Bitcoin Hits Most Oversold Level Against Gold in 3 Years as BTC Risks Falling Below $100K

This is a daily analysis by CoinDesk analyst and Chartered Market Technician Omkar Godbole.

As bitcoin’s BTC$104,558.42 price wilts, bulls are pinning hopes on a potential rotation of money from the still-rallying gold to its digital counterpart.

These hopes may get a boost as price charts show bitcoin’s per piece dollar-denominated price is now at its most oversold against gold’s per ounce price, according to the widely-tracked 14-day relative strength index (RSI).

The oscillator has dropped to 22.20, dipping just below the July low to levels last seen in November 2022. Readings below 30 are generally interpreted as oversold conditions, indicating that an asset, in this case, BTC, has experienced significant recent selling pressure relative to gold, potentially pushing the ratio between the two to undervalued levels.

However, an oversold RSI reading alone does not guarantee an immediate bullish reversal for BTC against gold. This condition requires confirmation from other technical indicators, such as signs of downtrend exhaustion in price action, bullish divergences, or increased buying volume. Without these supporting signals, the oversold status may persist during strong downward trends, meaning the price could continue falling despite the low RSI level.

As of writing, the bitcoin-gold ratio remains in a pronounced downtrend, marked by prominent red candles that highlight seller dominance amid the recently confirmed death cross—the bearish crossover of the 50- and 200-day simple moving averages (SMA).

Given this bearish technical backdrop, BTC bulls will need to exercise patience and await clearer signs of a trend reversal before expecting a sustained recovery.

The same can be said about BTC’s dollar-denominated price as it looks set to test the lower end of the expanding channel, presently below $100,000.

The 14-day RSI is yet to hit the oversold territory, and the MACD histogram continues to print deeper bars below the sign, both suggesting scope for the ongoing sell-off to continue. Further, prices seem to have found acceptance under the 200-day SMA, which could spur selling by momentum traders.

With prices below the 200-day SMA, the focus is on the lower boundary of the expanding channel, currently at around $99,500.

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The 50-week simple moving average (SMA), currently around $101,700, remains a critical support level for bitcoin. Throughout the bull run starting in early 2023, this moving average has consistently provided a reliable foundation, helping to sustain rallies and propel prices to new highs.