BTC price action was at $25,000 the last time that Bitcoin daily RSI was as low as this week.
Bitcoin (BTC) is rapidly headed for oversold territory despite still trading above $40,000, the latest data shows.
As noted by analyst Matthew Hyland on Jan. 14, Bitcoin’s relative strength index (RSI) hit its lowest levels since September this week.
Bitcoin daily RSI echoes $25,000 levels
The price of BTC experienced a 15% decline following the introduction of the inaugural spot Bitcoin exchange-traded funds (ETFs) in the United States, and it has encountered challenges in recovering since then.
While traders caution against potential further declines, the Relative Strength Index (RSI) indicates the possibility of an imminent reversal.
In daily timeframes, the traditional momentum oscillator dropped to 42.7/100 on Jan. 14, reaching a level lower than any recorded in the past four months, as verified by data from Cointelegraph Markets Pro and TradingView.
During that period, the BTC/USD pair was trading at approximately $25,000.
Also read: CRYPTO MARKET REVIEW IN 2023 AND NARRATIVES IN 2024
The move was not lost on Hyland, who uploaded a chart to X (formerly Twitter), which suggested a hidden bearish divergence playing out, with RSI making lower lows while Bitcoin makes higher lows.
#BTC Daily RSI lower that October lows and at lowest levels since September: pic.twitter.com/lwPnkrhkUh
— Matthew Hyland (@MatthewHyland_) January 16, 2024
The daily RSI, however, does not definitively suggest an imminent recovery in BTC price strength.
Dipping below the 50/100 midpoint, the next significant challenge for the metric might be the threshold leading to its “oversold” region at 30/100.
“I am hoping to witness the Daily RSI entering the oversold territory for Bitcoin,” mentioned Seth, a well-known trader and social media commentator, in a recent X post.
Over shorter hourly timeframes, RSI crossed below the crucial 30/100 threshold twice this week, subsequently rebounding and establishing higher lows on both occasions.
Bollinger Bands reflect return of volatility
Contrastingly, trader Jelle observed last week that a return to “overbought” levels above 70 can frequently signal the beginning of the most significant upward movement for BTC/USD.
When #Bitcoin‘s RSI enters the overbought territory, the real fun happens.
Just look at what happened in the past: pic.twitter.com/IAdXyOE3nU
— Jelle (@CryptoJelleNL) January 9, 2024
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As reported in December 2023, RSI is just one of several key metrics currently on the radar of market participants.
Another indicator to consider is the Bollinger Bands volatility indicator. The daily chart now illustrates BTC/USD returning to a volatile mode after a period of constriction. Present prices indicate a move towards the lower end of the expanding channel, which has not been significantly challenged since mid-September.