A popular cryptocurrency analyst going by Rekt Capital on the microblogging platform Twitter, has suggested that a key technical Bitcoin ($BTC) indicator is entering a period that has historically led to “outsized returns on investment” for long-term investors.
In a tweet shared with Rekt Capital’s over 320,000 followers, the analyst noted that Bitcoin’s relative strength index (RSI) is approaching an area that led to outsized returns in the past, with previous reversals occurring near this area in January 2015, December 2018, and March 2020.
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According to Investopedia, the relative strength index is a momentum indicator used in technical analysis that measures the “magnitude of recent price changes to evaluate overbought or oversold conditions in the price of a stock or other asset.”
Traditionally, an RSI below 30 indicates an asset is undervalued or oversold, while an RSI above 70 shows that the asset is overvalued or overbought. Rekt Capital’s chart shows BTC is entering the 30 range, showing it is now oversold and near “bear market bottoms” as the previous times it entered the range.
As CryptoGlobe reported, retail investors have been taking advantage of Bitcoin’s recent price dip toward the $30,000 mark and have been accumulating the cryptocurrency, even as large amounts of it are sent to exchanges to be sold off.
The price of BTC dropped below the $30,000 mark earlier this month amid the collapse of Terraform Labs’ ecosystem after the UST stablecoin lost its peg amid a bank run triggered by a major sell-off on decentralized finance protocol Curve. CryptoCompare data shows that, at the time of writing, BTC is trading at around $29,400.
Notably, Bloomberg commodity strategist Mike McGlone has suggested that the price of leading cryptocurrencies Bitcoin and Ethereum will outperform equities markets in the future as the volatility of the flagship cryptocurrency keeps dropping.
McGlone first noted that he believes Bitcoin will be seeing more “responsive buying below the market” as the “asset that went up the most in the last 5-10 years is going to come back as the Fed [Federal Reserve] hammers down.”
The views and opinions expressed by the author, or any people mentioned in this article, are for informational purposes only, and they do not constitute financial, investment, or other advice. Investing in or trading cryptoassets comes with a risk of financial loss.
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