Bitcoin tumbled to around $65,000 on Thursday amid a wave of liquidations fueled by strong bearish sentiment, but a technical indicator suggests the cryptocurrency could be set for not just a bounce, but a bigger move up.
Bitcoin’s daily Relative Strength Index (RSI), which is a popularly used momentum oscillator that assesses whether an asset is oversold or overbought, flashed 17.6 (on a scale of 0-100) on Thursday – heavily oversold conditions that were peaked in the modern BTC era by the 2020 Covid crash, falling to 15.6 from a low of 8.6. it dropped to 9.5.
On both of these previous occasions, bitcoin rewarded buyers with violent upward moves. In 2018, BTC more than quadrupled over the following 8 months from $3,150 to $13,800. In 2020, bitcoin rose from $3,900 to a cycle high of $65,000 just over a year later.
Thursday’s market carnage wiped out more than $1.5 billion across crypto derivatives. While the temptation may be to sell when an asset is weak, astute traders will see the oversold areas as an opportunity – especially since liquidity between $70,000 and $80,000 has effectively been wiped out.
