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A technical analysis indicator indicates that Bitcoin is experiencing significant oversold conditions due to the impact of rising bond yields on risk assets, including cryptocurrencies.

Bitcoin's 14-day relative strength index (RSI) has significantly fallen beneath 30, signaling a state of oversold conditions. This metric has reached its lowest point since the market crash caused by the onset of the COVID-19 pandemic in March 2020.

The RSI is a momentum indicator that ranges from 0 to 100. It provides insight into an asset's recent price fluctuations compared to its average price movement over a designated period, typically spanning 14 days.

A reading lower than 30 indicates an oversold state, suggesting that the price has declined too rapidly compared to its recent average. Conversely, a reading exceeding 70 signals overbought conditions.

A common error made by both the crypto community on X (formerly Twitter) and inexperienced traders is to interpret oversold and overbought indicators as early signals of an upcoming bullish or bearish reversal.

However, this isn't the situation. An oversold RSI reading simply indicates that prices have experienced a rapid decline, whereas an overbought reading suggests that prices have surged quickly.

The most recent RSI reading below 30 or in oversold territory, if anything, indicates an increase in bearish momentum. As the adage suggests, oversold conditions can persist for longer periods than the ability of bargain buyers to remain financially solvent.

As stated by Alex Kuptsikevich, FxPro's senior market analyst, the trend of Bitcoin has transitioned into a bearish direction.

"Bitcoin closed the [last] week with a notable drop below its 200-week and 200-day moving averages, signaling a shift to a bearish trend. From current levels near $26,000, the following area of decline appears to be the last pivot area at $24,700," Kuptsikevich said in an email.

The 14-day RSI has dropped to lowest since March 2020.

At the time of reporting, Bitcoin was trading at $26,000. The previous week witnessed a decrease in prices by more than 10% due to the 10-year U.S. inflation-indexed security yield surging to nearly 2%. This marked the highest level since 2009.