Bitcoin Drops 4% as Analyst Predicts Local Bottom at $78,000-$71,700

An analyst who accurately predicted Bitcoin’s correction in the first quarter of 2024 has indicated that the cryptocurrency is nearing a local bottom based on a technical momentum indicator. The pseudonymous analyst, Rekt Capital, shared this insight with his 542,000 followers on the social media platform X. According to Rekt Capital, Bitcoin’s relative strength index (RSI) on the daily chart has dropped into oversold territory, a condition that traders closely monitor for potential trend reversals.

Historical data shows that since November 2022, Bitcoin has experienced strong rallies whenever its RSI reached oversold levels on the daily time frame. Rekt Capital noted that Bitcoin’s daily RSI equaled the levels seen during the 2022 bear market when the price crashed into the high $70,000s. The only lower daily RSI in this cycle was recorded in August 2023. Throughout this cycle, each time the RSI dropped below 25, it resulted in a trend reversal to the upside over time.

Based on this analysis, Rekt Capital suggests that Bitcoin may find a solid bottom between $78,000 and $71,700. The trader also pointed out that Bitcoin has formed a potential double-bottom pattern, similar to the layer-1 protocol Cronos (CRO). A double-bottom structure is traditionally viewed as a bullish reversal pattern, indicating that the asset has found a price floor and is preparing for an upside burst. At the time of writing, CRO was trading at $0.80, having potentially broken out from its own double-bottom pattern.

Rekt Capital’s analysis suggests that other altcoins are also in varying phases of their respective double-bottom formations, which could further support a bullish reversal for Bitcoin. Despite the potential for a reversal, Bitcoin was trading at $82,207, down over 4% in the past day. This analysis provides a technical perspective on Bitcoin’s current market conditions and potential future movements, highlighting the importance of monitoring key indicators such as the RSI for trend reversals.