This is a technical analysis article written by CoinDesk Analyst and Certified Market Technician Omkar Godbole.
A key technical indicator is flashing a signal that marks bitcoin’s slowdown. downward trend in February.
The price of BTC fell below $90,000 early Tuesday, down 28% from the record high of over $126,000 reached early last month. With this, the 14-day relative strength index (RSI) – a widely followed measure of price momentum – fell below 30, signaling an oversold condition. This means that BTC’s current decline has been strong enough to invite a potential pause or rebound.
But an oversold RSI should never be taken literally. The indicator may stay in this territory much longer than buyers can hold on. Many experienced traders view an oversold RSI as a sign of strong bearish momentum, rather than an immediate trend reversal.
What really matters is whether the price action confirms the signal. Traders should therefore look for emerging support levels or candlestick patterns, such as the Doji or candles with long lower wicks, which suggest that selling pressure is easing. If these appear, they would validate the oversold RSI and set the stage for a rebound.
The last time the RSI fell below 30 in late February, bitcoin was trading below $80,000. This marked a slowdown in the downtrend, followed by a low near $75,000 in early April. Traders would be well advised to closely watch for signs of a similar development at present.
Because the RSI is so widely followed by traders, this signal can sometimes become a self-fulfilling prophecy, where collective trading actions based on the indicator amplify its effect.
