Bitcoin (BTC) Daily RSI Dips Into Oversold Territory, a Signal That Has Preceded Bullish Rallies in the Past

In a new post on X, analyst Ali Martinez has discussed the latest trend forming in the Relative Strength Index (RSI) for Bitcoin.

A technical indicator for Bitcoin (CRYPTO: BTC) has signaled a potential entry point for the second-largest crypto by market capitalization several times in the past two years.

Now that the indicator is once again showing a signal, it could indicate a return of bullish price momentum for BTC.

Relative Strength Index (RSI) is a popular technical analysis indicator that measures the speed and magnitude of recent changes in an asset's price.

The indicator is displayed as a value on a scale from zero to 100. When the indicator is below 30, it can indicate that the cryptocurrency is currently oversold.

This trend may signal an asset price bottom. On the other hand, when the indicator is above 70, it can suggest that the coin is currently overbought and, thus, potentially due for a reversal to the downside.

Chart analysis by an analyst at X shows the trend in the daily RSI for Bitcoin over the last couple of years.

As shown in the chart above, the daily RSI has recently observed a plunge for Bitcoin, which now sits below the 30 level.

Thus, it would appear that BTC is turning oversold, at least according to this metric.

This development in the indicator comes as BTC has seen a crash in the past 24 hours that has brought its price below the $60,000 level for the first time since the beginning of May.

The latest plummet into the underbought region is the first time the indicator has dipped into this territory since August of last year.

Interestingly, the signal last August eventually led to a 197% rally for the cryptocurrency.

Bitcoin also enjoyed a similar bullish effect during the other two occurrences of this trend from the past two years.

The signal eventually led to a 60% rally for BTC, while the March 2023 signal led to an increase of over 62%.

As the daily RSI has once again dropped into this territory for the asset, it's possible that BTC's 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 BTC.

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.

However, it's important to note that technical analysis is not a perfect science and past performance does not guarantee future results.

This trend in the daily RSI should be used in conjunction with other technical and fundamental analysis to make informed trading decisions.

BTC Price: Bitcoin had slipped below $60,000 earlier in the day, but the asset has since seen a slight rebound to $60,200.

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