Bitcoin fell to around $65,000 on Thursday amid a wave of selloffs driven by heavily bearish sentiment, but a technical indicator suggests the cryptocurrency could be set not just for a rebound, but for a major move higher.
Bitcoin’s daily relative strength index (RSI), which is a commonly used momentum oscillator that gauges whether an asset is oversold or overbought, reached 17.6 (on a scale of 0 to 100) on Thursday – significantly oversold conditions that were overtaken in the modern BTC era by the Covid crash of 2020, when it fell to 15.6, and the market’s lowest in 2018, when it dropped to 9.5.
On both previous occasions, Bitcoin rewarded buyers with violent bullish moves. In 2018, BTC more than quadrupled over the next 8 months, from $3,150 to $13,800. In 2020, bitcoin rose from $3,900 to a cyclical high of $65,000 just over a year later.
Thursday’s market carnage resulted in the liquidation of more than $1.5 billion in crypto derivatives. While the temptation may be to sell when an asset is weak, savvy traders will see oversold territories as an opportunity, especially since liquidity between $70,000 and $80,000 has effectively been wiped out.
