Cryptocurrencies Are Facing Price Volatility After the Nasdaq Relative Strength Index (RSI) Flashed an Oversold Signal

The Nasdaq Composite Index has once again hit the oversold region, with its RSI dropping to 30. Popular analyst zerohedge noted that an oversold RSI has historically triggered strong rebounds for this index.

Cryptocurrencies are facing price volatility as the Nasdaq Relative Strength Index (RSI) flashed an oversold signal, hinting at a potential market rebound. However, with risk assets still under pressure from sellers due to tariffs and fears of a recession, will Bitcoin and altcoins bounce back, or is further downside on the horizon?

Nasdaq RSI Flashes Oversold as S&P 500 Shows Extreme Bearish Sentiment

The Nasdaq Composite Index has once again hit the oversold region, with its RSI dropping to 30. Popular analyst zerohedge noted that an oversold RSI has historically triggered strong rebounds for this index.

Each time the RSI dipped to 30, it was followed by a swift recovery. However, it's crucial to note that while the oversold RSI on Nasdaq signals potential buying opportunities, the S&P 500 index, which tracks the performance of the 500 largest trading companies in the US, shows a skewed bearish sentiment.

According to SubuTrade, 59.2% of investors are bearish. Additionally, bears have dominated S&P 500 for three weeks in a row, which is the first time it has happened since 2009.

Historically, an extreme bearish sentiment has often coincided with major market bottoms, as excessive fear tends to signal capitulation before a rebound.

Given the close correlation between Nasdaq and risk assets, these dips could trigger a price rebound for cryptocurrencies as they signal that the US stock market may have reached a local bottom and could bounce back.

Bitcoin Price Attempts Recovery as Bulls Need to Act Now

Bitcoin price today trades at $83,200 after a slight 1% gain in 24 hours. Besides the bullish signs from the US stock market other macro factors hint at a potential upswing in the near time that could stir price gains for other cryptocurrencies.

The US CPI index showed cooling inflation and catalyzed crypto market gains. Additionally, global liquidity is accelerating, and going by past patterns, this has always preceded a bullish breakout for BTC.

However, Bitcoin price faces headwinds in its attempt at a recovery. After its recent downtrend, BTC price broke below the 200-day EMA, and it is now retesting this level as resistance. Bulls need to step in here to get BTC back above the 200-day EMA, but the MFI index shows sellers are still dominant.

If Bitcoin price fails to break this level, it could enter a consolidation like it happened between August and September 2024.

Will Altcoins Recover From Fresh Lows?

The altcoin season index has plunged to a six-month low, signaling Bitcoin’s price dominance over other cryptocurrencies. The drop comes after Ethereum price fell to $1,800 for the first time since 2023.

The falling index suggests that investors are rotating capital from altcoins to Bitcoin to mitigate risk due to uncertainty. If this continues, it may affect the altcoin market recovery. However, as the US stock market hints at a bottom, altcoins may soon recover and potentially reclaim previous highs.

To sum up, cryptocurrencies may be poised to recover after the Nasdaq and S&P 500 indexes suggested that the US stock market may have reached a local bottom and could bounce back. If this happens, Bitcoin and altcoins could see fresh demand and avert further dips.

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