Opportunity signal or alert?: The RSI indicator shows extreme conditions in the BTC/XAU ratio

The relationship between Bitcoin and gold (BTC/XAU) has reached a critical level not seen in nearly three years. The price is around 20 ounces of gold, marking one of the lowest points of the year. Simultaneously, the weekly RSI indicator has fallen to 29.5, entering deeply into oversold territory.

What does this level in the RSI indicator mean?

Historically, when the RSI technical indicator drops to these levels, it often coincides with market inflection points. Most analysts point out that extreme overselling indicates moments where assets are under intense selling pressure, creating potential conditions for subsequent recoveries.

Analysis of previous markets

Reviewing past cycles, occasions when Bitcoin has experienced such low relationships to gold have preceded significant rebounds. This leads some observers to interpret that Bitcoin may be undervalued in relative terms, opening the door to bullish movements in the short to medium term.

The cautious side

Although overselling is attractive for opportunity seekers, there is also an alternative scenario. If this support line is broken, it could amplify Bitcoin’s relative weakness compared to gold, indicating that downward pressure still has room to grow. Therefore, this level acts as a critical boundary where two possible market directions are defined.

The key will be how the price reacts in the coming days around this key support.