This is a daily analysis from CoinDesk Analyst and Chartered Market Technician Omkar Godbole.
like bitcoin BTC$104,558.42 As prices slump, bulls are pinning their hopes on the potential for money rotation from the still-rising gold to digital currencies.
Those expectations could grow further as price charts show that Bitcoin’s dollar price per piece is currently the most oversold relative to gold’s price per ounce, according to the widely tracked 14-day Relative Strength Index (RSI).
The oscillator has fallen to 22.20, just below the July low and to levels last seen in November 2022. A reading below 30 is generally interpreted as an oversold condition, indicating that the asset (in this case BTC) has recently experienced significant selling pressure relative to gold, potentially pushing the ratio between the two to undervalued levels.
However, the RSI oversold reading alone does not guarantee an immediate bullish reversal in BTC against gold. This situation requires confirmation from other technical indicators, such as signs of downtrend exhaustion, a bullish divergence, or an increase in purchase volume in the price movement. Without these support signals, oversold conditions may persist during a strong downtrend, and the price may continue to fall despite low RSI levels.
BTC/Gold ratio and 14-day RSI. (TradingView/CoinDesk)
At the time of writing, the Bitcoin-to-Gold ratio is still in a noticeable downtrend, marked by a prominent red candlestick highlighting the sellers’ advantage amidst the recently confirmed death cross (a bearish crossover between the 50-day and 200-day simple moving average (SMA)).
Given this bearish technical backdrop, BTC bulls will need to exercise patience and wait for clear signs of a trend reversal before expecting a sustained recovery.
BTC/USD is heading south
The same goes for BTC’s dollar price, which is likely to test the lower end of the expansion channel, which is currently below $100,000.
The 14-day RSI has not yet reached oversold territory, and the MACD histogram continues to show deep bars below the sign, both of which suggest room for continued decline. Additionally, the price appears to be accepted below the 200-day SMA, which could prompt some selling by momentum traders.
This is a daily chart of BTC/USD. (TradingView/CoinDesk)
With the price below the 200-day SMA, all eyes are on the lower end of the expansion channel, which is currently near $99,500.
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The 50-week simple moving average (SMA), currently near $101,700, remains an important support level for Bitcoin. Throughout the bull market that began in early 2023, this moving average has consistently provided a reliable foundation, helping to sustain gains and push prices to new highs.
