Bitcoin (BTC) has never been so oversold in the past month before its block reward is cut in half, an important indicator says.
In progress Twitter debate on April 11, the analyst known as PlanB noted that Bitcoin’s Relative Strength Index (RSI) was abnormally low.
Indicator reaches record levels before halving
The oscillator uses a scale of 1 to 100 to determine if Bitcoin is overbought or oversold at a particular price.
The 12-month RSI is currently recording 49 – near its historic lows. Since 2011, according to PlanB data, there have only been two periods below this level, in 2015 and late 2018.
Also, before the previous two halves of Bitcoin in 2012 and 2016, the 12-month RSI was much higher – around 70.
There are about 30 days left before the 2020 halving.
Bitcoin RSI 12 months, 2011-present. Source: PlanB / Twitter
“#Bitcoin RSI … has never been this low before halving,” PlanB said. He then confirmed that by “weakness” he meant that Bitcoin was oversold.
… But BTC is still on target
Halves are a major event for Bitcoin holders, as the amount paid to miners each block decreases by 50%.
This increases the “hardness” of Bitcoin as money by reducing inflation and improving its stock-to-flow ratio – a key measure that PlanB is organizing.
Stock-to-flow has proven to be extremely accurate in predicting Bitcoin price performance. Despite the criticism, the model has not yet failed and even takes into account the spectacular drop in Bitcoin to $ 3,700 in March.
More generally, a weak reading of the RSI reinforces the idea that price increases are due, while the BTC / USD also currently resides in the lower rungs of the stock-to-flow corridor. According to the latter, a spectacular milestone of up to $ 100,000 on average should occur by the end of 2021.