Crypto Glossary

Posted on September 13, 2021 in
Glossary

Oversold

When the price of an asset has fallen and there is the prospect of a price rebound, the asset is said to be in an oversold situation. Being oversold does not imply that a price rally will take place soon, or at all for that matter. Technical indicators indicate when market conditions have deteriorated to the point of being oversold or overbought. The price levels that are used in these indicators are determined by where the price is now situated about previous values. Fundamentals can also be used to identify whether or not an asset has deviated from its usual metrics, and if so, whether or not it has become oversold as a result of the deviation.

What is oversold?

An oversold market suggests that an asset is trading at a price that is lower than its true value at the time of purchase. A situation in which an asset is sold at a below-market price for an extended period, indicating that it has already reached its all-time low, occurs. In contrast to an overbought market, an oversold market is more likely to experience an upward-direction rally, causing the price of the asset to skyrocket.

On the other hand, when an asset is overbought, it indicates that the price has been moving in a bullish direction for a lengthy period. Therefore, it is currently trading at a greater price than its intrinsic value. As a result, traders will conclude that the asset is too overpriced, indicating that a sell-off is imminent. As a result, a reversal and pullback are on the horizon, and the asset’s price will fall.

Oversold in cryptocurrency

There is no known reversal period for an oversold occurrence. Technical indicators, on the other hand, are used to determine whether a Bitcoin asset is oversold. Furthermore, the indications provide estimates of when the illness is most likely to recur in the future. In the majority of cases, the reversal date is determined by a series of “if” conditions. For example, analysts may detect that a shift will only occur if a specific price level, which is commonly referred to as a support level, is reached. The relative strength index (RSI) and Bollinger bands are two technical indicators that are commonly employed to suggest an oversold state. Technical analysts use the relative strength index (RSI) to determine if a stock or other asset is overbought or oversold. The RSI analyzes the magnitude of recent price fluctuations and is used to determine whether a stock or other asset has reached an overbought or oversold position. Bollinger bands, on the other hand, are made up of three bands: a lower, middle, and upper band.Β 

The middle band is based on the asset’s moving average, and the lower and upper bands are based on the asset’s standard price deviations from the middle band, respectively. When the numbers shift towards the upper band, this is referred to as an oversold condition. Aside from technical indications, fundamental analysis can also be used to determine whether a stock is oversold. To calculate fundamental indicators, prices must be current and historical.

Related Articles

We offer investors a variety of opportunities in the digital assets industry. Our innovative platform provides financial access for anyone seeking investment returns anywhere, anytime. Our ecosystem aims at making finance an everyday enriching activity.

ZEI is currently registered under and listed by Bappebti as a candidate merchant. To date, the Indonesian government has established crypto assets as commodities which can be determined as the subjects of futures contracts, which can be traded through the Futures Exchange (of crypto assets).

RISK WARNING ON THE SERVICES

Before you use the Services, you must be aware of the following:

  1. You should not transact Digital Assets if you are not familiar with Digital Assets. Transacting Digital Assets may not be suitable for you if you are not familiar with the technology of the Services that are provided.
  2. You should be aware that the value of Digital Assets may fluctuate greatly. You should buy Digital Assets only if you are prepared to accept the risk of losing all of the money you put into such Digital Assets.
  3. You should be aware that although we strive to provide you with excellent service, we do not guarantee that the Site or Services will be available without interruption.
  4. Digital Assets held in your Hosted Wallet and funds in your Fiat Wallet are not subject to the Indonesian insurance or guarantee scheme as provided by the Indonesian Deposit Insurance Corporation (Lembaga Penjamin Simpanan).