Bitcoin has experienced a strong drop in the past 48 hours after a strong rally to start the week. The leading cryptocurrency now changes hands for $10,300 after it underwent a strong $2,000 correction that brought it as low as $9,990 on Friday morning.
There are crucial reasons why the cryptocurrency could soon undergo a strong bounce.
Traders are critically eyeing the $10,500 as we head into the weekly close due to that level’s macro importance to BTC’s price action. Bitcoin should bounce soon if it is to maintain its medium-term uptrend.
Related Reading: These 3 Trends Suggest BTC Is Poised to Bounce After $1,000 Drop
Why Bitcoin Could Soon Bounce
First and foremost, Bitcoin is extremely oversold, with the severity of this drop reminding many of the March crash. One trader shared the chart below, which suggests that BTC hasn’t been this technically oversold since March’s black swan crash:
“Alright, stopped out on both $BTC & $ETH trades (of course). It think this is just one of those times when I have to admit defeat. By the way: the RSI hasn’t been this oversold since the black swan crash. Crazy stuff.”
Chart of BTC's price action since the start of 2020 with RSi analysis by crypto trader Byzantine General (@Byzgeneral on Twitter). Chart from TradingView.com
Secondly, one trader’s proprietary indicator that last printed a “buy” signal 100 days ago has once again been triggered.
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