Don't cut losses before dawn! K33 Report: Bitcoin has entered the "extremely oversold zone," and selling now makes no sense

During the most pessimistic moments in the market, the strongest opportunities for reversal are often hidden. Research firm K33 points out that Bitcoin has fallen into a rare extreme oversold zone in history. Multiple indicators show signs of a bottom, suggesting that current selling may not be a wise move.
(Background: AI agent tests “Bitcoin vs. USD” choice, with 36 models overwhelmingly favoring BTC: stable and reliable compared to fiat)
(Additional context: Ray Dalio of Bridgewater: There is only one gold in the world, and global central banks will not choose Bitcoin as a safe-haven asset)

Table of Contents

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• Technical: Weekly RSI drops to historic lows
• Sentiment: Derivatives market shows “extreme bearishness”
• Fundamentals: Resilience amid geopolitical tensions
• The worst may be over

After months of volatility and selling pressure, professional research firm K33 Research released a new report indicating that Bitcoin has entered a rare “extreme oversold” zone in history. The report emphasizes that despite widespread market pessimism, many technical indicators and historical data suggest that the risk-reward ratio is highly attractive now. Selling at current levels may not be a wise decision.

Technical: Weekly RSI drops to historic lows

According to Vetle Lunde, head of research at K33, Bitcoin recently experienced one of the longest consecutive declines in history: six weeks of continuous decline and five black monthly candles. This caused Bitcoin’s weekly Relative Strength Index (RSI) to drop below 27, the third-lowest level ever recorded for the asset.

In technical analysis, an RSI below 30 is generally seen as a serious oversold signal, indicating that selling momentum has largely exhausted itself. Lunde notes:

“If you want to make a mistake, follow the crowd.”

Sentiment: Derivatives market shows “extreme bearishness”

The report further analyzes derivatives data, finding that the funding rate for Bitcoin perpetual futures has rarely turned negative. This indicates strong bearish sentiment, with traders willing to pay fees to maintain short positions.

Additionally, options traders are paying high premiums to buy puts to hedge against downside risk. K33 believes that such extreme defensive positioning often signals a market reversal. Historical data shows that when funding rates are similarly negative, Bitcoin’s average gains over the next 90 to 180 days are 62% and 101%, respectively, with an almost 80% success rate.

Fundamentals: Resilience amid geopolitical tensions

Despite recent geopolitical tensions in the Middle East causing oil prices to surge and stock markets to fluctuate, Bitcoin has shown unexpected stability. Lunde attributes this to the market having undergone sufficient “de-risking” cleanup.

Data indicates that institutional exposure on CME has decreased by 35%, and ETF investors have significantly reduced holdings. As long-term holders reduce selling pressure, Bitcoin is consolidating near the 200-week moving average (a key indicator of long-term bottom), demonstrating strong support resilience.

The worst may be over

K33 Research concludes that Bitcoin is currently in a bottoming phase. While it may take time for a definitive bottom to form, “the worst is already behind us.” At levels below approximately $71,000, the market has absorbed most negative news. K33 believes that for rational investors, the current environment is more suitable for accumulating positions rather than panicking and selling low.