Bitcoin traders expect a short-term bounce as one BTC price metric sinks to its lowest levels in several months.
Data from Cointelegraph Markets Pro and TradingView reveals deeply “oversold” conditions on the BTC/USD relative strength index (RSI).
BTC price dip sends RSI back to October
Bitcoin (BTC) tanking 5% in a day has had serious implications for low-timeframe RSI.
On the hourly chart, RSI fell from local highs of 81.7 on Jan. 6 to three-month lows of just 16.6 a day later.
Such a rapid decline is rare, taking BTC/USD from “overbought” to “oversold” in 24 hours. The last time that the index measured so low, BTC/USD traded at $60,000.
BTC/USD 1-hour chart with RSI data. Source: Cointelegraph/TradingView
RSI measures trend strength and contains three key levels for observers: the 30 “oversold” boundary, the 50 midpoint and the 70 “overbought” threshold.
When the price crosses these levels, depending on the direction, traders can make inferences about the future of a given uptrend or downtrend. During bull markets, Bitcoin regularly spends extended periods in “overbought” territory.
Source: ShardiB2
With the latest comedown, traders quickly suggested that BTC price was due for an upward relief bounce in the face of an RSI overreaction.
“1-hour Bitcoin RSI is at 16 and 4-hour almost completely reset,” commentator Bitcoin Munger reported in a post on X while observing inflows to the US spot Bitcoin exchange-traded funds (ETFs).
Despite making new local lows on Jan. 8, RSI contrasted with the spot price downtrend, a deviation that classically precedes price relief.
“Bitcoin #BTC $BTCUSD has reached the next RSI(5) oversold point on the 6-hour chart…,” trader and portfolio manager David Cox continued about other low-timeframe RSI readings.
BTC/USD 6-hour chart with RSI data. Source: David Cox/X
Bitcoin traders still see new lows in January
As Cointelegraph reported, bearish BTC price targets remain in circulation in the run-up to the inauguration of US President-elect Donald Trump.
Related: Back to $76K for 2025? 5 Things to know in Bitcoin this week
These include a return to range lows at or just below $90,000, along with deeper corrections to $80,000 or lower.
Adding to the downside forecasts, popular trader Bluntz employed Elliott Wave Theory to predict new lows coming within the next two weeks.
A chart uploaded to X implied that new all-time highs should nonetheless result once the market bounces.
BTC/USD 1-hour chart with RSI data. Source: Bluntz/X
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.