Bitcoin’s 14-day relative strength index (RSI) has dropped to its lowest since the coronavirus-induced crash of March 2020, indicating extreme oversold conditions. According to Alex Kuptsikevich, senior market analyst at the FxPro, Bitcoin’s trend has shifted bearish. “Bitcoin closed the [last] week with a notable drop below its 200-week and 200-day moving averages, signaling a shift to a bearish trend,” he said in an email.
The RSI is a momentum indicator ranging between 0 to 100 that shows the asset’s recent price movement relative to its average price movement over a specific period, usually 14 days. A reading below 30 reflects oversold conditions, implying that the price has dropped too quickly relative to its recent average. However, it is important to note that an oversold RSI reading does not necessarily mean a bullish reversal is imminent.
At press time, Bitcoin was trading at $26,000, having dropped over 10% last week as the yield on the 10-year U.S. inflation-indexed security nearly rose to 2%, hitting the highest since 2009. This surge in bond yields has weighed over risk assets, including cryptocurrencies.