In the last seven days, the price of Bitcoin (BTC) has fallen by over 11%, struggling to maintain the $26,000 level. Adding to the bearish sentiment, a key indicator suggests that this trend may continue.

The 14-day relative strength index (RSI) for Bitcoin, the largest cryptocurrency in the world, has dropped below 30, indicating that it is oversold. The RSI ranges between 0 and 100 and shows how an asset’s price movement compares to its trajectory over a specific period. This recent 14-day period revealed that Bitcoin’s RSI is at its lowest level since the market crash in March 2020 caused by the Covid-19 pandemic.

An RSI score above 70 typically indicates that an asset is overbought, while a score below 30 suggests oversold conditions. However, RSI levels may not necessarily predict future price swings. According to Alex Kuptsikevich, a senior market analyst at FxPro, Bitcoin’s current trajectory remains bearish:

“Bitcoin closed the [last] week with a notable drop below its 200-week and 200-day moving averages, signaling a shift to a bearish trend. From current levels near $26,000, the following area of decline appears to be the last pivot area at $24,700.”

Factors Contributing to the Drop in Bitcoin Price

Reports from Glassnode and Coinshares suggest reasons for the recent decline in Bitcoin’s value. These reports indicate reduced interest from the crypto market, as major exchanges experienced a decrease in trading volumes. This suggests that investors are holding off on purchasing more Bitcoin.

Coinshares also points out that Bitcoin’s price volatility has decreased significantly. James Butterfill, the firm’s head of research, suggests that this decrease could potentially lead to a sharp rise or fall in the price of Bitcoin:

“In recent months, volatility has decreased, reaching levels comparable to the all-time lows observed at the start of the year. Historically, such levels have often marked turning points for significant price swings, either upward or downward.”

Another factor that could be contributing to the decline in Bitcoin’s price is the targeted action taken by the SEC against major crypto exchanges in the US. The gradual depreciation of the US dollar’s strength is also affecting interest in USD stablecoins, causing them to lose market share. Furthermore, the market is anxiously awaiting the SEC’s decision on a spot Bitcoin ETF, as regulatory decisions often impact investor sentiment.

In addition to these factors, concerns about China’s economic situation are also affecting the market. China’s property and real estate industry is currently facing debt problems, with developers defaulting on payments. While this may not lead to a complete collapse of the country’s economy, it could contribute to further market instability. However, Bitcoin may benefit from this decline if enough people view it as a reliable hedge.

FAQs

Is Bitcoin’s price expected to rise or fall?

Given Bitcoin’s current bearish trajectory, there is uncertainty surrounding its price movement. While indicators such as the RSI suggest oversold conditions, market factors and investor sentiment can influence future price swings.

What is the significance of the RSI?

The relative strength index (RSI) is a technical indicator used to analyze an asset’s price movement. An RSI score above 70 implies that an asset is overbought, while a score below 30 indicates oversold conditions.

How do regulatory actions impact Bitcoin’s price?

The SEC’s actions and regulatory decisions can significantly affect investor sentiment in the crypto market, potentially impacting Bitcoin’s price. Investors closely monitor the regulatory landscape to make informed decisions about their investments.

Summary:

The price of Bitcoin has declined by more than 11% in the past week, struggling to stay above the $26,000 level. The 14-day relative strength index (RSI) for Bitcoin is at its lowest level since the 2020 market crash, indicating oversold conditions. The drop in Bitcoin’s price can be attributed to reduced interest from investors, decreased price volatility, regulatory actions by the SEC, and concerns about China’s economic situation.