Bitcoin’s price struggles persist following the recent flash crash, with an analyst eyeing a potential “V-shape” rebound as the Relative Strength Index (RSI) reaches its lowest point in five years.
Ongoing Sideways BTC Performance
Bitcoin’s price remained stagnant on August 22, with $26,000 serving as a focal point for intraday trading. This marks the third consecutive day of sideways movement for BTC/USD. Despite being heavily oversold based on RSI readings, Bitcoin hasn’t shown signs of recovery from levels seen two months ago. Traders have playfully referred to the choppy price action as the “death chop.”
BTC/USD 1-hour chart. Source: TradingView
Liquidity Dynamics and Potential Outcomes
Liquidity analysis of the Binance BTC/USD order book reveals a lack of substantial liquidity, increasing the possibility of a sharp price movement in either direction. The market appears to be waiting to see if more buying or selling pressure will come into play. A lower low (LL) could risk breaching the $20,000 support, potentially leading to sub-$20,000 levels.
BTC/USD order book data for Binance annotated chart. Source: Material Indicators/X
RSI Signals “V-Shape Recovery” Prospects
Analysts point out heavily oversold signals on RSI, hinting at a possible “V-shape recovery” trend. Michaël van de Poppe, CEO of trading firm Eight, noted that similar situations in the past have resulted in recoveries and the establishment of higher price floors. Van de Poppe suggested that Bitcoin could target $26,500 or beyond.
Traders draw parallels between the current Bitcoin price action and that of September 2020, just before the onset of the previous bull market. Some anticipate a gradual upward trend, similar to the past, leading to potential price gains.