In the world of cryptocurrencies, Bitcoin’s value has dropped a lot because bond prices are going up. This has also hurt other risky investments, like different coins.
The 14-day relative strength index (RSI) for Bitcoin is one tool that experts use to figure out what’s going on. This index shows how much the price of Bitcoin has moved compared to how much it has moved on average over the past 14 days. Currently, Bitcoin’s RSI has fallen below 30, indicating an excessive sell-off. This means that the price has dropped faster than it has on average in recent times. To put it in perspective, this RSI number hasn’t been this low since March 2020, when the COVID-19 pandemic was causing havoc on the markets and Bitcoin’s price dropped a lot.
To be clear, the RSI is like a gauge that goes from 0 to 100. It helps experts compare how the price of an object has changed recently to how it has changed in the past. That over a certain amount of time, usually 14 days. When the RSI falls below 30, such as in Bitcoin’s case, analysts perceive this as an indication that the asset may have been sold at a level that is excessively low. On the other hand, when the RSI surpasses 70, it could signify that there has been excessive buying of the product.
A popular misunderstanding is common in X’s crypto community, which used to be called Twitter, as well as among new traders. Many people tend to see oversold and overbought as early signs that the market is about to change from negative to positive or vice versa.
This idea, though, isn’t true. When an RSI number falls into the “oversold” range, it just means that prices have dropped quickly and nothing else. On the other hand, a view of “overbought” means that prices have gone up quickly.
Indeed, the recent RSI drop below 30, indicating an oversold market, demonstrates the amplification of the bearish trend. This fits with the old saying that signs can stay in the “oversold” zone for a long time, longer than people who try to buy during a dip can still make money.
Alex Kuptsikevich, an experienced market expert at FxPro, has said that bitcoin’s performance has changed in a way that points in a more bearish direction.
Kuptsikevich pointed out that bitcoin fell a lot below both its 200-week and 200-day moving averages over the past week. Observers view this change as a distinct indication that the overall trend is shifting downward. According to what Kuptsikevich mentioned in an email, the next anticipated price drop is likely to occur around $24,700, the current hanging point.
At this moment in time, one bitcoin is worth $26,000. But prices have gone down by more than 10% in the past week. The rise in the yield of the 10-year U.S. inflation-indexed bond, which almost hit 2%, is partly to blame for this drop. Since 2009, observers have noted that this number is the largest one.
