"Follow the crowd if you want to make a mistake": K33 says Bitcoin is oversold and shouldn't be sold yet.

Bitcoin has fallen into one of the most oversold zones in the weekly chart in history after months of sustained selling pressure, according to the latest report from research and brokerage firm K33.

“Want to make mistakes? Follow the crowd,” said Vetle Lunde, Head of Research, in the report, pointing out widespread bearish sentiment and a defensive trend dominating the crypto derivatives market.

After six consecutive weeks of decline and five months of continuous downturn — one of the longest bearish streaks in the asset’s history — Bitcoin’s weekly RSI has dropped to 26.84, the third-lowest level ever recorded.

According to the report, the recent correction was mainly driven by long-term investors and institutions selling off. In Q4 2025, supply held for over six months dropped sharply; ETF investors cut nearly 100,000 BTC; while open interest on CME Group’s futures market fell to a two-year low. However, recent capital outflows have shown signs of easing.

Derivatives Market Reflects Extreme Pessimism

K33 states that the derivatives market is the clearest indicator of current sentiment. The 30-day average funding rate for Bitcoin perpetual contracts has just turned negative — only the tenth time this has happened since 2018.

Negative funding rates indicate increased demand to close long positions or open short positions, causing perpetual contracts to trade at a discount compared to the spot market.

Options markets also reflect a similar trend. Investors are paying high premiums to hedge against downside risk — in other words, they are willing to pay large premiums for bearish bets.

Historical data shows that periods of deep negative funding rates are often followed by more positive returns for Bitcoin, especially in the medium and long term. On average, 30-day returns after such periods are around 13%, with a win rate of 56%. Over 90 and 180 days, win rates increase to 78%, with average gains of 62% and 101%, respectively.

Bitcoin Remains Stable Amid Geopolitical Tensions

Despite the defensive stance in the derivatives market, Bitcoin has shown relative stability amid escalating geopolitical tensions in the Middle East. Following US and Israel attacks on Iran, along with retaliatory strikes including oil refinery attacks and the closure of the Strait of Hormuz, oil prices surged and stock markets weakened. Meanwhile, Bitcoin experienced a slight increase during the same period.

Lunde suggests this resilience partly reflects a “risk reduction” process over recent months. Institutional exposure on CME has decreased by about 35%, while ETF investors have cut nearly 90,000 BTC in the past five months. Meanwhile, selling pressure from long-term holders has waned as supply of coins held for over six months begins to rise again.

Currently, Bitcoin is consolidating around the 200-week moving average — a level that has historically coincided with cycle lows.

“The worst may be over; now it’s time to wait,” Lunde said.

Bitcoin is trading just below $71,000, up 4.7% in the past 24 hours and 8.7% over the past week.

In conclusion, K33 believes there is no compelling reason to sell BTC at current levels. According to Lunde, the risk-reward structure favors accumulation strategies, although Bitcoin’s past bottoming phases often take time to fully develop.