Bybit becomes the exclusive payment partner for Tomorrowland Brasil 2025-26, offering Bybit Card holders early access to tickets for the first time in the festival’s history.

The S&P 500 gained 0.51% last week, rebounding as investors await Trump's tariff decision and US PMI data. Gold dips to $3,025 as Ukraine peace talks reduce safe-haven demand, but Fed rate cut expectations may limit losses. Market focus shifts to U.S. retail sales data for further direction. CoinDesk Indices, which tracks the broader crypto market, rose 1.06% in the past 24 hours, while Bitcoin and Ether dropped 0.38% and 0.95%, respectively. Trade these markets and more with up to 500x leverage on Bybit MT5 using this 

Today's top performer is W, up 7.1% as RedStone expands RED token to Base using Wormhole NTT.

Wormhole (W), launched in 2020, is a cross-chain protocol enabling communication and token transfers across more than 30 blockchain networks. Initially a bridge between Solana and Ethereum, it has evolved into a comprehensive platform with features like the Portal token bridge and messaging protocols, facilitating seamless cross-chain interactions. RedStone 

 its RED token to Base via Wormhole’s NTT, enabling seamless multichain staking, governance, and security. As a leading modular oracle, RedStone enhances DeFi with EigenLayer AVS security, while NTT ensures efficient cross-chain transfers without liquidity fragmentation.

Check out the latest prices, charts, and data of 

 for Tomorrowland Brasil 2025-26, offering Bybit Card holders early access to tickets for the first time in the festival’s history. The Bybit Card provides seamless payments, exclusive rewards, and up to 8% APR on balances, with no annual fees. The exclusive presale runs from April 4-6, requiring a Bybit Card for ticket purchases, while general sales begin on April 8 with a 10% cashback offer for new users.

BTC spot ETFs saw a weekly net inflow of $744.3M, driven by $768.8M in non-GBTC inflows, while GBTC outflows totaled $24.5M. The current total inflows from inception stand at $36.1B, with GBTC outflows reaching $22.5B.

, offering 800 Genesis Stars, which translate to Privasea airdrop rewards. Users must complete the quest and submit their Privasea Liveliness address via the I'm Human app. The TGE is imminent, as hinted by Privasea’s latest update.

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Bybit partners with Tomorrowland Brasil 2025-26, offering exclusive ticket presale for cardholders

Discover the 11 best gold-backed cryptos of 2025, offering real asset security amid market volatility. Explore top tokens like XAUt, PAXG & more.

The early months of 2025 have ushered in a flurry of changes in financial markets, primarily caused by the new US presidential administration of Donald Trump. Drastic cuts to US public spending, the threat of tariff wars and a new paradigm in the relationship between the US and its trading partners have unnerved markets and caused 

 prices and investor sentiment to take a hit. As stocks have dived, the crypto market has also slowed, reflecting the overall negative outlook prevalent among investors across different markets.

The world's primary precious metal commodity, 

, is surging in an atmosphere of largely declining investor sentiment. This is hardly surprising to anyone familiar with the history of financial markets. The yellow metal has always done well when stocks are getting hammered and the outlook for growth-dependent assets is souring. As of the time of this writing on Mar 24, 2025, gold’s price has appreciated by around 5% over the past 10 days. This change might seem insignificant to crypto investors, who are used to much more volatile swings in the price of their assets. Still, it represents a notable weekly jump for gold, an asset known for its price stability and low volatility. 

As gold rallies, many in the crypto investment world are turning their attention to a previously unassuming category of the market — gold-backed cryptocurrencies. While the broader crypto market is rather lethargic, cryptocurrencies in this category are posting weekly growth rates that virtually mirror the growth in the price of gold. If you’re a crypto investor looking for a safe harbor in these times of uncertainty, gold-backed tokens might just be the answer. In this article, we’ll cover the top 11 gold-backed cryptos as of Mar 24, 2025, which together make up nearly the entirety of this small category's total 

A gold-backed cryptocurrency is a tokenized digital asset whose value is typically supported by reserves held in gold. In some cases, the token issuer holds the gold reserves used to back the cryptocurrency. In other cases, a third-party trusted custodian maintains the reserves of the underlying physical gold on behalf of the issuer.

The earliest notable gold-backed cryptocurrencies were launched around 2019–2020. Among these are Tether Gold (XAUt), introduced in 2020, and Pax Gold (PAXG), which debuted in 2019. Another notable player in this area, Perth Mint Gold Token (PMGT), operated between 2019 and 2023.

Gold-backed cryptos let you turn gold ownership into a more flexible and liquid form for 

Besides buying gold crypto assets as a hedge against the volatile crypto market, you can also trade gold and other asset classes — such as crypto, forex and market indices — via 

. This product lets you access multi-asset trading opportunities alongside benefits like high leverages of up to 500x, tight spreads, competitive fees and 24/7 support.

