Bits + Bips: Bitcoin Has Been Oversold for Months. Is a Buy Signal Next?

**SPEAKER_1** (0:00)
You're listening to a brief segment from one of the Bits and Bips episodes this week. The full show is now only available on its own dedicated Bits and Bips channels. So be sure to go to X, YouTube, and your favorite podcast platform and search for Bits plus sign Bips, spelled B-I-P-S, and subscribe.

**Steven Ehrlich** (0:21)
Really excited to have you on this week in particular, because as I know, you've been watching, and plenty of us in the industry have been.
Crypto is going along slowly, calmly, and that's not typically, it's MO, especially in a world where yields are rising, AI stocks are continuing to go through the roof, major indices keep setting record highs. At the same point, we get worrying inflation prints and a lot of different things going on. Crypto is supposed to move one way or another, but hopefully up, but for the most part, it's staying still. And I think you're the perfect person here because of the way you look at the market to sort of explain what you're seeing, why, and I guess most importantly, when it might end. So let's get right into it.
Let's talk about Bitcoin. I know that you've given some comments recently that you think the bottom is in and we are going to look for, we are going to see a bit of an upswing. Perhaps you could walk us through what you're saying.

**Katie Stockton** (1:26)
Of course. So obviously, the crypto winter has been ongoing. And with the downtrend, we now have a long-term oversold indication. And that's based on, it's measurable. It's based on the monthly stochastic oscillator that we use. So it's a technical indicator, pretty popular in fact. And it's been oversold now for a few months. And that's something that has us sort of perk up, right? We pay attention when oversold conditions return, but they themselves are not enough of an indication of a turnaround. What we'd like to also see is mostly twofold, I would say, which would be improved momentum. And when I say that, I mean more than just short-term.
And then also we have another indicator, a suite of indicators in fact, from Tom DeMark. The DeMark indicators are helpful in order to enhance those oversold conditions and vice versa.
And they do have some signs of downside exhaustion presently for the monthly Bitcoin chart. And they would suggest that at least for another three or four months, we could see some stabilization, if not a longer-term turnaround.

**Steven Ehrlich** (2:41)
Okay. So let's break this down a little bit more using the chart that we just had up, if we can get it again.
Because there's a lot of information here. A lot of different charts. And I know when you and I have spoken in the past, it's never just one reading. It's never one indication. It's never one particular time horizon or time scale. So could you just maybe walk us through a little more precisely like what you're seeing and I guess like what you would need to continue seeing for your conviction to persist or get stronger.

**Katie Stockton** (3:15)
Of course. So you can see this is a weekly bar chart of Bitcoin. You can see the downtrend of course, series of lower highs, lower lows. But what you'll also notice is that there is a long-term support zone nearby and support can be measured many different ways. We look at previous peaks and troughs on the chart. So you can see previous troughs or lows have been captured by this zone. We also like to use Fibonacci Retracement levels. It's something that's fairly common in technical analysis as a discipline.
It's a way to understand where buyers may step in based on the Fibonacci Sequence, which is maybe a topic for another webinar, but quite helpful, we have found. Then also, just things like the Cloud model, the shaded area that you see can also be a support gauge. But of course, right now, it's resistance, longer-term resistance and overhang. It also reflects the downtrend that has affected Bitcoin for some time now.
But with all of this, we have the long-term oversold indication, so that's more visible on the monthly chart. We use stochastic oscillator on the monthly, on the weekly, on the daily, across timeframes to help us understand what's going on here. Because we had not only the weekly oversold, which would be more intermediate terminate takeaway, but then also the longer-term oversold on the monthly taken together, those would suggest that we have a potential major low in place.

**Steven Ehrlich** (4:44)
Yeah. I'm curious. I know in some of our previous conversations, we've gone back and talked about historical precedents. Although crypto is not very old, especially in terms of the world of the financial system, it's gone through many cycles in its brief history.