A relentless grind lower for bitcoin has pushed a closely watched technical indicator to its lowest level in four years.
According to Rob Sluymer, technical analyst at Fundstrat Global Advisors, the weekly Relative Strength Index, or RSI — a measure of the magnitude of recent price changes — has dipped below 30 for the first time since January 2015.
The RSI is measured on a scale of 0 to 100 with a reading below 30 considered oversold, while a reading above 70 considered overbought. “BTC is again at historically oversold levels and is retesting important support that needs to hold to suggest a bottom is developing,” wrote Sluymer in a research note to clients.
While the 2015 fall into oversold territory marked a cycle low for the cryptocurrency, it took it the best part of the year to begin a move higher, suggesting bitcoin enthusiasts are not out of the woods just yet. In fact, should the December lows give way, another 20% decline could be on the cards, says Sluymer. “A break below the Q4 lows at BTC 3100 would imply a decline to 2270 while a move above BTC 4200 is needed to signal BTC is beginning to improve,” he wrote.
has not closed above $4,200 since Nov. 29, 2018.
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But some are more optimistic, believing the aptly named crypto winter is nearing an end. A recent Finder.com survey of industry participants found the average 2019 year-end price prediction for bitcoin was $6,549, a level not seen since October.
“As it stays here, its stability will at some point foster positive gains as development continues,” said Joe Raczynski, a Washington D.C.-based blockchain consultant, whose year-end price target is $8,000. Raczynski added that any global instability would see investors flock to bitcoin.
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However, for chart watchers, the outlook remains bleak. The cryptocurrency set a record in January, logging seven consecutive losing months and is on track to close out its tenth losing week over the past 14.
“A successful retest of the Q4 lows developing into a double bottom price pattern remains a possibility, but the price structure for most cryptocurrencies remains weak and appears vulnerable to a pending breakdown to lower lows,” wrote Sluymer.
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