Bitcoin (BTC) traders expected a short-term bounce as a key BTC price metric sank to its lowest levels in almost three years. Data from Cointelegraph Markets Pro and TradingView revealed extremely “oversold” conditions on the BTC/USD relative strength index (RSI).
Key takeaways:
Bitcoin’s “most oversold” RSI, historically tied to major BTC price rallies, suggests a price reversal in the short term.
Bitcoin’s network value-to-transaction ratio shows it is undervalued at current levels.
BTC price dip sends RSI back to 2023
Bitcoin’s 36% drop to $80,500 on Nov. 21 from its all-time high of $126,000 has significantly impacted high-time frame RSI.
Related: Bitcoin rebounds on Japan rate hike as Arthur Hayes sees dollar at 200 yen
On the weekly chart, the RSI fell from local highs of 64 in September to 35 at the time of writing, levels last seen in January 2023 when Bitcoin traded around $15,500-$17,000.
“Historically, when the weekly RSI tags this level, it’s time to pay attention,” said analyst Jelle in an X post on Friday, adding:
“Either we’re close to a bottom, or we’re in for a lot more pain soon enough.”
RSI measures trend strength and contains three key levels for observers: the 30 oversold boundary, the 50 midpoint and the 70 overbought threshold.
When the price crosses these levels, depending on the direction, traders can make inferences about the future of a given uptrend or downtrend. During bull markets, ETH regularly spends extended periods in overbought territory.
“Bitcoin looks the most oversold it’s been all cycle,” said Mister Crypto in a Friday X post, referring to the Stochastic RSI, also shown in the two-week chart below.
“A bounce is very likely.”
Not all traders were quick to suggest that the BTC price was due for a relief bounce due to the overbought conditions.
“When $BTC was this oversold in 2018, it dumped another 49%. In 2022, it dumped another 58%,” said YouTuber Lark Davis in an X post, adding that Bitcoin could go another 40% lower.
“These bottoms can take way longer to form than you think, and they can bring more pain than you think.”
As Cointelegraph reported, a heavy concentration of liquidity clusters above the spot price supports the case of a possible short-term BTC/USD reversal.
Bitcoin is currently undervalued at $87,000
Onchain data provider CryptoQuant has explained how Bitcoin could currently be undervalued based on its network value to transaction (NVT), a metric that compares market cap to its actual network usage.
The chart below shows that Bitcoin’s NVT Golden Cross dropped to a historically depressed level near -0.6, “a zone that reflects a structural undervaluation of the network,” CryptoQuant analyst MorenoDV_ said in his latest Quicktake analysis.
The metric has increased slightly to -0.32 over the last few days, an indication that the price is beginning to realign with transaction-driven fundamentals after a sharp valuation discount.
However, “indicator remains in negative territory, meaning Bitcoin is still priced conservatively relative to its network utility,” the analyst said, adding:
“The present setup points to a market transitioning from deep undervaluation toward equilibrium, a phase historically associated with accumulation and structurally healthier price discovery.”
“Price is now recovering, but valuation is still discounted relative to usage,” said analyst CryptosRus in response to MorenoDV_ analysis, adding:
“That setup has only shown up a handful of times in Bitcoin’s history.”
Note that the last two times when the NVT Golden Cross reached such levels were in April 2025 and at the bottom of the 2022 bear market, preceding 60% and 350% BTC price rallies, respectively.
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