This Oversold Signal Has Triggered 350%, 1,800%, and 2,700% Bitcoin Surges Before

Although it has performed relatively well since the war in the Middle East broke out nearly a month ago, and has dwarfed gold in terms of gains within this period, bitcoin is far from its best shape observed in October last year.

The cryptocurrency trades nearly 50% below its all-time high of over $126,000, but this continued sell-off could suggest a major reversal is on the horizon.

Triple or Quadruple-Digit Gains?

Popular trader and analyst Merlijn The Trader outlined this historical performance in a recent tweet, noting that the weekly RSI levels for BTC have plunged to such an oversold state for just a fourth time in the asset’s history. The previous three examples were followed by mind-blowing gains:

• 2019: oversold. Then 2,700% rally.
• 2020: oversold. Then 1,800% rally.
• 2022: oversold. Then 350% rally.

If bitcoin is to mimic even the most modest surge, it would rocket to over $300,000. The most bullish one, though, would send it toward $2,000,000. Both of these might seem like a stretch at the moment, to say the least, but Merlijn said BTC could complete the corrective wave 4 if it holds $65,000 on the weekly chart, which could still push it to a new all-time high of $140,000 in wave 5.

If it falls below that level, though, then “oversold gets more oversold first.”

Still Extreme Fear

Despite bitcoin’s impressive jump yesterday after Trump’s speech on the war against Iran, in which the asset surged from $68,000 to almost $72,000 in minutes, the overall market sentiment remains fearful. In fact, data from Alternative.me shows that the popular Bitcoin Fear and Greed Index has been deep in “extreme fear” state for days, but it has recovered from the local lows marked over the weekend.

This is another sign that can be regarded as bullish. After all, it was Warren Buffett who said that investors should be greedy when others are fearful, and vice versa. BTC has spent most of the past six months in fear or extreme fear territory, which has historically been followed by an uptick.

Bitcoin Fear and Greed Index. Source: Alternative.me

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