Bitcoin’s performance in May put the first cryptocurrency in conditions the market has not seen before as it has painted eight consecutive negative weeks. But while some investors are manically dropping their holdings, others believe Bitcoin is slowly becoming oversold and may hit a retracement soon.
Never seen before
Eight consecutive weeks of losses on Bitcoin is something that traders and investors have not seen before, but according to the BTC chart, it results from a massive rally started on Bitcoin back in November 2020.
Back at the ATH, Bitcoin has shown almost 300% of YTD gain, its price reaching almost $70,000. The run between 2020 and 2021 was the longest bullrun the first cryptocurrency saw in its trading history. The 2020-2021 rally was almost two times longer than the run we saw back in 2017.
Daily and intraday timeframes already suggest that Bitcoin has reached the oversold zone as it has been under heavy selling pressure since the beginning of the year, but on the weekly chart, BTC just barely becomes oversold after being heavily overbought back in November.
While the number of consecutive weekly candles could be considered as an oversold/overbought indicator, the main way of determining the state of the market is the Relative Strength Index.
According to the technical indicator, RSI is barely moving under the value of 35, which makes the analyzed asset barely oversold and may not be an indicator of an immediate reversal.
The closest support line for Bitcoin is the 200-week moving average located at around $27,000. At press time, Bitcoin tests the $29,000 support and, in case of a breakout, could move directly to the abovementioned support.