The cryptocurrency market has been on a wild ride, driven largely by investors reacting to news of the Covid-19 pandemic. Bitcoin, the world’s most famous crypto asset, has taken its share of ups and downs over the period—but one key indicator suggests it now looks “most oversold” since the virus-driven crash of 2020. This article takes an in-depth look at the data behind this potential turn of events and what it might mean for the future of Bitcoin.
1. Bitcoin Showing Signs of Recovery Despite Covid-19 Challenges
In the midst of the Covid-19 pandemic, the Bitcoin market is bringing the silver lining with signs of recovering prices, increased adoption and their implementation in big financial markets.
Signs of increasing prices: Bitcoin’s price on March 13 has risen to ten thousand dollars with a 14 day consecutive increase since the beginning of the month at seven thousand five hundred and seventy-one dollars. This marks the single largest increase in the last two years. The currency is now up 40% compared to the beginning of the year and more than 55% since the start of February.
Increased adoption and implementation: Even in the midst of Covid-19, many industries are still using Bitcoin technology. Recently, prominent players in the finance sector, such as, Fidelity and E-Trade are investing for the development of Bitcoin technology believing that this is going to be the future of finance. Moreover, along with many online platforms, that currently use Bitcoin currency as payment method, physical stores are now using the currency for payment.
- Fidelity commodities and custody business now provide Bitcoin services.
- PayPal users have access to buy and sell Bitcoin.
- The French Ministry of Finance is reportedly planning to hold its reserves of gold in its own crypto wallet.
- Some large corporate firms are allocating investments to Bitcoin for long-term value.
Though uneven, Bitcoin is slowly building an interesting momentum, providing a little bit of relief and positivity to the current global situation.
2. Technical Indicator Suggests Bitcoin is Oversold
Technically speaking, data suggests that Bitcoin is oversold. Several technical indicators, such as Relative Strength Index (RSI), Moving Average Convergence Divergence (MACD) and Commodity Channel Index (CCI), point to the fact that the cryptocurrency is undervalued relative to trend.
RSI, which is the most popular oscillator in cryptocurrency analysis, is particularly noteworthy given that current market conditions suggest Bitcoin is oversold. The index is already at below 30, indicating an influx of buyers could be imminent for the coin. Similarly, the MACD, which is a lagging indicator, confirms the fact that the coin is trending downwards and suggests a pivot point.
Lastly, the CCI also supports the idea that Bitcoin is currently undervalued, after hovering around the oversold region for the past few days. To put it simply, all three indicators are pointing towards the same conclusion: short-term buying pressure could increase for Bitcoin in the coming days.
3. Reassuring Signal for Investors: Bitcoin at Lower Price Points Than Before the Crash
The recent drop in Bitcoin’s price has resulted in a flurry of price predictions across the industry, with many predicting the potential roller-coaster ride investors might experience over the coming months. However, this dip has residents another getting- a reassuring sign of what could be a gradual recovery.
Prices have dropped to levels unseen since January 2021. A low of around $38,000 on 15th May, 2021, indicating a lack of enthusiasm from institutional investors, or a deliberate tactic to reduce their holdings in Bitcoin. At the same time, mass adoption is on the rise. Ultimately, it provides a great entry point for those who are looking to capitalize on the potential of Bitcoin, now that it is at a lower price point than before the crash.
Ultimately, this could provide a more stable base from which Bitcoin could slowly increase in value. While this may be good news for the average investor, the Bitcoin community may experience a gradual, rather than the volatile, growth it has been used to.
- institutional investors appear to have been reducing their Bitcoin holdings recently
- Bitcoin adoption is at an all-time high
- Lower price point could provide a more stable base for Bitcoin to increase in value
The Bitcoin market has showed great promise in the past several months, and with the oversold indicator having recently reached admirable levels, investors may want to consider re-examining the crypto market before making any major decisions. As always, prospective investors should exercise caution and conduct their own research before jumping into any investments, especially those as volatile as Bitcoin.