Bitcoin‘s monthly Relative Strength Index (RSI) has reached its lowest level, highlighting the impact of the cryptocurrency industry’s persistent volatility.
According to data released by crypto researcher PlanB, Bitcoin’s RSI reached a record low of 43.7 on June 13, which is about 60% lower than the all-time monthly high.
Bitcoin Relative Strength Index. Source: PlanB
Bitcoin on a free wall
The previous record low RSI was established in January 2019 at 43.9, when the leading crypto traded for $3,000.000. In January 2015, a second crucial historical bottom was recorded at RSI 44.6 and a price of $210 per Bitcoin.
Notably, the RSI measure used in technical analysis is a momentum indicator. It analyses the size of the most recent price swings to determine if a cryptocurrency’s price is overbought or oversold.
The oversold state, also viewed as a stochastic oscillator, describes a circumstance in which Bitcoin has traded at a lower price, and a rebound is possible. In most instances, there is no precise timescale for recovery.
It is believed that Bitcoin has reached the oversold territory after failing to maintain advances above $30,000 over the weekend and hitting the lowest RSI level.
The RSI decline is the climax of Bitcoin’s dismal start to the week when the commodity lost nearly 17% of its value. The asset reached an annual low of $23,200. Bitcoin’s weekly chart showed a significant 25% correction.
Bitcoin 7-day price chart. Source: CoinMarketCap
How Bitcoin responds to inflation
Bitcoin’s downward trend might result from inflation reaching an all-time high of 8.6%, with speculation that the Federal Reserve could use the statistics to boost interest rates.
In recent months, Bitcoin has shown hints of stabilising around the $30,000 mark, but alarming inflation data has done nothing to halt its precipitous decline.
Moreover, the decline coincides with projections by several market analysts that the asset may reach a low of less than $20,000. Nonetheless, the market assumes that Bitcoin will see another bull run following the current decline.
Bitcoin’s dramatic price decline has impacted the overall market. The cryptocurrency market has lost more than 55% of its value, falling below $1 trillion for the first time since January 2021.
Most crypto markets continue to trade in the red, but Bitcoin has maintained its 44.56% market share.