Bitcoin Daily RSI Hits 4-Month Lows, BTC Price Still Up 70%
Despite trading above $40,000, recent data shows that Bitcoin (BTC) is quickly heading into oversold territory.
As noted by analyst Matthew Hyland on January 14, Bitcoin's Relative Strength Index (RSI) hit its lowest level since September this week.
BTC price RSI echoes $25,000 levels
BTC's price performance suffered a 15% drop after the launch of the United States' first-ever Bitcoin exchange-traded funds (ETFs) — and is still struggling to recover.
As traders warn of further downside risk, the RSI's reversal may be premature.
On daily charts, on January 14, the classic momentum oscillator dropped to 42.7/100 – lower than any point in the past four months, confirmed by data from Cointelegraph Markets Pro and TradingView.
BTC/USD traded around $25,000 at the time.
The move was not lost on Highlander, who uploaded a chart to X (formerly Twitter), which suggests a hidden bearish divergence is playing out, with the RSI making lower lows and Bitcoin making higher lows.
#BTC daily RSI drops to October lows and lows since September: pic.twitter.com/lwPnkrhkUh
— Matthew Hyland (@MatthewHyland_) January 16, 2024
However, the daily RSI does not strongly indicate a return to BTC price strength anytime soon.
Falling below the 50/100 midpoint, the metric's next major test could be a hurdle in the 30/100 “oversold” area.
“I would like to see the daily RSI drop to Oversold for Bitcoin,” popular trader and social media analyst Fet wrote in part in a recent X post.
On hourly timeframes, the RSI pierced the 30/100 line twice this week, recovering both times and making significant lows in the process.
Bollinger Bands reflects the volatility of returns
Last week, meanwhile, another trader Jelle, on the contrary, said that a return to “overbought” levels above 70 can often indicate the beginning of a very steep decline in BTC / USD.
Related: BTC speculators drop $5B – 5 things to know in Bitcoin this week
The real fun happens when #Bitcoin's RSI enters overbought territory.
Just look at what happened in the past: pic.twitter.com/IAdXyOE3nU
— Jelle (@CryptoJelleNL) January 9, 2024
As Cointelegraph reported in December 2023, the RSI is currently one of the key metrics on market participants' radar.
Another indicator is Bollinger Bands volatility, for the daily chart BTC/USD shows a return in volatility mode after a bullish period.
Current prices indicate a trip to the bottom of the expanding channel, which also hasn't really been challenged since mid-September.
This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.
