Bitcoin at Most "Oversold" Level Since 2020
The price of Bitcoin recently underwent a significant correction, dropping by 10% in just a matter of minutes. This led to mass liquidations and panic selling, causing the daily charts for BTCUSD to become the most oversold they have been since the COVID crash in early 2020. Bitcoin at Most "Oversold" Level Since 2020
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BTC Panic-Selling Reaches Extremes Not Seen Since COVID Crash. Bitcoin at Most "Oversold" Level Since 2020.
Investing and trading are often influenced by emotions, and fear and panic can be particularly powerful motivators. This is why market selloffs tend to be more dramatic and alarming than bull markets. The saying "Bulls take the stairs, bears ride the elevator" is a popular way to describe this phenomenon. Bitcoin at Most "Oversold" Level Since 2020.
For instance, in March 2020, Bitcoin's price dropped by 70% in just a few days due to the COVID-19 pandemic. This was the last time that the Relative Strength Index technical indicator on the daily timeframe was this oversold.
Now, after a recent drop in Bitcoin's price, the daily RSI has once again reached an extreme level not seen in over three years. It remains to be seen whether this represents a good opportunity to buy or the start of a more significant decline.
Bitcoin Daily RSI Plunges To Most Oversold Level Since 2020
The Relative Strength Index is a momentum indicator that tells investors and traders when an asset is overbought and oversold on a relative basis. When the tool reaches extremes above 70 or below 30, it can present an opportunity to buy or sell. The RSI is now lower than the LUNA or FTX collapse, or at any point since March 2020.
During especially strong moves, however, the RSI can remain elevated for extended phases despite reaching such overheated readings. Such was the case in December 2018, the previous instance of the daily Bitcoin RSI reaching such a low.
In that case, the RSI stayed hot for two full weeks, cutting down BTCUSD price by another 40% before it was all said and done. A 40% correction in Bitcoin would take prices back to the November 2022 bottom.
If Bitcoin instead rebounds and reacts more akin to 2020, new all-time highs could be just months away. If not, a deeper reset is possible.
#Bitcoin daily RSI is now the most oversold in all of 2023 Act accordingly pic.twitter.com/GpKFAvsonc — Tony "The Bull" (@tonythebullBTC) August 17, 2023
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.