Bitcoin’s decline eased Tuesday as US equity markets rebounded from Monday’s AI- and software-led sell-off. By the closing bell, the Dow Jones Industrial Average had gained 370 points, while the S&P 500 posted a 0.77% advance. The swift recovery in equities appeared to reduce pressure on crypto investors who had been trimming exposure to risk assets.
Market analysts continue to emphasize the importance of Bitcoin reclaiming the $65,000 level as support and maintaining footing above $60,000. Many warn that a sustained break below $60,000 could quickly open the door to fresh lows in the low-$50,000 range.
Despite trading roughly 49% below its all-time high, Bitcoin has shown signs of whale accumulation. Market analytics firm Material Indicators reported a $4.5 million spot purchase by so-called “mega whales” on Tuesday morning. While the firm noted the order size was modest in absolute terms, it was significantly larger than the typical $1 million to $2 million market orders usually seen from that cohort.
They added:
“We typically see them do this when they are buying directly into liquidity to help break walls.”
Is a Bitcoin reversal on the horizon?
For now, there are limited signs of a decisive shift in Bitcoin’s extended downtrend. However, analysts note that the asset appears deeply oversold, pointing to several indicators that historically signaled sentiment and positioning had reached extreme levels before a rebound.
According to Cointelegraph, Bitcoin’s weekly Relative Strength Index (RSI) has dropped to 25.71 — a level not seen since July 2022. Historically, RSI readings below 28 have coincided with discounted buying opportunities and have often preceded the formation of market bottoms.
Galaxy Digital head of firmwide research Alex Thorn said Bitcoin is “nearing all-time oversold territory,” noting that the current technical setup suggests market conditions are approaching historically extreme levels that have previously preceded relief rallies or trend reversals.
“Weekly RSI is lower than any time except the darkest of bears.”
Bitcoin is also trading within 9% of its 200-week exponential moving average (EMA), currently around $58,855 — a level that some traders view as a historical signal that a bottoming phase may be underway during prior market cycles.
However, crypto analyst Rekt Capital offered a more cautious outlook. The analyst noted that a confirmed daily close below the 200-day EMA could flip the indicator into resistance during any short-term rebound attempt. According to Rekt Capital, future retests of the moving average may instead trigger further downside momentum rather than signal a recovery.
Even if Bitcoin is in the early stages of carving out a market bottom, the process could stretch over several months. Bitcoin analyst Brian Brookshire said that “grinding out a bottom” typically takes time, adding that constructive signs would include a rebalancing of the BTC supply-in-profit versus supply-in-loss metrics, along with Bitcoin rebounding from its estimated mining cost levels.
Brookshire also pointed to potential US monetary policy shifts as a future catalyst for price action. He suggested that interest rate cuts by the Federal Reserve — whether under current Chair Jerome Powell or a possible future chair such as Kevin Warsh — could have a meaningful impact on Bitcoin’s trajectory.
