You might have noticed its price has taken a hit. It fell from $102,500 on January 7 to $95,000 in just two days. That kind of drop is bound to raise eyebrows, but what really caught traders’ attention was the RSI (Relative Strength Index). On the hourly chart, it hit 16.6—a level we haven’t seen since Bitcoin was at $60,000.
So, what’s the RSI? The RSI is a tool traders use to see if something is overbought (priced too high) or oversold (priced too low). If the RSI falls below 30, it’s considered oversold, which can signal that prices might bounce back soon.
When the RSI dips this low, some traders see it as a chance for prices to climb back up. While the hourly RSI is at rock-bottom levels, the 4-hour RSI is almost reset. That means there might be room for a short-term bounce, especially since more money has been flowing into U.S. Bitcoin ETFs recently.
Bitcoin #BTC $BTCUSD has reached the next RSI(5) oversold point on the 6-hour chart… pic.twitter.com/49fTmH3TLk
— David Cox, CMT, CFA (@DavidCoxRJ) January 7, 2025
Some Traders Still Expect Lower Prices
Not everyone is feeling optimistic, though. Some analysts believe Bitcoin could drop even further, possibly to $80,000 or below, before finding a bottom. But even they admit that when the market recovers, Bitcoin could hit new all-time highs.
While the price has dropped sharply, analysts at Bitfinex don’t expect major crashes ahead. They’ve noticed that selling pressure is starting to ease. In their latest report, they mentioned that “selling liquidity” is decreasing, which is often a good sign.
In simple terms, fewer people seem willing to sell Bitcoin at these levels. According to Bitfinex, this situation looks similar to what we saw in early and late 2024—times when Bitcoin’s price eventually soared.
Could a Price Bounce Be Around the Corner?
We can’t say for sure, but the signs suggest that Bitcoin might not be far from a recovery. If selling continues to dry up and buying picks up, prices could stabilize or even climb.
It’s important to remember that ups and downs are part of the game. Whether you’re holding onto Bitcoin or thinking of buying, staying informed about tools like the RSI and understanding market dynamics can help you make smarter decisions.
Let’s see where Bitcoin heads next—2024 has already shown us that anything can happen.
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