Cryptocurrency analyst and trader Ali Martinez is warning of a potential sharp drop in the price of Bitcoin (BTC) if history repeats itself.
Martinez tells his 145,900 followers on the social media platform X that Bitcoin has previously corrected by 20% to 30% in two instances after the Relative Strength Index (RSI) on the weekly chart fell below the 14-period smooth moving average (SMA) overlaid on it.
The RSI is a momentum oscillator used to determine oversold or overbought conditions. The RSI crossing the moving average indicates a bearish signal, while the RSI crossing above a moving average is a bullish signal.
“If history repeats, we could see a move down to $95,000!”
The widely followed analyst also says that based on Bitcoin’s Market Value to Realized Value (MVRV) Extreme Deviation Price Bands, the $111,000 price is a “critical support level” for the crypto king and could lead to a correction of around 20% from the current area if it breaks.
The MVRV Extreme Deviation Pricing Bands are a tool used to determine potential support and resistance levels based on the standard deviation of Bitcoin’s MVRV ratio from its historical mean.
The MVRV ratio, which is simply the ratio of Bitcoin’s market cap relative to the price when coins were last moved, indicates whether Bitcoin at current prices is above a fair value (overvalued) or not (undervalued).
Bitcoin is trading at $114,168 at time of writing.
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