It is roughly one month left until the 2020 Bitcoin halving event, something observers regard as a bullish event. However, a key indicator metric now suggests that Bitcoin is historically oversold. In fact, one analyst claims that Bitcoin has never been this oversold prior to a halving event.
Bitcoin RSI indicator suggests Bitcoin is historically oversold
The Bitcoin Relative Strength Index, or Bitcoin RSI, is a 1 to 100 scale traders use as a momentum indicator. Put simply, this means that the index measures recent changes in the price of Bitcoin.
What’s more, this can allow traders to gauge whether an asset, Bitcoin in this case, is oversold or overbought. An overbought asset has a high RSI index rating, while an oversold asset holds a low index score.
Although this index could seem a bit complicated, a high rating essentially indicates “strong” Bitcoin performance. Consequently, a low rating is indicative of “weak” Bitcoin performance. The following chart showcases Bitcoin’s RSI performance over the past nine years.
Bitcoin halving event is just roughly a month away
At the moment, Bitcoin carries a Relative Strenght Index score of 49. Although this is far from the lowest-ever Bitcoin RSI rating, it is the lowest before a Bitcoin halving event. The upcoming 2020 Bitcoin halving will likely occur in the week beginning on May 18th.
In fact, the well-known Twitter crypto analyst “PlanB” points out these lackluster Bitcoin RSI figures. “#bitcoin RSI … never been this weak before the halving,” PlanB wrote on Twitter, before adding “I should have said […] never been this oversold before the halving”.
The fact that Bitcoin is currently displaying such “weak” RSI fundamentals reflects other financial markets’ current performances. Numerous crypto observers point towards the Bitcoin halving as a decidedly bullish market event.
Could Bitcoin’s price soon increase?
As such, it is highly notable that these Bitcoin RSI ratings are so low. For reference, the 12-month RSI numbers were significantly higher before the two previous halvings in 2012 and 2016, with ratings reaching approximately 70.
Nevertheless, this “weak” RSI reading could suggest price increases are due. Even disregarding the exceptional circumstances of the upcoming Bitcoin halving – which will make Bitcoin scarcer – this is the case.
Specifically, overselling an asset depresses its price. This indicates Bitcoin could soon see a bullish upswing in its price performance. We will find out soon enough if this ends up happening seeing as it’s only a month left until the halving.
For example, one recent report suggests Bitcoin could hit a new all-time high later in 2020.
Rasmus Pihl is a writer for Toshi Times by day and an avid follower of the blockchain industry by night. Rasmus holds a Bachelor’s Degree in Marketing from the Gothenburg School of Business, Economics, and Law and runs a Swedish marketing consulting firm. Moreover, when he isn’t writing for Toshi Times, traveling, working or changing the world in some other capacity, Rasmus is more than likely caught up in postgraduate studies.