Momentum gauge drops below 30 as Strategy offloads holdings, ETFs see outflows
Bitcoin’s 14-day relative strength index fell below 30 on Wednesday, marking textbook oversold conditions as the largest cryptocurrency shed 9.5% over seven days and spot ETFs recorded net outflows. Strategy, the largest publicly listed bitcoin holder, sold a portion of its holdings during the slide.
The oversold reading typically signals that bearish momentum has moved too fast and could stall. Bitcoin’s price stabilized at $66,924.57 by June 3, according to CoinDesk’s Crypto Daybook Americas. Historical precedent offers mixed signals: oversold RSI readings in early February, November 2025, late February 2025, and August 2024 each marked interim or major price bottoms.
Yet strategists are divided on whether a rebound is imminent. Monarq Asset Management, a crypto analyst firm, issued a stark warning via Telegram: “Blood is in the water, trade accordingly.” Sam Gaer, chief investment officer at Monarq, attributed the caution to regulatory headwinds and weakening institutional demand. “With the long-anticipated regulatory clarity from the CLARITY Act looking less likely every day (Jamie Dimon openly hostile, pulling no punches, using DC clout to position against it), value and speculative buyers are stepping back and looking for the long-term, long-anticipated capitulation move,” Gaer said.
QCP Capital, another crypto analysis firm, offered a more nuanced stance. The firm urged traders to “buy the dip” while cautioning: “please insure the dip before discussing it.” The firm flagged spiking implied volatility as a risk factor.
Key support levels now dominate trader focus. QCP Capital identified $67,000 as the threshold bitcoin needs to hold above to restore bullish sentiment. Monarq’s Gaer pegged $60,000 as a price level back in focus, though he referenced a four-year cycle theory that could target as low as $45,000 in a deeper selloff scenario.
Liquidations compounded the weakness. A $1.6 billion liquidation event from crypto bets rippled across altcoins, with Ethereum, Solana, and Dogecoin each dropping 9%. Prediction markets reflect lingering pessimism: traders assign a 66% probability to bitcoin falling below $55,000 before year-end.
Headwinds from weakening institutional and corporate bids, combined with lingering Fed rate-hike concerns, limit the scope for a sustained recovery even if the oversold reading does mark a near-term floor. The confluence of regulatory uncertainty and technical deterioration has left analysts watching for signs of capitulation rather than immediate reversal.