How do gold-backed cryptocurrencies work?

As noted above, gold-backed cryptocurrencies are based on physical gold reserves. The exact mechanics of the reserve maintenance can vary. Some projects store the gold themselves, while others rely on external custodians to handle the storage.

These cryptocurrencies appeal to investors who want crypto exposure, but prefer a real-world asset's security. Gold serves as an excellent backing for a digital asset, as it’s a well-established and widely respected commodity. During 

, as stocks and cryptocurrencies plunge, gold tends to rise in value, potentially lifting gold-backed cryptos up with it.

Like any other asset on the market, gold-backed tokens have unique pros and cons. One con is that in a booming market, they tend to offer lower returns as compared to standard cryptocurrencies or other high-growth assets. Another drawback is the lack of unified regulatory mechanisms to ensure that the gold reserves actually exist, are maintained at the claimed levels and are held by a trustworthy party. Sufficient liquidity can also be an issue for smaller projects.

On the positive side, the biggest advantage of these assets is security during bear markets: as financial markets turn south, gold-backed cryptos are more likely to hold their value than other cryptocurrencies. Another key pro is owning tokens propped up by a 

 — an excellent way to silence crypto skeptics who constantly claim that these assets have no intrinsic value behind them.

The 11 gold-backed crypto assets we list below represent nearly the entire market niche. As of mid-March 2025, the 

 with reportable market caps under the category of "Tokenized Gold."

Their prices, caps, growth rates and other relevant statistics are valid as of this writing. Naturally, this data may change substantially, given the volatile nature of the crypto market. However, the backing by gold normally gives these assets a somewhat higher degree of stability as compared to other types of cryptocurrencies (

 (XAUt) is the most dominant gold-backed cryptocurrency on the market. It was introduced by Tether Limited Inc., the company behind USDT, the world’s most traded crypto asset.

Each XAUt token is backed by one troy ounce of gold, with the physical gold bars securely stored in Swiss vaults. Holders can redeem their XAUt for physical gold at any time. However, to do so, you’ll need to have enough XAUt tokens for the price of a full London Good Delivery physical gold bullion bar (approximately 400 troy ounces/XAUt). If you own less XAUt than that, swapping it for other assets, typically USDT, is the more practical option. You can 

Over the past 10 days, XAUt's value has grown by 5% — exactly in line with the price of gold, which XAUt closely tracks. Launched on Ethereum as an 

 asset, XAUt has long been the leader of the Tokenized Gold category. With a market cap of approximately $744 million, XAUt is currently trading at $3,023.24.

 (PAXG) is this niche's confident runner-up, right behind XAUt. Each of its tokens is also backed by one troy ounce of gold, with the actual gold held in the London-based vaults of Brinks Security, a multinational cash-handling security company. Launched in 2019 by the New York–based Paxos Trust Company, the token has a market cap of $652 million. PAXG and XAUt dominate the gold-backed crypto market, together holding around three-quarters of the category's total market capitalization. As it also tracks the price of one ounce of gold, PAXG has appreciated by around 5% over the past 10 days.

Quorium Gold (QGOLD) is the third-highest-capped gold-backed crypto at the moment, with a market cap of $253 million. Similar to XAUt and PAXG, QGOLD is backed by and tracks the price of one troy ounce of gold.

The project was launched in late 2023 on 

, a company committed to sustainable mining. QGOLD is backed primarily by verified untapped gold reserves, as certified by the NI 43-101 reports overseen by the Canadian Securities Administrators. While Quorium also engages in mining to grow its reserves, its main focus remains on leveraging existing, verified untapped gold.

Kinesis gold (KAU) is a gold-backed cryptocurrency launched by the Cayman Islands–based blockchain finance company 

. The KAU token is backed by one gram, rather than an ounce, of gold, and therefore has a unit price quite different from the cryptos we’ve covered above. It currently trades at around $97, similar to the actual price of gold, and has a market cap of $139 million.

Kinesis partners with the leading gold Allocated Bullion Exchange (ABX) — an international institutional exchange company with an extensive vaulting network, including Malca-Amit and Loomis International, along with other vault partners such as Brinks — to manage the gold reserves that back KAU.

 (VRO) is backed by one gram of physical gold from the recycling industry. This environmentally-friendly project is among the older gold-backed cryptocurrencies. Launched in May 2020 on Ethereum by the UK-based LinGOLD Ltd., VeraOne's gold is not only London Bullion Market Association (LBMA)–compliant, but also made with the maximum purity of 999.9 (or 99.99% pure), and can be converted into physical form in legal tender recognized by the Government of Gibraltar. VeraOne maintains its gold reserves at Geneva Freeport, a top-security warehouse in Switzerland.

