Bitcoin has just sent a signal that the market cannot ignore. After a lightning spell above $70,000, Bitcoin suddenly corrected in a context of fragile liquidity, leading to a wave of massive liquidations. However, beyond this one-off volatility, a key indicator draws attention: the weekly RSI falls to a level observed in the middle of the 2022 bear market. Between structural fragility and possible echo of the previous cycle, the market finds itself at a strategic tipping point.
In brief
- Bitcoin briefly exceeds $70,000 before correcting sharply amid reduced liquidity.
- 120 million dollars of positions are liquidated in four hours during a session marked by shallow market depth.
- Price movements are referred to as “breakouts and shakeouts”, illustrating successive bullish and bearish traps.
- The weekly RSI falls to 27.8, its lowest level since June 2022, in the oversold zone.
Reduced liquidity
In a context of the brutal fall of the flagship crypto and the closure of Wall Street for Presidents' Day, bitcoin has evolved in thinning order books, favoring sudden and opportunistic movements.
The flash move above $70,000 was quickly erased, triggering a series of massive selloffs. Data available reveal :
- BTC peaks at $70,000 before rapid retracement;
- $120 million in crypto liquidations in just four hours;
- Liquidity blocks absorbed then replaced by new sell walls above the price;
- A sequence qualified by Material Indicators as “breakouts and shakeouts”.
This configuration reflects a market more vulnerable to the movements of players with large volumes. With shallower books, simultaneous squeezes on long and short positions become more frequent.
Trader Daan Crypto Trades sums up the current climate: “volatility is significantly higher, a phenomenon that has also been observed in most other markets recently. Global markets are clearly not going through a period of calm”.
The observed phenomenon is therefore not the result of a simple isolated incident, but of a global environment marked by increased volatility.
Weekly RSI Returns to 2022 Bear Market Levels
Beyond these rapid movements, a basic indicator is now attracting attention: the weekly RSI. Keith Alan, co-founder of Material Indicators, sees similarities to the previous down cycle.
He declares: “I see more and more similarities with 2022 on the BTC chart, as the weekly RSI approaches levels historically associated, once per cycle, with low points in the oversold zone”. The indicator showed a level of 27.8 on Monday, its lowest since June 2022, below the threshold of 30 traditionally considered an oversold zone.
The analyst recalls that during the 2015 and 2018 cycles, a weekly RSI in an oversold zone marked a macroeconomic low point. On the other hand, in 2022, this signal had preceded five months of consolidation before the establishment of a real market floor for bitcoin.
Keith Alan also qualifies any hasty projection: “This does not mean that the development will necessarily have to be the same this time, but it is relevant to carefully monitor similarities and divergences in market structure in order to refine expectations”. The signal must therefore be monitored, without automatic conclusion.
In the short term, volatility remains the main driver of the market. In the longer term, the technical signal calls for caution without deciding the future scenario. If history offers benchmarks, it never dictates the outcome. Now, the price of bitcoin is moving at a level where each movement could redefine the balance of the cycle.
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