Bitcoin is trading nearly 50% below its all-time high of over $126,000, but historical data suggests a potential reversal. Analyst Merlijn The Trader notes that Bitcoin’s weekly RSI has reached an oversold state for only the fourth time in its history, with previous instances leading to rallies of up to 2,700%. The market sentiment remains in “extreme fear,” a condition that has historically preceded upward movements.
Bitcoin’s price remains nearly 50% below its all-time high of over $126,000, despite outperforming gold since the outbreak of conflict in the Middle East nearly a month ago. This continued sell-off has led some analysts to watch for a potential major reversal based on historical patterns.
Popular trader Merlijn The Trader highlighted that Bitcoin’s weekly RSI has hit oversold levels for just the fourth time in the asset’s history. “BITCOIN WEEKLY RSI IS OVERSOLD FOR THE FOURTH TIME IN HISTORY,” he stated in a recent tweet, outlining the significant gains that followed the three prior occurrences.
The historical rallies he cited include a 2,700% surge in 2019, an 1,800% rally in 2020, and a 350% rally in 2022. Merlijn suggested that if Bitcoin holds the $65,000 support level on the weekly chart, it could complete a corrective wave and target a new all-time high of $140,000.
If Bitcoin falls below $65,000, however, Merlijn indicated that “oversold gets more oversold first.” This analysis comes as the broader market sentiment remains fearful despite a recent price jump. Bitcoin surged from $68,000 to nearly $72,000 in minutes following a speech by former President Donald Trump on the war against Iran.
Data from Alternative.me shows the Bitcoin Fear and Greed Index has been in an “extreme fear” state for days, though it has recovered slightly from weekend lows. This prolonged period of fear is seen by some observers as a historically bullish signal for the cryptocurrency market.
