Bitcoin Price Falls 11% while Key Indicator States BTC Is at Most Oversold Level since Covid 2020 Crash
The price of Bitcoin is struggling to maintain momentum and has succumbed to several macroeconomic factors over the last week.
The price of Bitcoin (BTC) has fallen by more than 11% over the last 7 days as the king coin struggles to maintain the $26,000 level. Unfortunately, a key indicator suggests a continuous bearish trend for the king coin.
The 14-day relative strength index (RSI) for the world’s largest cryptocurrency has fallen below 30, signifying that Bitcoin is oversold. The RSI ranges between 0 and 100 and reflects an asset’s price movement compared to the price trajectory over a specified period. The 14-day period used here revealed Bitcoin’s RSI is at its lowest level since March 2020 when the Covid pandemic caused a crash.
Generally, an RSI score above 70 shows an asset is in overbought territory, while one below 30 indicates oversold conditions. However, the RSI levels may not necessarily indicate any projections of price swings in the near future as many sometimes believe. According to FxPro senior market analyst Alex Kuptsikevich, Bitcoin’s current trajectory is bearish. He said:
“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. From current levels near $26,000, the following area of decline appears to be the last pivot area at $24,700.”
Factors Causing the Plunge in Bitcoin Price
Reports from Glassnode and Coinshares suggest a reason for the plunge in Bitcoin’s value. According to these firms, the past week recorded reduced interest from the crypto market. Most major exchanges saw fallen trading volumes suggesting that investors are holding off on spending more money purchasing Bitcoin.
Coinshares also notes that the price of Bitcoin is not swinging as much as it used to. The firm’s head of research, James Butterfill, suggests that this occurrence could end in a sharp rise or plunge in the price of the king coin:
“In recent months, volatility has decreased, reaching levels comparable to the all-time lows observed at the start of the year. Historically, such levels have often marked turning points for significant price swings, either upward or downward.”
There is also the possibility that the SEC’s targeted action against major crypto exchanges in the US is causing problems for Bitcoin. Another factor is a gradual but continued depreciation in the dollar’s strength. This has also affected interest in USD stablecoins, with these assets losing market share from 70% to 50%.
The market also seems to be waiting for the SEC’s decision on a spot Bitcoin ETF. While this is unlikely, based on precedence, it is clear that investors always pay close attention to the regulatory landscape, which usually informs their decisions.
In addition to these problems, there are also a few concerns about the economic situation in China. For instance, China’s property and real estate industry is experiencing debt problems, with developers increasingly defaulting on payments. While this may not completely tank the country’s economy, it is a serious enough situation that could lead to a further meltdown. However, Bitcoin may benefit from this plunge if enough people consider it a strong enough hedge.
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Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge.
When he’s not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.
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