Bitcoin RSI Hits Extreme Zone: Why Indicators Are Screaming ‘Oversold’

The cryptocurrency market is navigating through turbulent waters. On February 3, 2026, Bitcoin briefly plunged below $73,000, hitting a low of $72,884—its weakest level since November 2024. Against this backdrop of heavy selling pressure, a major technical indicator has just flashed: the RSI (Relative Strength Index) has dropped below the 30 threshold, signaling extreme oversold conditions.

This signal, closely watched by traders worldwide, raises a critical question: has the market corrected too far, and is a significant bounce imminent? Or is this oversold reading merely the prelude to a deeper correction? Here’s a comprehensive analysis of the indicators, the macroeconomic backdrop, and the short-term outlook.

What Is the RSI and Why Does the 30 Threshold Matter?

The Relative Strength Index is a momentum indicator invented in 1978 by engineer and technical analyst J. Welles Wilder Jr. It measures the speed and magnitude of price movements over a standard 14-day period, producing a value that oscillates between 0 and 100.

In practical terms, an RSI below 30 means that price losses have significantly outweighed gains over the past 14 days. This is what analysts call an oversold condition: the market has fallen too fast, too hard relative to its recent norms. Conversely, an RSI above 70 indicates overbought conditions.

Historically, the market tends to bounce when the RSI shows oversold conditions. The logic is straightforward: enough traders and algorithms interpret this signal as a buying opportunity, which turns it into a self-fulfilling prophecy. Buy orders pour in, and the bounce actually materializes.

This phenomenon is especially powerful when the oversold signal coincides with a major technical support level—a price zone where buyers have historically stepped in to halt the decline.

The $73,000–$75,000 Support Zone: A Historic Battleground

And that’s precisely where Bitcoin finds itself right now. The RSI has dropped below 30 while the price hovers around the critical $73,000–$75,000 support zone. This range is far from arbitrary—it has played a decisive role on multiple occasions over the past two years.

In April 2025, Bitcoin’s correction came to a halt in this zone. Even earlier, during the early 2024 bull rally, prices stalled at this very level before eventually breaking through. This makes it a genuine battleground between buyers and sellers—a major technical pivot point.

On February 3, 2026, BTC briefly pierced this zone, touching $72,884 before quickly rebounding above $75,000. This lower wick followed by a bounce is often interpreted as a sign of strong demand at these levels. At the time of writing, Bitcoin is trading between $76,000 and $78,000, up roughly 5% from its weekly lows.

A Technical Bounce, Not Yet a Reversal

However, it’s crucial to put things in perspective: an oversold RSI bounce does not automatically signal the start of a new bull market. As CoinDesk analysts point out, oversold readings have historically produced only modest bounces during broader downtrends, as seen in 2022. The last oversold signal, in November 2025, led to several weeks of consolidation before another leg down.

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The Macro Backdrop: The Dollar Index Complicates Recovery

Beyond pure technical analysis, the macroeconomic context plays a crucial role. The Dollar Index (DXY), which measures the greenback’s value against a basket of major currencies, surged 1.5% over two days to reach 97.60—its best two-session performance in nine months.

A strong dollar is generally unfavorable for risk assets like Bitcoin. It raises the opportunity cost of holding dollar-denominated assets and is often accompanied by tighter global financial conditions, discouraging risk-taking across markets.

This dollar resurgence is fueled by the nomination of Kevin Warsh as the next chair of the U.S. Federal Reserve. Known as a hawk during his tenure as a Fed governor between 2006 and 2011, Warsh is perceived as less inclined to aggressively cut interest rates. ING analysts note that “the dollar looks healthier” since the nomination, and that the greenback devaluation trade is starting to unwind.

Additionally, the release of critical U.S. economic data—notably the nonfarm payrolls report—has been delayed due to a partial federal government shutdown. This added uncertainty is keeping investors on the defensive.

Flows and Positioning: A Market on Guard

Flow data confirms the prevailing caution. According to CoinShares, crypto investment products recorded $1.7 billion in net outflows last week, marking the second consecutive week of massive redemptions. Bitcoin funds accounted for the bulk of withdrawals, followed by Ethereum funds and other major tokens.

On the on-chain front, indicators reveal increasingly defensive positioning. Long-term Bitcoin holders have moved into unrealized losses—a condition that CryptoQuant associates with “extremely bearish” phases that can nonetheless precede local bottoms.

In the options market, early signs suggest that some traders are beginning to position for a potential stabilization. This duality between prevailing pessimism and early contrarian signals is typical of possible turning-point zones.

Ethereum and Altcoins: The Carnage Continues

Bitcoin isn’t suffering alone. Ethereum has plunged 24.5% in one week, trading around $2,280 after testing the critical $2,200 support level. The 9-day exponential moving average, sitting at $2,499, is acting as dynamic resistance, reinforcing the short-term bearish bias.

Despite this brutal correction, derivatives data shows that traders remain predominantly positioned long. The long/short ratio on Binance ETH/USDT stands at 2.67 for standard accounts and 3.71 for top traders, suggesting persistent bullish conviction despite falling prices.

The total crypto market capitalization has stabilized around $2.65 trillion, up 1.7% over 24 hours, following the sharp disruptions earlier in the week. BNB led gains among altcoins, supported by renewed activity from Changpeng Zhao, while Dogecoin benefited from fresh mentions by Elon Musk.

Outlook: What to Watch in the Coming Days

Bitcoin’s current situation presents a textbook case for technical analysts: an oversold RSI combined with a major historical support level creates the theoretical conditions for a significant bounce. But several factors could derail this optimistic scenario:

• The dollar: If the DXY continues to climb, pressure on risk assets will persist.
• Macro data: The delayed release of the U.S. jobs report maintains uncertainty.
• Institutional flows: As long as fund outflows continue, the floor remains fragile.
• Technical support: A clean break below $73,000 would open the door to $68,000—the November 2024 level.

As Rob Hadick, partner at Dragonfly Capital, puts it: “The BTC decline doesn’t seem tied to any single factor. Crypto and Bitcoin prices have always been volatile.” He notes, however, that “crypto market fundamentals remain solid, especially with the continued traction of stablecoins and tokenized assets,” and that “the medium- to long-term outlook remains constructive.”

In summary, the oversold RSI signal is an important warning sign, but not a guaranteed bounce trigger. Savvy traders will watch Bitcoin’s ability to defend the $73,000–$75,000 support zone in the coming days, while keeping a close eye on the dollar and U.S. macroeconomic data. Patience and risk management remain the best allies in such an uncertain environment.