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Bitcoin: RSI returns to when the price was at 40,000 USD

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The price correction of Bitcoin that occurred over the weekend brought the RSI to levels not seen since it was around $40,000 USD. 

In fact, Bitcoin’s daily RSI on Saturday dropped to just over 42 points, a level that had not been seen since January 25th. 

The RSI index follows Bitcoin’s price correction below 65,000 USD

RSI stands for Relative Strength Index, and it is an index of the relative strength of prices. 

This is one of the most widely used indices by traders, and it is composed of a value always between 0 and 100. 

When the RSI value exceeds 70, it is said to have entered overbought territory, while when it falls below 30, it is said to have entered oversold territory.

Between February 9, 2024 and March 14, the price of Bitcoin has been almost continuously in overbought territory for over a month. However, starting from March 15, it has not returned there.

On March 14, 2024, it was the day when the historical maximum price of BTC was recorded, at about 73,800 USD. 

Since then, the daily RSI of the price of Bitcoin has never dropped below 45 points, with only three excursions below the 50 mark.

Instead on Saturday, due to the rapid correction following the news of Iran’s attack on Israel, it even dropped to 42.

Comparison with previous months

The last time the daily RSI of the Bitcoin price was below 45 points was on January 25th, when the price was around $40,000 and the RSI was at 38.

It is worth noting that the last time the price of Bitcoin was in the oversold zone was in August 2023, before the news spread that Grayscale had won the case against the SEC, and that the agency would likely be forced to approve Bitcoin spot ETFs. 

Since then, it has not only never dropped below 30, but has also remained almost always above 40. 

It had shown a bit of weakness only at the end of January 2024, when the price of BTC dropped from 46,000 USD to 38,000 USD. However, during those days the RSI remained below 40 for four consecutive days, while yesterday it had already risen above 45. 

Therefore, these are two completely different scenarios, even though the first one occurred during a full bull run and was just a momentary interruption of the upward trend, while the episode on Saturday happened during a bull run that has probably ended.

The fact that Bitcoin’s daily RSI has not significantly risen above 60 since March 16 effectively suggests that the bull run that started in the second half of last year is over. At that time, BTC remained in overbought territory for a whopping 25 consecutive days, and it also returned there at the beginning of December. 

It fell below 50 only on January 12, but by the 27th it had risen above this threshold. 

The weekend problem

The drop in the price of Bitcoin below $66,000 on Saturday and Sunday was rapid and painless, and was characterized by a decidedly interesting phenomenon. 

The sudden drop, from 67,000 USD to 61,000 USD, occurred on Saturday with the news of Iran’s attack on Israel. 

Although this crash was generated by real panic selling, as shown by the trading volumes that were a bit too high for the weekend, it did not go below 61,000 USD. 

In other words, it was a rapid collapse but without serious consequences, so much so that three hours later the price had already returned to 65,000 USD. 

The fact is that panic selling has only concentrated among those who already had BTC on exchanges, because the inflows of Bitcoin on crypto exchanges at that time were minimal. At this moment, for example, the total number of BTC present on all crypto exchanges in the world continues to be close to the lows of the last 4 years. 

After all, the stock exchanges were closed, so there were no active exchanges on ETFs. Furthermore, on Saturdays, crypto markets are often less frequented, so the crash came at a time when it probably couldn’t do much damage. 

The following day it was discovered that Iran’s attack had failed and ended, so the RSI returned to absolutely normal levels. Then with the news of the approval of Bitcoin spot ETFs in Hong Kong, all the losses accumulated between Saturday and Sunday were recovered, and Bitcoin returned above 66,000 USD. 

At this moment, the daily RSI of the Bitcoin price seems to be already returning around the 50 level, which is a neutral zone, and given that the halving is expected on Saturday, it is not even to be excluded that it may increase in the coming days. 

 It had been since the end of January that we had not seen such low levels of the Relative Strength Index. 

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