Bitcoin Rebounds from Oversold Territory as ZEC Extends 922% YTD Rally

Bitcoin showed signs of recovery on Sunday after flashing an extreme oversold signal on the relative strength index (RSI), a key momentum indicator. According to analyst Ali Martinez, Bitcoin's RSI dropped into what he described as "extreme oversold territory," with readings below 30, which historically have preceded short-term rebounds. The previous instances in 2023 and March 2025 were followed by price increases.

At the time, Bitcoin was trading near $86,466, up approximately 2.7% from earlier levels. The broader cryptocurrency market also strengthened, with total market capitalization rising 3.29% to $2.95 trillion. Ether gained about 4.5%, while other major altcoins like Solana, BNB, DOGE, ADA, and TRX saw upward movements.

Zcash (ZEC) and XRP were among the standout performers. ZEC surged more than 14% to around $574, extending a rally that has seen it rise 113% over the past month and an impressive 922% year-to-date. XRP climbed 7.7% to approximately $2.04. Other privacy-focused assets, including Monero, also outperformed during the market turbulence.

The rebound was accompanied by significant derivatives liquidations, with CoinGlass reporting over 117,900 traders liquidated, totaling roughly $206.39 million in the past 24 hours. The largest single liquidation was a $3.03 million HYPE-USD long on Hyperliquid. Thin weekend liquidity likely amplified the price movements.

Despite the gains, market sentiment remains fragile. The Crypto Fear and Greed Index registered a mere 10 out of 100, indicating severe caution among traders. Bitcoin had previously dropped to a seven-month low near $80,553, erasing all its yearly gains and falling 12% for the week.

Analysts from Standard Chartered warned that if Bitcoin stays below $90,000, about half of crypto treasury holdings could move "underwater", where asset values fall below purchase prices. Companies like Strategy and Metaplanet, which hold around 4% of all Bitcoin in circulation, have seen their shares plummet, with Strategy down 61% since July and Metaplanet falling about 80% from its June peak. JP Morgan cautioned that Strategy could be removed from certain MSCI equity indexes, potentially forcing passive funds to sell additional shares.

Brent Donnelly of Spectra Markets noted that crypto treasury firms often behave procyclically, buying during rises and selling during declines, which could deepen volatility if Bitcoin breaks below $80,000.

Technically, traders are watching key levels: holding above $86,000-$87,000 could signal a continuation of the recovery, while a break above $88,000 would confirm bullish momentum. Conversely, falling below $84,000 might lead to a re-test of lower supports.