This has never happened to Bitcoin before. That’s why I buy.

For the first time ever, Bitcoin (BTC -0.04%) will record its first four-month stretch of relative strength index (RSI) value of less than 42. Not only is this the longest the RSI has been lower than 42, but it will also be the first monthly close of Bitcoin’s RSI below 39. Pending of some sort of massive price rally, Bitcoin’s November RSI will likely be somewhere around 38, a level it has never reached before.

The Relative Strength Index (RSI) is a metric used to measure the speed and size of an asset’s recent price changes to evaluate whether it is overvalued or undervalued. The idea is that when an asset’s RSI falls into undervalued territory, it is theoretically a great time to buy as the risk of prices falling further is minimal.

Bitcoin and RSI

It should be noted that this does not mean that prices must return to peaks immediately. In fact, RSI values ​​can remain in undervalued territory for months at a time. The benefit of tracking an asset’s RSI is that investors can make more informed decisions based on current conditions in a broader, historical context.

RSI values ​​range from 0 to 100. Traditional use of the RSI states that values ​​above 70 indicate that an asset is overbought and thus overvalued. Conversely, values ​​below 30 are usually a measure of when assets are oversold and therefore undervalued.

RSI has historically been used for stocks, but it can serve a similar purpose with cryptocurrencies such as Bitcoin. Like stocks, we can see how Bitcoin behaved in the past when it reached similar levels. Throughout its history, Bitcoin has gone through a handful of bear markets of its own. During these periods, Bitcoin’s RSI fell to levels around the low 40s for months at a time. In the 2015 bear market, the RSI remained in the 40s for nine months. During the last bear market of 2018 and 2019, Bitcoin traded at an RSI lower than 45 for five months before rallying.

Now we are in a similar situation, but with some significant differences. Bitcoin’s RSI has been lower than 43 for the past six months now, a new record. Historically, previous bear markets have been in undervalued territory for about the same duration, but never this low. Pending some kind of new price momentum, the monthly RSI for November will be a new record low for Bitcoin at around 38. The previous monthly record came in June 2022, when it reached 39.

Will this time be different?

For some, this may resonate as a reason to stay away from Bitcoin until healthier levels are regained. However, when looking at recent periods when the RSI reached the 40s or even 30s, one pattern quickly becomes apparent. On average, once the RSI has bottomed, it takes about a year and a half for the RSI to return to 70. When the RSI reaches 70, it provides the fuel for Bitcoin to do a serious bull run, and it takes about 10 months for a new all -time high is made.

These are just averages, and this time could certainly be different. There are more circumstances affecting Bitcoin, unlike in previous years. For the same reasons that the stock market has struggled, Bitcoin is proving not to be immune to fears of inflation and rising interest rates. Perhaps this bear market for Bitcoin lasts longer and is deeper than others.

Even if that is the case, past data shows that Bitcoin is capable of recovering and those with a long-term investment strategy have the most to gain. Should this indeed be the bottom of Bitcoin’s problems, Bitcoin, based on historical trends, will reach an RSI of 70 around the time of the next halving (May 2024). Once that key level of 70 is reached, previous data suggests a new all-time high could be reached sometime as early as 2025.

Hindsight always seems to be 20/20. In each of these previous bear markets, critics have written off Bitcoin – but it has always bounced back. History shows that those who play the long game win the most. Patience and consistency are key in times like these.