Home Bitcoin News Bitcoin’s RSI Hits Oversold, Rebounds: Signs of Recovery for BTC

Bitcoin’s RSI Hits Oversold, Rebounds: Signs of Recovery for BTC

Bitcoin (BTC) has experienced sharp fluctuations, with investors eagerly watching its every move. The world’s leading cryptocurrency saw a significant drop on February 3, 2025, but recent signs suggest that it might be on the path to recovery. After dipping below key support levels, Bitcoin’s Relative Strength Index (RSI) showed oversold conditions, signaling a potential turnaround.

A Quick Drop, Followed by a Rebound

Bitcoin’s value took a hit on February 3, 2025, with the digital currency falling 6.6% in just a single day. This swift decline caused a ripple effect throughout the entire cryptocurrency market, leading to an 11.7% loss in total market capitalization. Traders and investors were rattled, and the market sentiment was overwhelmed by fear. A contributing factor to the downturn was the latest wave of global financial uncertainty, with the crypto sector reacting to broader market jitters, partially triggered by trade tariffs imposed by former U.S. President Donald Trump’s administration.

However, Bitcoin’s recent rebound suggests that the worst might be over. After hitting a low near $92,000, BTC quickly bounced back, reclaiming critical support levels above $100,000. As of February 4, 2025, Bitcoin has experienced a rally of just over 8%, touching prices as high as $102,500. The surge has given traders a glimmer of hope, especially those who had been positioned to capitalize on short-term price movements.

Bitcoin’s RSI: A Key Indicator of Market Momentum

A closer look at Bitcoin’s Relative Strength Index (RSI) reveals the scale of the recent fluctuations. The RSI is a momentum oscillator that measures the speed and change of price movements over a set period, typically 14 trading sessions. When the RSI is above 70, it signals that the asset is overbought, while an RSI below 30 indicates oversold conditions.

On February 3, Bitcoin’s 4-hour RSI plunged to a remarkably low level of 19.76. This was the lowest reading seen since August 2024, a period when Bitcoin had fallen sharply from near $60,000 to around $49,000. Prior to this, the RSI had dropped below 25 in December 2024, suggesting that Bitcoin was approaching a point of extreme oversold conditions.

This drop in the RSI was a clear indication that Bitcoin had been oversold, sparking a quick recovery. In the 24 hours following the dramatic fall, Bitcoin’s RSI moved back above the neutral 50 level, further strengthening the argument that the cryptocurrency might be poised for a rally. While the price action remains volatile, Bitcoin has respected key support zones between $92,000 and $106,200. The mid-range level, hovering around $99,100, has acted as a key point of support.

The Role of Bitcoin’s Liquidation Heatmap

To understand the potential future price movements of Bitcoin, traders are turning to tools like the liquidation heatmap. The heatmap, which tracks liquidations of leveraged positions in real time, has shown that immediate price targets for Bitcoin include the $97,500 and $94,000 levels. This suggests that while Bitcoin has bounced back, there could still be some downward pressure in the short term.

The heatmap indicates that further drops to the $94,000-$95,000 range are possible, although the sharp rally from lower levels provides some optimism for investors. While the overall market sentiment remains cautious, Bitcoin’s ability to regain support above $100,000 is a positive sign that the worst may be behind it.

The Big Picture: Are We Out of the Woods?

Despite the recent positive price action, a deeper analysis reveals mixed signals. On the one hand, Bitcoin’s quick rebound and the RSI’s movement above neutral indicate that the cryptocurrency might have found its bottom—at least for now. On the other hand, the On-Balance Volume (OBV) indicator, which measures buying and selling pressure, has recently made a new lower low. This suggests that selling volume has remained high, and the momentum is still somewhat bearish.

The presence of increased selling pressure over the past 36 hours further complicates the outlook. Although Bitcoin has shown resilience, the market is still susceptible to swings in investor sentiment. A continued drop to the $94,000-$95,000 range remains a distinct possibility. As such, traders should remain vigilant and prepared for additional price fluctuations.

What’s Next for Bitcoin?

Looking forward, it’s clear that Bitcoin’s price will continue to be influenced by both macroeconomic factors and technical indicators. Global financial uncertainty, including concerns over trade tariffs and investor sentiment, will likely play a significant role in the cryptocurrency’s price action. Additionally, Bitcoin’s RSI and OBV readings will remain crucial for assessing whether the cryptocurrency can maintain its momentum or if it will face another round of selling pressure.

Bitcoin has weathered countless price swings in the past, and this recent dip and rebound are just another chapter in its volatile history. However, the rebound over the past 24 hours suggests that the market may have absorbed the worst of the panic, at least for the time being. Investors will be closely monitoring Bitcoin’s next moves, especially as it navigates support levels and attempts to regain stability in the face of ongoing global uncertainty.

In conclusion, while Bitcoin’s recent price action has been encouraging, the path forward is far from certain. Whether the cryptocurrency has truly found its bottom remains to be seen. What’s clear, however, is that Bitcoin’s ability to bounce back from an oversold condition offers a glimmer of hope for traders and investors alike.

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Maheen Hernandez

A finance graduate, Maheen Hernandez has been drawn to cryptocurrencies ever since Bitcoin first emerged in 2009. Nearly a decade later, Maheen is actively working to spread awareness about cryptocurrencies as well as their impact on the traditional currencies. Appreciate the work? Send a tip to: 0x75395Ea9a42d2742E8d0C798068DeF3590C5Faa5

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