As Bitcoin ($BTC) wraps up another volatile year, crypto analysts highlight concerning signals in the cryptocurrency’s momentum indicators. These signals suggest that the first quarter of 2026 could be pivotal in determining whether the current correction evolves into a full-blown bear market is just a normal correction. Axel Adler Jr., an institutional Bitcoin researcher and verified author at CryptoQuant, shared his insights in a post on X (formerly Twitter) today. His insights are accompanied by a detailed analysis that has ignited discussions among investors.
Bitcoin RSI Nears Critical Long-Term Levels After Three-Month Sell-Off
Bitcoin has shed approximately 20% of its value over the past three months, amounting to a $21,500 drop, while also posting a negative year-over-year performance of -10.5%, or about $10,400. The same -20% drawdown can be a healthy correction or the start of a deep bear market. Context determines interpretation. Despite this, he emphasized that the drawdown alone doesn’t dictate the market regime. The analyst delves into technical indicators like the Relative Strength Index (RSI) to provide context.
The chart illustrates Bitcoin’s price trajectory from 2014 to 2025, showing peaks and troughs that align with historical market cycles. Currently, the monthly RSI stands at 56.5, having dipped below the 12-month SMA of 67.3 for the first time since 2022. More critically, it’s now just two points away from the 4-year SMA of 58.7—a threshold that, in previous cycles like 2018 and 2022, often preceded deeper bearish phases when breached.
RSI at the Crossroads as Bitcoin Attempts to Form a Market Base
Adler argues that while a double-digit drawdown is not uncommon for Bitcoin, the RSI’s positioning relative to these long-term averages is what separates a “healthy correction” from the onset of a prolonged downturn. As per him, the average price over the past three months ($101,500) and the full year ($101,800) are nearly identical, indicating that much of the weakness has been concentrated in recent declines, with the market now attempting to stabilize and form a base.
Looking ahead, Adler identifies key levels to monitor in Q1 2026: An RSI holding above 55–58 could preserve recovery potential, while a sustained drop below 55 might signal a deeper downward phase. For investors, the message is clear. The next few months will be telling.
