There’s oversold, and there’s lololol-omg-roflcopter-lolerskates-that-shit’s-way-overdone. At least some analysts feel that way.
Looking at Bitcoin’s daily chart, it’s not hard to see why on-chain metrics show large buying sprees in crypto over the past couple of weeks.
First, let’s take a look at the oscillator levels.
The Composite Index
The Composite Index on the daily chart is at a major low. It’s the lowest the Composite Index has been since April 24, 2021 – making it the second lowest since November 2018. That’s pretty damn crazy.
The Relative Strength Index
The next oscillator we’re looking at is the RSI. The last time it was this low was back in November 2022, when $BTC was trading in the $15,800 value area.
The RSI is currently in bull market conditions – but it’s well on its way to returning to bear market conditions if it fails to return above the 40 or 50 levels over the next couple of weeks – if it dives down to 20, then it will return to bear market conditions.
But if you compare the moves of the Composite Index and the RSI against the candlestick chart, the moves in the oscillators are significantly out of proportion.
Price Action
Shifting over to the candlestick chart, analysts see several reasons why a major bounce could occur soon.
From an Ichimoku perspective, the strongest level of support/resistance is Senkou Span B, a level that Bitcoin is currently trading near.
Additionally, there is a massive gap between the body of today’s candlestick and the Tenkan-Sen. However, gaps between candlestick bodies and the Tenkan-Sen often correct within one to five periods.
Finally, the 61.8% Fibonacci retracement at $19,868 is another source of support.
While there are some very strong signs of an end to the selling pressure, the weekend will be especially important to watch.
Any close on the daily chart below the Cloud could trigger and confirm a resumption of the dreaded crypto-winter – so keep your eyes open!