The crypto market thrives on momentum, but every rally eventually reaches a point where prices risk overheating. One of the clearest ways traders track these extremes is through the Relative Strength Index (RSI). According to CoinMarketCap’s latest Crypto RSI Dashboard, the average market RSI currently sits at 63.07—indicating mild overbought conditions. Even more striking, 24.9% of cryptocurrencies are overbought, while just 0.2% are oversold.
Source: Coinmarketcap
This raises an important question: what does overbought vs oversold actually mean, and why should traders care?
Understanding RSI in Crypto Trading
The Relative Strength Index (RSI) is a momentum oscillator that measures the speed and strength of price movements.
- Above 70 RSI → Overbought: prices may have risen too quickly and could face a correction.
- Below 30 RSI → Oversold: prices may have dropped too sharply and could bounce back.
- Between 30–70 RSI → Neutral: steady trading without strong extremes.
In crypto’s fast-moving environment, RSI helps traders decide when an asset looks overheated or undervalued.
Why 24.9% of Cryptos Are Overbought Right Now
The dashboard highlights a sharp imbalance: nearly a quarter of the market is flashing overbought signals, while virtually none are oversold.
This suggests:
- Strong bullish momentum is pushing coins higher, from Bitcoin (BTC) and Ethereum (ETH) to altcoins like Solana (SOL) and Dogecoin (DOGE).
- Retail and institutional inflows are accelerating, driving up valuations.
- Market sentiment is leaning heavily towards greed, as reflected in rising prices and RSI spikes.
While bullish rallies can continue, historically such wide overbought readings often precede short-term pullbacks or at least periods of sideways consolidation.
What Oversold Means for Traders
On the opposite side, oversold signals are rare at the moment, making up just 0.2% of the market. This means very few assets are trading at discounted levels.
When cryptos do hit oversold territory (RSI under 30), they often attract buyers hunting for bargains. Historically, oversold signals can precede sharp rebounds, especially in high-liquidity coins.
How Traders Use Overbought vs Oversold RSI
Here’s how professional and retail traders interpret these signals:
- Entry & Exit Timing
- Overbought → Potential exit or take-profit zone.
- Oversold → Potential entry or buy-the-dip opportunity.
- Overbought → Potential exit or take-profit zone.
- Risk Management
- Traders reduce exposure in overbought markets to avoid being caught in corrections.
- Accumulation often happens when coins are oversold.
- Traders reduce exposure in overbought markets to avoid being caught in corrections.
- Confirming Signals
- RSI alone isn’t perfect. Savvy traders combine it with support/resistance levels, volume trends, and other indicators like the Fear & Greed Index.
Should You Be Worried About Current RSI Levels?
The fact that nearly one in four coins is overbought suggests traders should be cautious. While the market may continue rallying, these conditions increase the likelihood of:
- Short-term volatility as traders take profits.
- Sharp pullbacks in overheated altcoins.
- Rotation of capital from overbought majors into smaller cap coins.
However, RSI does not predict when a correction will happen—it simply signals that the odds of one are increasing.
Final Thoughts
The RSI dashboard provides a valuable snapshot of crypto market momentum. With 24.9% of assets in overbought territory, traders should prepare for potential volatility ahead. On the flip side, the lack of oversold coins means genuine bargain opportunities are limited right now.
Whether you’re holding Bitcoin, Ethereum, or altcoins, the lesson is clear: watch RSI as part of your trading toolkit. Overbought and oversold signals don’t guarantee price moves, but they can help you anticipate market shifts before the crowd reacts.
