Bitcoin's RSI Divergence Signal: Bottom Near or More Pain Ahead?

The RSI Signal That Could Define Bitcoin's Next Major Move

A confluence of technical signals, professional trader warnings, and sobering long-term performance data is forcing Bitcoin analysts to confront an uncomfortable question: is the bottom already in, or is the market still building toward one? As Bitcoin trades more than 40% below its all-time high reached in late 2025, weekly RSI data is approaching an inflection point that has historically preceded major recoveries — but seasoned traders are urging caution before interpreting any single indicator as a green light.

The stakes could not be higher. The answer to this question will determine whether patient investors are rewarded for holding through pain, or whether the real opportunity lies several months — and potentially tens of thousands of dollars — further down the road.

The Facts

At the center of current technical debate is Bitcoin's Relative Strength Index on the weekly chart. Trader Jelle has highlighted that BTC's weekly RSI is approaching a critical juncture where a higher low could form, a setup that has historically coincided with bear market bottoms. Crucially, Jelle argues that the price itself does not necessarily need to make a higher low for the signal to be valid. "Doesn't matter if BTC makes a higher low, equal low, or lower low," he noted. "When RSI starts moving higher again, the bottom is very close — or already in." ^[1]

This type of bullish RSI divergence last emerged at the tail end of the 2022 bear market, preceding a sustained rally that lasted over a year and eventually saw Bitcoin reclaim — and ultimately surpass — its previous all-time highs. At that time, the recovery was also accompanied by the recapture of the 200-week exponential moving average as support, a level that was only lost again just recently, casting doubt on its reliability as a long-term anchor. ^[1] Adding further uncertainty, a separate chart has flagged a potential bear flag formation in the current price structure — a classically bearish pattern that, if confirmed, could lead to another significant support failure similar to the breakdown seen in January. ^[1]

Professional trader Alessio Rastani offers a more explicitly bearish near-term view. Despite acknowledging a short-term bounce earlier this year, Rastani argues that the structure of that recovery lacks the conviction necessary to signal a genuine trend reversal. He places the probability of another leg lower above 50%, with potential downside targets ranging between $59,000 and $46,000 before conditions become attractive for longer-term positioning. He also pushes back on the assumption that Bitcoin will reach new all-time highs in 2026, suggesting the recovery timeline may be considerably longer than the market is currently pricing in. ^[2]

Zooming out further, a rigorous performance analysis reveals an uncomfortable truth about Bitcoin's recent investment track record. Someone who purchased Bitcoin when it first crossed $60,000 in March 2021 — roughly five years ago — holds an asset currently trading around $70,000, representing a nominal gain that, after accounting for US inflation of nearly 24% over the same period, translates into a real purchasing-power loss. Over that same five-year window, the S&P 500 delivered an annualized compound growth rate (CAGR) of over 11%, compared to Bitcoin's sub-4% figure — and with considerably lower volatility. ^[3] Jelle himself acknowledged the market is still early in its potential bear market cycle, noting that previous bear markets have lasted approximately a year, while Bitcoin only topped 23 weeks ago. ^[1]

Analysis & Context

The RSI divergence thesis deserves to be taken seriously — but not uncritically. Bitcoin's 2018-2019 and 2022-2023 bear market recoveries were both preceded by precisely this kind of weekly RSI setup, where momentum turned before price found a definitive floor. The pattern has a credible track record. However, the crucial distinction in 2025 is that the macro backdrop is materially different: interest rate uncertainty, equity market fragility flagged by Rastani himself, and a Bitcoin price structure that has already breached major long-term support levels create a more treacherous environment than simple historical pattern-matching would suggest. ^[1][2]

The five-year performance data from Blocktrainer deserves particular attention because it challenges the reflexive optimism that often pervades Bitcoin discourse. The honest conclusion is that timing matters enormously. Bitcoin bought at cycle peaks has consistently underperformed traditional assets over subsequent multi-year periods — not because the asset is broken, but because the entry price is everything in a high-volatility environment. The four-year CAGR metric provides a more balanced lens: on that timeframe, Bitcoin has historically averaged 30-40% annualized returns since 2022, comfortably outpacing the S&P 500's typical 10-15% band. The current dip in that metric toward 20% and briefly below 10% in early 2025 reflects the cycle trough, not a structural failure of the asset. ^[3] The strategic reserve announcements, ETF approvals, and growing institutional adoption cited in the data represent genuine fundamental tailwinds — but fundamental strength does not prevent deep cyclical drawdowns, and investors conflating narrative momentum with near-term price action have repeatedly been punished for it.

The real takeaway from synthesizing these three perspectives is that the market finds itself at a genuine fork in the road. The weekly RSI setup is constructive, but it is a leading indicator requiring confirmation — not a guarantee. The bear flag pattern and Rastani's structural concerns are valid counterweights. And the five-year performance data is a powerful reminder that even fundamentally sound assets can disappoint investors who buy at the wrong point in the cycle. The disciplined approach — dollar-cost averaging into clearly defined support zones rather than attempting to call an exact bottom — is supported by historical data showing that consistent buyers who began accumulating at the November 2021 cycle peak would still be sitting on roughly 60% gains today through simple periodic investment. ^[3]

Key Takeaways

• Bitcoin's weekly RSI is approaching a historically significant inflection point; a higher low in RSI has preceded major recoveries in prior cycles, but confirmation is essential before treating it as a definitive bottom signal. [1]
• Professional trader Alessio Rastani maintains that the current bounce structure lacks conviction, and places meaningful probability on another move lower, potentially into the $59,000–$46,000 range before a durable bottom forms. [2]
• Five-year Bitcoin holders are currently in negative territory in real, inflation-adjusted terms, underscoring that entry timing and cycle positioning matter as much as long-term conviction in the asset. [3]
• The four-year CAGR metric — averaging 20-40% in recent years versus the S&P 500's 10-15% — remains the most balanced measure of Bitcoin's risk-adjusted performance, and currently still favors Bitcoin despite the recent underwhelming returns. [3]
• Dollar-cost averaging into defined support zones remains the strategy most robustly supported by historical data, outperforming both panic selling and lump-sum buying at cycle highs across multiple market cycles. [3]