The last time this classic indicator dropped below the 20.0 level was in March 2020, when the world panicked due to the spread of the coronavirus.
The extremely low RSI values indicate an extremely oversold market — it was formed as a result of the collapse of the BTC/USD rate on August 17, the reasons for which are not clear. Among the versions are:
→ SpaceX's decision to sell bitcoins from its balance sheet;
→ high yields of US government bonds (10-year bonds are at a 14-year high);
→ the collapse of the Chinese developer Evergrande.
Be that as it may, the decline of RSI below the level of 20.0 should not be interpreted as a signal to open a long position, although there is evidence for this.
→ a long lower shadow on yesterday's candle on the daily bitcoin price chart confirms the aggressiveness of the bulls defending the 25.6k level;
→ this level approximately coincides with the Fibo level at 0.38 for a rollback from the growth of A→B;
→ the bitcoin market may follow the stock market — after all, the S&P 500 is at the lower boundary of the rising channel, which operates in 2023.
→ The price of bitcoin has broken through the upward channel of 2023, which may mean a radical change in sentiment. The USD 30,000 level proved to be a difficult barrier for the bulls.
→ Intraday charts show that bitcoin fell especially rapidly in the 26,800-27,500 range. Therefore, this area of seller dominance could become resistance to a recovery if it follows the RSI's spring 2020 lows.
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