Bitcoin Shows Signs of Slowing Downward Momentum as Bullish Divergence Appears, Analyst Says

Bitcoin’s recent price action is offering a subtle signal that the intense selling pressure may be easing, according to a new technical analysis from Real Vision crypto market analyst Jamie Coutts. While the broader market trend remains bearish, a key indicator on the weekly chart suggests that downward momentum is losing steam.

Bullish Divergence Emerges on Weekly RSI

Coutts highlighted the emergence of a bullish divergence on Bitcoin’s weekly Relative Strength Index (RSI). This occurs when the price of an asset makes a lower low, but the RSI — a momentum oscillator — forms a higher low. Last week, Bitcoin retested its February low, but the RSI remained at a comparatively higher level. Coutts described this as the opposite of a bearish divergence observed last September, which preceded further declines.

The analyst noted that this pattern historically suggests that selling momentum is slowing, even if the price has not yet bottomed. He pointed to similar divergences that appeared during previous bear markets in 2015, 2019, and 2022, each of which eventually preceded significant trend reversals.

Bearish Trend Still Dominates Across Timeframes

Despite the encouraging signal from the RSI, Coutts cautioned that the overall trend for Bitcoin remains bearish across all major timeframes. He stated that further price declines are still possible and that the bear market may not be over. The divergence alone is not a confirmation of a bottom, but rather an early warning that the pace of the sell-off is decelerating.

Implications for Different Types of Investors

Coutts offered a nuanced outlook for market participants. For long-term investors, the current environment may present an accumulation opportunity. The analyst suggested that those with a multi-year horizon are likely to begin building positions at these levels, betting on a future recovery. In contrast, short-term traders are expected to remain on the sidelines, waiting for a confirmed trend reversal — such as a break above a key resistance level or a sustained move higher — before committing capital.

Conclusion

The appearance of a bullish divergence on Bitcoin’s weekly RSI is a notable technical development, but it does not signal an immediate end to the bear market. The pattern indicates that selling pressure is waning, a condition that has historically preceded major bottoms. However, until the broader trend shifts, caution remains warranted. The coming weeks will be critical in determining whether this divergence leads to a genuine reversal or simply a pause in the downtrend.

FAQs

Q1: What is a bullish divergence on the RSI?
A bullish divergence occurs when the price of an asset makes a lower low, but the RSI (Relative Strength Index) makes a higher low. It suggests that selling momentum is weakening and a potential reversal may be ahead.

Q2: Does this divergence mean Bitcoin has bottomed?
No. The analyst noted that the trend remains bearish and further declines are possible. The divergence is a signal of slowing momentum, not a confirmation of a bottom.

Q3: Should I buy Bitcoin now based on this analysis?
The analysis suggests that long-term investors may consider accumulating, but short-term traders should wait for a confirmed trend reversal. Individual investment decisions should be based on personal risk tolerance and broader market conditions.