Bitcoin Price Sell-Off Slows As RSI Hits Four-Year Low

Bitcoin is looking oversold after a drop to 13-month lows Wednesday and could defend immediate support at $5,000 in the next few days.

The average price across major exchanges, as calculated by CoinDesk's Bitcoin Price Index fell 10 percent - the biggest single-day drop since March 30.

As a result, a deeper drop looks likely, albeit after a minor bout of range-bound trading, as the 14-day relative strength index is signaling bearish exhaustion.

The 5- and 10-day exponential moving averages have adopted a bearish bias, while the stacking order of the 50-day EMA, below the 100-day EMA, below the 200-day EMA, indicates that the path of least resistance is to the downside.

Over on the monthly chart, BTC is trading below the support of the trendline connecting the November 2011 and August 2016 lows, validating the bearish view put forward by the bearish crossover between the 5- and 10-month EMAs in September.

The RSI is now threatening to turn bearish below 50.00 for the first time since September 2015.

To sum up, the odds are stacked in favor of a drop below the psychological support of $5,000, although the oversold daily RSI indicates that may not happen immediately.

The probability of a stronger corrective rally in the near-term is quite low as a significant majority of investors, who had called a bottom around $6,000, may have turned bearish after yesterday's price drop.

The bearish pressure would weaken if prices close above the June low of $5,780.

The bearish view would be neutralized if the former-support-turned resistance of $6,000 is scaled.