This is a daily analysis by CoinDesk analyst and Chartered Market Technician Omkar Godbole.
Like bitcoins The price withers, bulls harbor hopes of a potential rotation of money from the ever-rallying gold to its digital counterpart.
Those hopes may get a boost as price charts show that bitcoin’s per dollar-denominated price is now at its most oversold relative to gold’s per ounce price, according to the widely tracked 14-day relative strength index (RSI).
The oscillator has fallen 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 seen significant selling pressure of late relative to gold, potentially pushing the relationship between the two to undervalued levels.
However, an oversold RSI reading alone does not guarantee an immediate bullish reversal for BTC against gold. This condition requires confirmation from other technical indicators such as signs of downtrend exhaustion in price action, bullish divergences or increased buying volume. Without these supporting signals, the oversold status may persist under strong downtrends, meaning the price may continue to decline despite the low RSI level.
At the time of writing, the bitcoin-gold ratio remains in a pronounced downtrend, marked by prominent red candles highlighting seller dominance amid the recently confirmed death cross – the bearish crossover of the 50- and 200-day simple moving averages (SMA).
In light of this bearish technical backdrop, BTC bulls will have to exercise patience and await clearer signs of a trend reversal before expecting a sustained rally.
BTC/USD is looking south
The same can be said for BTC’s dollar-denominated price as it appears to be testing the lower end of the expanding channel, currently below $100,000.
The 14-day RSI has yet to hit oversold territory and the MACD histogram continues to print deeper bars below the sign, both of which suggest the possibility that the ongoing selloff could continue. Furthermore, prices appear to have found acceptance below the 200-day SMA, which could spur selling by momentum traders.
With prices below the 200-day SMA, the focus is on the lower limit 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 bull run that started in early 2023, this moving average has consistently provided a reliable foundation that helps sustain rallies and drive prices to new highs.
