Bitcoin (BTC) experienced a sharp 6.6% drop, resulting in an 11% market cap loss. The trigger for this plunge came from rising concerns surrounding Trump’s trade tariffs, which sent tremors throughout global financial markets and sparked fear in the cryptocurrency sector. However, Bitcoin has since staged a remarkable recovery, bouncing back with an 8% gain and reclaiming key support levels. As the market stabilizes, many traders are now asking: Is Bitcoin poised 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 Vital Indicator of Market Sentiment
The Relative Strength Index (RSI) is one of the most important tools for understanding Bitcoin’s momentum and potential price action. This oscillator measures whether an asset is overbought or oversold. Readings below 30 indicate oversold conditions, while anything above 70 signals overbought. On February 3rd, Bitcoin’s 4-hour RSI plummeted to a concerning 19.76, its lowest since January. This mirrored previous sharp declines in December and August, when RSI values dipped to 25 and 16, which were followed by further price declines.
What’s Next for Bitcoin?
As of now, Bitcoin’s price remains within a range between $92k and $106.2k, with key support zones acting as safety nets. The $99.1k mid-range level has proven resilient, allowing Bitcoin to bounce back to $102.5k. Despite a minor 3% dip, Bitcoin has stayed above important support levels, which signals underlying strength.
However, the On-Balance Volume (OBV) has made a lower low, suggesting an increase in selling pressure over the past 36 hours. This could indicate that bearish sentiment is still in play. Liquidation heatmaps show that Bitcoin may face resistance around $97.5k and $94k, posing challenges for further upward movement.
Also Read: Bitcoin Futures Contracts Explained: How They Work, Benefits, and Risks
In conclusion, while Bitcoin’s recovery from oversold conditions is promising, investors should remain cautious. A potential dip to the $94k-$95k range could still occur before a more substantial recovery takes hold. Traders should watch key support levels closely for any signs of further strength or continued volatility.
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 CoinBrief.io. Before making any investment decisions, you should always conduct your own research. Coin Brief is not responsible for any financial losses.
