Bitcoin just flashed major crash signal

Bitcoin’s ($BTC) daily Relative Strength Index (RSI) has climbed above 80, marking its most overbought reading since November 2024.

The move follows a ferocious multi-day rally that lifted the cryptocurrency from the low $60,000s to nearly $80,000, with the latest RSI reading signaling that a short-term pullback may be possible.

The rapid ascent began on August 19; Bitcoin gained more than 7% to approximately $69,300. The following session added another 5%, pushing the asset above $73,000. On August 21, $BTC surged roughly 7% more, briefly testing levels not seen in months.

In less than a week, Bitcoin advanced more than 20%, reclaiming key moving averages (MA), including the 200-day level near $69,000. By press time, $BTC was trading at $77,037, up almost 2% in the last 24 hours and 22% over the past week.

$BTC’s in danger of retreating

Following the rally, Bitcoin’s 14-day RSI stood at 85.99, firmly in overbought territory. Values above 70 are generally considered overbought, while readings above 80 have historically preceded periods of consolidation or correction as buying momentum becomes stretched.

The primary catalyst behind the advance was a cascading short squeeze. Billions of dollars in leveraged short positions were liquidated across major exchanges over several sessions, with estimates placing total short liquidations between $3 billion and $4 billion within days.