Signs are beginning to emerge that bitcoin's sell-off today may be overextended.
After hitting a 70-day low of $6,133 on CoinDesk's Bitcoin Price Index (BPI), bitcoin's relative strength index (RSI) hit a level (26.4) last seen in August of 2016, according to data from the Bitfinex exchange.
The relative strength index, or RSI, is used for identifying overbought and oversold conditions of an asset by "comparing the magnitude of recent gains and losses over a specified time period to measure speed and change of price."
When such levels are hit, the indicator suggests price action is approaching a level below the asset's true value, where a price bounce tends to occur.
BTC/USD rarely hits oversold levels (
But while the oversold indicators tend to signal downtrend exhaustion, bulls might want to still proceed with caution before celebrating as bitcoin's daily RSI has reached lower levels.
According to Bitfinex data, the lowest level recorded since 2013 was 16.1 on August 18th, 2015.
Bitcoin image via Shutterstock
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