2022-11-23 09:00:00

Analysis Of The Cryptocurrency Market: Bitcoin & Ether Nearing Oversold Levels

It’s useful to review what the relative performance index, a fundamental indicator, has indicated in the past to see whether that matters.

 

When measured using the RSI, the values of bitcoin and ether, which have fallen 4% as well as 12% over the past seven days respectively, are getting close to oversold territory. Whether or not that even counts are the question.

 

The relative importance index, sometimes known as RSI, is a frequently employed metric in technical analysis. They have routinely used it themselves, with the exception that they have usually used a 10-day RSI rather than the more common 14-day RSI.

 

The RSI’s relatively simple list of “rules” contributes to some of its appeals. They aren’t foolproof, but they do make it possible for both newcomers and seasoned professionals to rapidly assess an asset’s price level and pinpoint where it lies on the spectrum between cheap and expensive.

 

Generally speaking, an asset is “overbought” when the RSI reading is 70 or higher, and it is “oversold” when the reading is 30 or lower. For BTC and ETH, the RSI levels are approximately 32 & 34, correspondingly.

 

The sales have progressed too far, thus traders utilizing the RSI alone may be seeking to open up long bets shortly. However, how may this have operated over past centuries?

 

Reviewing pricing information from November 2017 with ETH and January 2015 with BTC reveals the following: (Note that the start date’s discrepancy is due to the availability of ETH price information.)

 

BTC’s RSI has dipped under 30 106 times. After a reading below 30, the dividend yields after one day, 7 days, and 30 days have indeed been 1.3%, 3.8%, and 7.2%, correspondingly.

 

This information demonstrates that investors have profited in the past by purchasing ETH and BTC at the present RSI levels. However, they performed better when purchasing when the RSI dropped below 30.

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