The largest cryptocurrency Bitcoin (BTC) rose to $44,300 on December 20th but then fell to $43,350 during the U.S. stock market’s daily trading session, particularly due to a 1.42% drop in the S&P 500. Since then, Bitcoin has recovered and is once again approaching the $44,000 threshold. Analysts see the decline in U.S. stock markets as a delayed correction due to overbought market conditions and the expiration of certain options that could lead to selling pressure, while suggesting that the pullback is positive.
Bitcoin and Altcoins Rapidly Bounce Back
Following the decline in U.S. stock markets that caused a drop in Bitcoin, the largest cryptocurrency has recovered during the Asian trading session today, nearing the $44,000 level again. According to current data, BTC has risen 2.26% in the last 24 hours, trading at $43,826.
Particularly affected by the drop in Bitcoin, Solana’s SOL and Avalanche‘s AVAX have seen sharp increases with this recovery. SOL has risen over 10% in the last 24 hours, exceeding the $85 level, while AVAX has risen over 9%, surpassing the $45 level.
The cryptocurrency market has been on an uptrend due to the excitement caused by the anticipated approval of a spot Bitcoin ETF in the U.S. and the historically bull-run-associated Bitcoin block reward halving in April 2024.
Bitcoin’s RSI May Be Cooling Off for a New Rally
Despite the rise due to buying pressure, some observers believe the market needs to cool down. Accordingly, after the rally that has been ongoing since November, there are expectations of entering a period of lower volatility as the Christmas holiday approaches and signs of cooling in current market metrics.
Rachel Lin, CEO and co-founder of Synfutures, made a general comment on the market, saying, “This week we saw Bitcoin mainly move between $40,500 and $43,500, and the altcoin king Ethereum (ETH) mainly between $2,150 and $2,250. Both cryptocurrencies are consolidating near their recent highs along with the general market. This sideways movement has allowed the cooling of the Relative Strength Index (RSI) metric for both cryptocurrencies. Two weeks ago, Bitcoin’s RSI was in the overbought zone. Bitcoin’s weekly RSI has now dropped from the level of 82 at the beginning of the month to 75.”
The RSI indicator, which measures the magnitude of price movements, indicates that a value below 30 means an asset’s price has fallen more than its fundamental value, i.e., it is oversold. Values above 70 indicate overbought conditions. As Lin pointed out, the cooling of Bitcoin’s RSI could be signaling preparation for a new rally, which may also indicate a new rally preparation in altcoins.
