This is daily analysis from CoinDesk analyst and certified market technician Omkar Godbole.
Like Bitcoin prices wilt, bulls pin their hopes on a potential money rotation from the ever-rising gold to its digital counterpart.
Those hopes could be bolstered as price charts show that bitcoin’s price per coin, denominated in dollars, is now at its all-time high oversold relative to gold’s price per ounce, according to the widely followed 14-day relative strength index (RSI).
The oscillator fell to 22.20, falling just below the February low to levels last seen in November 2022. Readings below 30 are generally interpreted as oversold conditions, indicating that an asset, in this case BTC, has recently experienced significant selling pressure relative to gold, potentially pushing the ratio between the two to undervalued levels.
However, an oversold RSI reading alone does not guarantee an immediate bullish reversal of BTC against gold. This condition requires confirmation of other technical indicators, such as signs of exhaustion of the downtrend in price action, bullish divergences, or an increase in buying volume. Without these support signals, oversold status could persist during strong downtrends, meaning the price could continue to fall despite the low RSI level.
At the time of writing, the bitcoin-gold ratio remains in a pronounced downtrend, marked by prominent red candles that highlight the dominance of sellers amid the recently confirmed death cross – the bearish cross of the 50 and 200 day simple moving averages (SMA).
Given this bearish technical backdrop, BTC bulls will need to be patient and wait for clearer signs of a trend reversal before expecting a lasting recovery.
BTC/USD looks south
The same can be said about the dollar-denominated price of BTC, as it appears poised to test the lower end of the expanding channel, currently below $100,000.
The 14-day RSI has yet to reach oversold territory, and the MACD histogram continues to print deeper bars below the sign, suggesting that the ongoing sell-off may continue. Additionally, prices appear to have been accepted within the 200-day SMA, which could boost momentum traders’ selling.
With prices below the 200-day SMA, the focus is on the lower boundary of the expanding channel, currently at around $99,500.
The 50-week simple moving average (SMA), currently around $101,700, remains a critical support level for bitcoin. Throughout the uptrend that began in early 2023, this moving average has consistently provided a reliable base, helping to support rallies and propel prices to new highs.
