- Bitcoin’s daily RSI has plunged to the 21–24 range, a level historically associated with significant local bottoms and trend exhaustion.
- Analyst Scott Melker identifies a daily close above this level as the primary confirmation needed to validate a high-probability bullish reversal.
- Following a 40% drawdown from the $126,000 peak, on-chain data shows diminishing exchange inflows, suggesting that the massive spot selling pressure is finally waning.
The volatile world of cryptocurrency, Bitcoin ($BTC) has been under intense pressure, experiencing a sharp decline that has tested the resolve of even the most seasoned investors. Prominent crypto analyst Scott Melker, known as “The Wolf of All Streets,” shared a technical analysis on X that has captured the attention of the market.
Melker highlighted Bitcoin’s daily chart, where the Relative Strength Index (RSI) is deeply oversold, signaling potential exhaustion among sellers. He noted bullish divergences forming across multiple timeframes, particularly on the 4-hour chart, and emphasized that a daily close below $76,888 without further price collapse could confirm an oversold bullish divergence—his favorite indicator for spotting bottoms.
Visualizing the Crash: From $92,000 to the $74,000 Local Low
The chart accompanying Melker’s post, sourced from TradingView, illustrates Bitcoin’s price trajectory from late January into early February 2026. Starting around $92,000, the price line trends downward, breaking below a horizontal support at $76,888 on February 3. Volume bars show fluctuating activity, with a notable spike during the drop, while the RSI (14-period) hovers around 21-24, well into oversold territory below 30. A purple arrow points to a “?” mark at the chart’s end, underscoring the uncertainty but also the potential for reversal.
This analysis comes amid a broader market correction. Bitcoin plunged to a one-year low near $74,000 on February 2, down over 40% from its all-time high of around $126,000 in late 2025. BTC trades around $76,394, reflecting a modest rebound but still down 1.96% in the past day. Factors contributing to the dip include sustained spot selling, reduced ETF inflows, and macroeconomic pressures like rising interest rates and geopolitical tensions.
Community Sentiment: Bullish Divergence vs. “Getting Oversolder”
Community reactions on X echo Melker’s caution. Users like pointed out similar oversold RSI levels leading to relief bounces in past trends, while stressed patience amid the downtrend. On-chain data from Glassnode reveals persistent sell pressure across spot and derivatives markets, but diminishing exchange inflows suggest downside momentum may wane.
While oversold conditions don’t guarantee an immediate reversal—Bitcoin could “get oversolder,” as one user quipped—historical precedents show such setups often precede multi-week rallies. For instance, similar divergences in early 2025 led to a 20% bounce.
Investors should monitor key levels: support at $74,000 and resistance at $78,000-$80,000. With prediction markets pricing BTC below $80,000 at 93% odds for February, the coming days will be crucial. As Melker advises, this signal takes time to develop, urging traders to avoid knee-jerk reactions in favor of disciplined strategies.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. CoinCryptoNewz is not responsible for any losses incurred. Readers should do their own research before making financial decisions.
