Bitcoin Enters an Extreme Oversold Phase: Analysts See Potential for New ATHs

Bitcoin (BTC) has recently entered an extreme oversold phase, with momentum indicators showing a decline that suggests market exhaustion and a possible trend reversal. Analysts monitoring macroeconomic conditions and Bitcoin's long-term price history believe the current market correction represents a repositioning rather than a signal that the bull market has ended. If historical recovery patterns hold, Bitcoin might soon be on track to achieve a new all-time high (ATH).

Key Takeaways

Bitcoin is currently in an extreme oversold phase, potentially indicating a trend reversal.
Analysts believe this correction reflects repositioning within the market, rather than the end of the bull market.
Thomas Lee and Bittel Julien highlight historical patterns suggesting Bitcoin may soon approach a new all-time high.
Julien's analysis challenges the traditional four-year Bitcoin cycle, arguing it's influenced more by public debt refinancing.
The current cycle may extend into 2026, allowing for a prolonged market trend before a significant price recovery occurs.

Enquête blanchiment : 25 M€ en Bitcoin confisqués sur la plateforme Cryptomixer.

Understanding Bitcoin's Oversold Condition

Thomas Lee, Co-founder and Chief Investment Officer (CIO) of Fundstrat Capital, has characterized Bitcoin's current market situation as a significant technical development. He referred to data from Bittel Julien, head of macro research at Global Macro Investor, which outlines how significantly oversold Bitcoin has become during this cycle and suggests its potential for reaching a new ATH.

In a post on the social media platform X, Lee praised Julien's analysis, noting that Bitcoin has often seen substantial rebounds after reaching historically extreme oversold conditions. Julien, who shared his insights on X earlier this week, explained that his report was in response to frequent inquiries regarding a longstanding market model that monitors Bitcoin's behavior after major momentum declines.

Julien’s model focuses on Bitcoin's average price trajectory after the Relative Strength Index (RSI) dips below 30, a benchmark that indicates extreme oversold status. He indicated that Bitcoin’s recent price trends have closely mirrored historical technical patterns, assuming the larger bull market structure remains intact.

The accompanying chart illustrates the current behavior of Bitcoin's price in comparison to the average historical performance observed after the last five occurrences when Bitcoin entered oversold territory. The point where the RSI dropped below 30 is marked as “time zero.” Historically, this phase typically follows a stabilization period, leading to a strong upward recovery in the subsequent weeks and months.

Bitcoin price
Source: X

Based on historical averages, Julien anticipates a route towards new all-time highs if Bitcoin continues to follow previous recovery trends. Although he acknowledges the chart isn’t infallible, he believes it provides a valuable analytical framework, especially if the four-year cycle thesis continues to hold true.

Implications of the Bitcoin Cycle Extension into 2026

Julien’s findings also suggest that the ongoing Bitcoin cycle may extend into 2026, questioning the relevance of the traditional four-year cycle theory. He argues that Bitcoin’s market cycles have never been predominantly influenced by halving events, as many in the crypto community assume. Instead, he posits that the cycle is primarily driven by the refinancing of public debt, which was delayed by a year due to the COVID-19 pandemic.

He noted that the four-year cycle for Bitcoin is now officially disrupted due to an increase in the weighted average maturity of the debt term structure. He also highlighted that current liquidity conditions and sustained interest expense monetization, which greatly exceed GDP growth, support the potential for an elongated cycle.

Additionally, Julien pointed out that price basing for Bitcoin typically requires time to develop, often encompassing volatile periods before a significant price increase. His analysis, he asserts, should not signal an impending market downturn but serves as a framework that assumes the bull market remains firmly in place.

Bitcoin price chart from TradingView
BTC price fails to recover | Source: BTCUSD on Tradingview.com