An analyst has pointed out how an indicator is forming a signal for Bitcoin that has proven to be quite bullish for the asset during the past two years.
Bitcoin Daily RSI Has Dipped Into The Oversold Territory
In a new post on X, analyst Ali Martinez has discussed the latest trend forming in the Relative Strength Index (RSI) for Bitcoin. The RSI is a popular technical analysis indicator that keeps track of the speed and magnitude of recent changes in BTC’s price. This metric represents its value on a scale from zero to a hundred.
When the indicator has a value lower than 30, the cryptocurrency is oversold right now. Such a trend may lead towards a bottom for the asset’s price.
On the other hand, the metric above the 70 mark suggests the coin could be overbought currently and, hence, potentially due to a reversal towards the downside.
As displayed in the above graph, the daily RSI has recently observed a plunge for Bitcoin, which now sits under the 30 level. Thus, it would appear that BTC is turning oversold, at least according to this metric.
This development in the indicator has come as BTC has seen a crash in the past 24 hours that has taken its price below the $60,000 level for the first time since the start of May.
The latest plummet into the underbought region is the first time the indicator has dipped into this region since August of last year. Interestingly, the signal eventually led to a 197% rally for cryptocurrency.
Bitcoin also enjoyed a similar bullish effect during the other two occurrences of this trend from the past two years. The November 2022 signal resulted in a 60% surge, while the March 2023 one led to an increase of more than 62%.
As the daily RSI has once again dropped into this territory for the asset, it’s possible that its price could end up seeing a return of bullish momentum in the coming future. The analyst notes that this could make the current dip a prime opportunity to buy.
In the scenario that BTC does observe a rally arising out of this pattern similar to the previous instances, a run equal to the smallest surges (60%) would mean the cryptocurrency would rise to a new high of $96,000.
Given this trend in the daily RSI, It remains to be seen how the price of the cryptocurrency develops from here.
BTC Price
Bitcoin had slipped under $60,000 earlier in the day, but the asset has since seen a small rebound to $60,200.
Featured image from Dall-E, charts from TradingView.com
