By Isabel Wang
One technical analyst is anticipating a buy signal on Tuesday that would suggest that the decline in bitcoin is overdone, at least in the short term
Bitcoin falls below $85,000. Why a short-term buy signal could appear as early as Tuesday.
Bitcoin was tumbling below $85,000 on Monday afternoon as a selloff in the world’s largest cryptocurrency picked up steam following its biggest monthly drop since February.
But one analyst said the technical backdrop could be pointing toward a reversal as soon as Tuesday, suggesting that the recent decline in bitcoin prices, which has carried them down by more than 30% since the record high reached in early October, could be nearing a pause.
Katie Stockton, a technical analyst and founder of Fairlead Strategies, said DeMark Indicators showed that bitcoin (BTCUSD) has the potential to see “a counter-trend buy signal” on Tuesday. It was yet another sign that the pioneering cryptocurrency had reached territory considered oversold by many technical analysts.
“This one model that’s common for technical traders is poised to flash counter-trend signals tomorrow, and it will be the first of its kind, believe it or not, since 2022,” Stockton told MarketWatch in a phone interview on Monday. “It tells us that at least from a short-term perspective, bitcoin is probably overdone on the downside. If it bounces in response to this signal and oversold conditions, it has the potential to preserve a key long-term support level at around $80,600.”
Holding above that long-term support level would be considered a positive sign for bitcoin, Stockton said.
DeMark Indicators, created by famed technical analyst Tom DeMark, are widely used to identify when price trends are running out of steam, and might be poised for a reversal. They’re designed to help investors anticipate potential turning points in a near-term trend for a given asset.
Bitcoin had fallen by 6.5% to trade near $84,706 as of 2:30 p.m. Eastern on Monday, on pace for its biggest one-day decline since March and hovering near its lowest 4 p.m. Eastern level since April 15, when it was trading at $84,007, according to Dow Jones Market Data.
Rising Japanese bond yields BX:TMBMKJP-02Y BX:TMBMKJP-10Y were putting pressure on risky assets including bitcoin on Monday after Bank of Japan governor Kazuo Ueda on Monday hinted that the central bank could be increasing its interest rates soon, which has jostled investors accustomed to the bank’s low rates.
See: Bank of Japan’s Ueda rattles global bond markets with the prospect of a rate hike this month
“The sharp decline in market volatility last week, with the VIX VIX falling back below the average for the last 12 months, may have unnerved some investors who remain concerned about an uncertain outlook into year-end,” said Kathleen Brooks, research director at XTB. “Bitcoin tends to be a leading indicator for overall risk sentiment right now, and its slide does not bode well for stocks at the start of this month,” she added.
The renewed risk aversion was also driving investors out of other cryptocurrencies and growth stocks. Ethereum (ETHUSD) was dropping over 8.5%, to trade near $2,740, on Monday afternoon. Shares of Strategy Inc. (MSTR) were falling 6.8% after the biggest corporate holder of bitcoin on Monday announced a U.S. dollar dividend reserve of more than $1 billion, days after its top executive laid out what circumstances might force the company to sell some of its $56 billion in bitcoin holdings.
See: Bitcoin is slumping again. Its biggest corporate owner admits it may have to sell if things get worse.
Weakness in bitcoin on Monday coincided with broader selling in equities, as the U.S. stock market kicked off the last month of 2025 on the back foot.
The S&P 500 SPX and the Nasdaq Composite COMP were each falling 0.4%, while the Dow Jones Industrial Average DJIA was off 0.8% in recent trading, according to FactSet data. The small-cap Russell 2000 index was off by 1%.
The two asset classes have become increasingly correlated this year. That has led to equity investors growing uneasy whenever bitcoin prices start to slide, Stockton said.
“When markets go down and sentiments turn bearish, the correlations between equities and bitcoin and risk assets more broadly tend to go higher since people just generally get scared and are more inclined to penalize any risk asset,” Stockton said. “But I wouldn’t depend on correlations in terms of trading bitcoin, because they will break up at times,” she added.
-Isabel Wang
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12-01-25 1541ET
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