Cryptocurrencies are facing price volatility after the Nasdaq Relative Strength Index (RSI) flashed an oversold signal, hinting at a potential market rebound. Risk assets have been under pressure from sellers due to tariffs and fears of a recession. However, as sellers lean towards exhaustion, will Bitcoin and altcoins bounce back, or is further downside on the horizon?
Cryptocurrencies Price Prediction as Nasdaq RSI Hits Oversold
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.
Nasdaq RSI
The S&P 500 index that tracks the performance of the 500 largest trading companies in the US also shows a skewed bearish sentiment. Per indicators, 59.2% of investors are bearish with SubuTrade identifying that bears have dominated S&P 500 for three weeks in a row, marking 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 Nasdaq and the S&P 500 close correlation with risk assets, these dips could trigger a price rebound for cryptocurrencies as they signal that the US stock market may have bottomed.
Will Bitcoin Price Lead a Crypto Market Recovery?
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.
BTC/USD: 1-day Chart
Will Altcoins Bounce Back?
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.
Altcoin Season Index
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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