In the fast-paced world of cryptocurrency trading, the relative strength index (RSI) serves as a valuable tool for investors and traders to gauge the momentum of an asset. A recent development has set the stage for a significant market event, as the Bitcoin (BTC) daily RSI has plummeted to levels not seen since the COVID-19-induced crash in March 2020.
RSI, a widely used technical indicator, measures the speed and change of price movements. It oscillates between 0 and 100, with readings above 70 typically indicating an overbought condition and readings below 30 suggesting an oversold condition.
The recent drop in Bitcoin’s daily RSI below the 20-mark has raised eyebrows in the cryptocurrency community. This level of oversold territory hasn’t been witnessed since the turbulent days of the pandemic-induced market crash in March 2020, when the entire financial landscape was gripped by fear and uncertainty.
MVP 200-week MA and EMA. Source: Michael van de Poppe
This downward trajectory, as outlined by Poppe, could persist over the forthcoming months. Such a trend implies that alternative cryptocurrencies, often referred to as “altcoins,” might outperform Bitcoin in terms of price appreciation and market capitalization growth. This phenomenon could signal a broader diversification in the cryptocurrency market as investors seek to explore other promising projects beyond the dominant Bitcoin.
However, Poppe acknowledges a crucial caveat in his analysis. He suggests that his thesis of altcoins outperforming Bitcoin would be invalidated if Bitcoin reclaims the 200-week MA and EMA. This scenario would likely lead to a resurgence in Bitcoin dominance, potentially stifling the anticipated altcoin rally.
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