Bitcoin velocity RSI produced a rare bear market bottom signal as BTC price losses sparked a return to extreme “oversold” conditions.
Bitcoin (BTC) is printing a key bear market bottom signal at $87,000 as analysis hopes that BTC price history repeats.
Bitcoin bear market comparisons have come thick and fast in recent weeks, but now, a leading BTC price indicator demands a market bottom.
Velocity RSI, which takes into account recent price momentum changes, has now dived below 10/100 to hit some of its most “oversold” levels ever.
“The Velocity RSI on the 3-day chart has just hit its lowest reading since the bottoms of the last 3 bear markets,” On-Chain Mind commented.
An accompanying chart showed similar chart setups at the end of Bitcoin’s 2018 bear market, as well as midway through 2022, around six months before the most recent true bear market found its long-term floor.
“It’s one of the more reliable, widely-tracked momentum exhaustion indicators, and it’s now flashing a level we only see at major cyclical resets,” On-Chain Mind added.
“An interesting technical signal worth paying attention to.”
Depending on the perspective, current BTC price behavior stands out from past bearish phases.
Related: Bitcoin battles $50K price target as Fed adds $13.5B overnight liquidity
Not all classic price metrics have reacted the same to the latest events, and these now include Bitcoin’s long/short ratio.
Joao Wedson, founder and CEO of crypto analytics platform Alphractal, noticed an unusual phenomenon playing out this week.
“Over the years, we’ve identified several strong Alpha signals in the crypto market. One of the most reliable has always been this: when Bitcoin’s Long/Short Ratio rises above the average of major altcoins, it historically points to a price bottom forming. But this time something different happened,” he told X followers.
“For the first time ever, BTC kept this ratio at extremely elevated levels for an unusually long period — and yet we saw false bottom signals throughout November, while the price continued to drop.”
Wedson explained that the implications of this could hurt bulls. Traders being overly eager to long BTC while attempting to catch a falling knife may incentivize large-volume players to liquidate them by driving the price down further.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
