Just when cryptocurrencies offered a glimmer of hope, the group has returned to oversold territory. Does relative strength suggest further strength or weakness?
Just when cryptocurrencies offered a glimmer of hope, the group has fallen right back to where it started. Following a 54% decline from 2025 highs for the Hashdex Nasdaq CME Crypto Index US ETF (NCIQ), a broad basket of liquid cryptocurrencies, it looked like the group was starting to turn a corner. After completing its final sell signal in February, five of the next six breaks for NCIQ were buy signals, during which it gained nearly 30% from its lows. Unfortunately, the rally didn’t last. The fund broke a triple bottom two weeks ago and has plunged lower since then, with intraday action on Thursday crossing below its February low. Consequently, the fund has moved back into a negative trend, in addition to losing its near-term market relative strength. Given the group’s lack of strength, as evidenced by NCIQ’s 0.16 fund score, the cryptocurrency space remains unfavored. Granted, both the index and individual names trade in heavily oversold territory, so it could hold steady for the next couple of weeks
During the previous decline from October to February, Bitcoin ($BTC) held up better than altcoins such as Ethereum ($ETH). This time around, however, even Bitcoin has erased all its progress over the last several months. Bitcoin reversed into a column of Os on its default chart after crossing $63k, taking it below levels initially reached in 2021. From here, initial support lies around $60k, with additional support around $55k and $50k. As we mentioned in yesterday’s report, the iShares Bitcoin Trust ETF (IBIT) also moved back into a negative trend to start the month, with it now holding an extremely weak fund score of 0.17—albeit while also trading in heavily oversold territory in the near-term.
The pullback within cryptocurrencies also led to change in one of the most notable indicators we track. Bitcoin is now failing its “Bogey Check,” reversing back into a column of Os versus cash (MNYMKT), indicating that Bitcoin investors have seen a flight to safety. Most of Bitcoin’s gains have come while the coin has passed its bogey check, serving as another sign of caution.
Previous research into Bitcoin bottoms explored what happened to the cryptocurrency following the instances when it fell more than 50%. One of the major themes was that Bitcoin tends to see an initial bounce following those occasions before reversing lower on average, mirroring recent action. Specifically, Bitcoin saw a positive median return through three months but was negative 83% of the time after a year, declining by 19% on average. This time around, Bitcoin was up as much as 29% three months after initially being cut in half but is now only 1% away from its February 5th level. With Bitcoin’s breakout failing dramatically, it would need to see significant and consistent improvement before it returns to technical favor, so investors are likely best off avoiding it for the time being. That said, things change quickly in the world of crypto, making it all the more important to follow movement for signs of a rebound.
