Bitcoin traders are running scared after a brutal 13% price collapse. But smart traders have spotted a lesser-known buy signal. Source: Shutterstock
By CCN Markets: Bitcoin plunged below $10,000 on Thursday after a violent three-day selloff. But now is not the time to panic. If history is anything to go by, now might be the best time to accumulate bitcoin.
Zoom out to the longer-term charts and BTC is wildly ‘oversold’ according to the RSI indicator, which has accurately pinpointed bitcoin buying opportunities in the past. Last time RSI was this low was in November 2018, right before bitcoin’s huge 200 percent run-up.
RSI, or ‘relative strength index’ is used by traders across financial markets to spot market tops and bottoms.
An ‘overbought’ market triggers above 70 on the RSI scale. In other words, the asset has been hyped up and may be due for a pullback.
— HornHairs 🌊 (@CryptoHornHairs) August 14, 2019
On the other end of the scale, falling below 30 indicates an ‘oversold’ market. Sellers are running out of steam, providing a good opportunity for buyers to get back into the market.
Historically, when bitcoin breaches 30 on the 4-hour chart, it is shortly followed by a strong price rise.
Right now, bitcoin’s RSI is below 20 on this particular time scale.