Bitcoin (BTC) added to its losses on Dec. 29 with a fresh tumble briefly taking BTC/USD below $46,600.
BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView
RSI flashes “oversold”
Data from Cointelegraph Markets Pro and TradingView showed the pair giving up ground prior to the Wall St. open to increase its 48-hour correction to 10.4%.
The latest move in a familiar pattern of behavior, the market showed that the range in which Bitcoin has acted in December remains very much in play.
As market participants resigned themselves to a lackluster end to the year, popular trader and analyst Scott Melker noticed a possible buying opportunity at current levels on short timeframes.
Bitcoin’s relative strength index (RSI), in addition to other bullish signals, had entered “oversold” territory during the dip in what is a classic buy-in trigger.
“If you are trading small time frames, there’s very solid risk/reward of punting longs here,” he wrote in one of several tweets about the opportunity.
“RSI oversold, hourly about to make a bull div, at the range EQ, low conviction selling on minimal volume.”
Beautiful bullish divergence with oversold RSI on the hourly chart. Small time frame, so I look for the div to build to higher time frames. The 4-hour would be next.
As I said, great potential R/R for a trade here back to the 50Ks. pic.twitter.com/a6T0sPCG6X
— The Wolf Of All Streets (@scottmelker) December 29, 2021
BTC/USD subsequently bounced from the lows to return above $47,000.
Melker had previously defended the retracement from $52,000, arguing that “nothing had changed” overall for rangebound Bitcoin.
Brandt: Panic sell-off “still yet to happen”
Not everyone, however, was optimistic.
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Peter Brandt, the veteran trader who earlier in the week had warned of “fake breakouts” in thin-liquidity markets over the holidays, now eyed room for further downside.
Still yet to happen … https://t.co/o4I4KuVMNf
— Peter Brandt (@PeterLBrandt) December 29, 2021
A phase of “panic capitulation” worse than early December appearing is nonetheless a topic of debate.
Retail investors, others argued, were likely not prone to mass selling at current levels, pointing to increases in small-balance wallets and evidence of strong hodl behavior throughout the year.