Bitcoin (BTC) saw a dramatic 6.6% drop, causing a staggering 11% loss in its market capitalization. This decline was triggered by fears stemming from Donald Trump’s trade tariffs, which rattled global financial markets, sending ripples through the cryptocurrency world. However, since that sharp drop, Bitcoin has managed to recover, gaining over 8% and reclaiming crucial support levels. As the market stabilizes, the question arises: is Bitcoin ready for a full recovery?
Bitcoin's RSI hits oversold, rebounds – Is the worst over for BTC? https://t.co/HZy3jXH4qo
— AMBCrypto (@CryptoAmb) February 4, 2025
Bitcoin’s RSI: A Key Indicator of Momentum
One of the best tools for understanding Bitcoin’s momentum is the Relative Strength Index (RSI). This indicator helps assess whether Bitcoin is oversold or overbought. A reading below 30 signals oversold conditions, while readings above 70 indicate an overbought asset. On January 3rd, Bitcoin’s 4-hour RSI plunged to 19.76, which was a concerning signal for traders. Historically, similar RSI drops in December and August, when RSI values hit 25 and 16, respectively, led to sharp declines in Bitcoin’s price.
What’s Next for Bitcoin?
As of now, Bitcoin has been trading between $92k and $106.2k, holding steady within key support levels. The $99.1k mid-range level has provided solid support, allowing Bitcoin to regain momentum, touching $102.5k and pushing RSI above the neutral 50 level. Though Bitcoin experienced a brief 3% dip, it remained above significant support levels.
However, the On-Balance Volume (OBV) has shown a lower low, indicating continued selling pressure over the past 36 hours. This suggests that bears may still hold the upper hand for the moment. Moreover, the liquidation heatmap reveals potential challenges around the $97.5k and $94k levels.
Also Read: Bitcoin Drops to $96K in February: Market Correction or Deeper Trouble?
Looking Ahead
While Bitcoin’s rebound is a promising sign, caution is still advised. A further dip to the $94k-$95k range remains possible before a true recovery can take hold. As Bitcoin continues to recover from oversold conditions, investors must closely monitor support zones for signs of strength or further declines. With market volatility in play, it’s crucial to remain vigilant.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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