFs.
Since then, the RSI has consistently remained above 40 and has not dropped below 30.
In January 2024, when BTC dropped from $46,000 to $38,000, the RSI remained below 40 for four consecutive days. However, it rebounded above 45 this time within a day.
These two scenarios are distinct, with the first being a brief interruption in an ongoing bull run while the recent correction suggests the bull run may have concluded.
The fact that Bitcoin’s daily RSI has not significantly exceeded 60 since March 16 implies that the bull run starting in the second half of the previous year has ended. During that time, BTC stayed in the overbought zone for 25 consecutive days and briefly returned in December. It fell below 50 only on January 12, rising above that point by the 27th.
The weekend phenomenon
The sudden drop in Bitcoin’s price from $67,000 to $61,000 on Saturday and Sunday was notable for its rapidity but lacked severe consequences. The crash was triggered by panic selling following news of Iran’s attack on Israel.
However, the price did not dip below $61,000 and quickly rebounded to $65,000 within three hours.
Panic selling mainly affected holders who already had BTC on exchanges, as Bitcoin inflows to crypto exchanges were minimal at the time. Currently, the total number of BTC on all exchanges worldwide remains close to four-year lows.
Moreover, with exchanges closed and less activity on weekends, the crash likely had limited impact. The subsequent discovery that Iran’s attack had failed brought the RSI back to normal levels.
Additionally, the news of approval for Bitcoin spot ETFs in Hong Kong helped recover all the losses incurred over the weekend, pushing Bitcoin’s value above $66,000.
At present, Bitcoin’s daily RSI appears to be stabilizing around the neutral zone of 50. Considering the upcoming halving, it is possible that the RSI may rise in the coming days.