Bitcoin Hits Third-Most Oversold Level Ever, Analyst Warns of Potential Violent Upside

Bitcoin is showing extreme oversold conditions according to key market indicators, signaling a possible sharp rebound in price as investor sentiment reaches a rare low.

Summary

Technical indicators suggest Bitcoin is trading at historically oversold levels, making a strong upside move increasingly plausible.

Analysts point to the Relative Strength Index (RSI) on the weekly chart, which has fallen to levels only seen twice before in Bitcoin’s history. Such readings often precede major corrective rallies.

Market observers note that despite macro uncertainty, investor positioning is heavily skewed toward pessimism, increasing the potential for a sudden spike in buying pressure once sentiment shifts.

RSI Signals Market Extremes

The Relative Strength Index, a popular momentum indicator, shows Bitcoin nearing 20 on the weekly chart, marking one of the lowest readings since 2013 and 2015. Historically, these oversold conditions have triggered multi-week rallies.

Traders highlight that extreme RSI readings coincide with periods of panic selling, but they also provide opportunities for contrarian investors who can tolerate high volatility.

Macro Environment Adds Pressure

Broader market factors, including tech equity weakness and rising interest rates, have intensified the selloff in risk assets, amplifying Bitcoin’s oversold condition. However, these same factors could catalyze a sharp recovery if risk-on sentiment returns.

Analysts caution that while oversold conditions improve the odds of a rebound, the timing and magnitude remain uncertain. Investors should be prepared for potential volatility in either direction.

Potential Upside Moves

Some market strategists suggest Bitcoin could see a violent upside swing if buying pressure returns, potentially reclaiming key support and resistance levels lost during the selloff.

Bitcoin is currently trading near $69,500, with short-term support around $67,000 and resistance near $75,000. If historical oversold patterns repeat, a rapid rally could follow.

Traders are advised to watch momentum indicators closely, as a shift from extreme pessimism to buying enthusiasm can happen quickly, creating opportunities for both short-term and long-term market participants.