VRO currently holds a market cap of almost $29 million, which sounds modest by the standards of the entire crypto market, but still makes the token the fifth-highest-capped asset in the Tokenized Gold category.

 (NNN) is a gold-backed crypto launched in 2022 by the Austria-based Novem Gold Blockchain GmbH. The token is based on BNB Chain, and is backed by the company's gold reserves held in Austria, which are stored in a secure in-house vault.

Novem's NNN token can be easily redeemed for gold bars at various LBMA-accredited dealers. NNN currently has a market cap of $23 million.

 (GOLDAO) and Gold Token (GLDT) are related tokenized gold cryptocurrencies launched by the Gold DAO decentralized project on the 

 (ICP) blockchain. GOLDAO serves as the project's primary governance token for the DAO, while GLDT is the main utility asset that represents tokenized gold and allows for flexible and liquid cross-chain trading. Every 100 GLDT is equivalent to 1 gram of gold.

The physical gold backing the project's tokens is held in Switzerland, and the vaults are regularly audited by third parties, including KPMG, one of the world's leading auditors.

GOLDAO currently has a market cap of $12 million, while GLDT's cap is just $610,000, the lowest figure among all tokenized gold cryptocurrencies with reportable caps.

 (CGO) is another token whose value and backing are based on one gram of gold of 999.9 purity. Launched in 2022 on the XDC Network/XinFin blockchain by the Dubai-based ComTech Gold, the 

 focuses on meeting the needs for digital tokenized gold products in the Middle East region.

The physical gold is stored and insured with Transguard Group, a trusted security solutions organization in the UAE. It can be redeemed at any time, with a minimum redemption amount of just 10 grams. ComTech Gold is regulated by the Dubai Airport Free Zone Authority (DAFZA) and endorsed by local UAE government body DMCC.

CGO has a market cap of $10.65 million and trades at around $97, similar to most other cryptos tracking the price of one gram of gold.

 (tXAU) was launched in late 2022 by Aurus, another Dubai-based fintech company. The tXAU token is based on Ethereum and 

 (POL). Each tXAU token is backed by LBMA-certified gold. Aurus states on their website that the reserves backing tXAU are securely held in vaults and regularly audited, though no specifics on the vault locations are provided.

tGOLD currently has a market cap of $7.92 million. Note that, although the token is said to be backed by one gram of gold, its current price is $84.84, notably lower than gold's price of $97. This discrepancy could be due to the token's current supply-and-demand dynamics.

 (VNXAU) is a multichain token backed by LBMA-grade gold held in vaults in Lichtenstein, and registered with the Financial Market Authority (FMA) Liechtenstein. While this tiny European country isn't the most common choice for tokenized gold projects, it features a solidly stable economy and high regulatory standards in its financial sector. Among the major chains on which VNXAU is present are Ethereum, 

VNXAU currently has a market cap of just $2.55 million.

 (XNK) is an ERC-20 crypto token that tracks the price of one fine troy ounce of gold with a purity of 99.9%, was launched in March 2024 on Ethereum by Kinka (BVI) Ltd. In September 2024, the project also established its presence on 

The gold bullion that’s used is provided by Kinka's parent company, Daiichi Commodities Company Ltd., a leading gold-trading company in Japan. This gold meets the standards set by LBMA, and is stored in Loomis International's high-security warehouses around the world.

Besides being available on several crypto exchanges, including 

 (UNI), XNK can be purchased directly from the issuer's website. This over-the-counter (OTC) option requires a minimum order of 0.1 ETH.

XNK's current market cap stands at close to $1.5 million.

Highly valued throughout the history of human civilization, gold remains among the most popular assets in modern financial markets as well. The world's premier precious metal is an excellent hedge against volatility and bear markets, and owning tokenized gold is also a great way to hold an asset with real-world backing and additional trading capabilities.

Intermediate

gold backed cryptocurrency, gold backed crypto

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11 best gold-backed cryptos offering real asset security in 2025

In our latest Learn 101 livestream session, crypto experts shared insights on Trump’s move to create a US crypto strategic reserve.

Recently, the US government announced the establishment of a 

. While some believe this is a turning point in Bitcoin history, others believe this move will only benefit big crypto holders.

Crypto goes national — new gold rush or regulatory experiment?

 provides a recap of our Learn 101 livestreams, offering you comprehensive expertise and insights from leading figures in the crypto industry in case you miss the livestream.

Joining the livestream on Mar 20, 2025, were two distinguished guests: DustyBC, Crypto KOL, and Shunyet Jan, Head of Derivatives Business and Institutional Sales at Bybit. Under the moderation of Sabrina Chua, Crypto Evangelist and SEO Editor at Bybit, this episode explores 

Crypto Goes National — New Gold Rush or Regulatory Experiment?

US crypto reserve — a bullish catalyst, or just talk?

Investor and content creator DustyBC points out that the volatility of the crypto market exposes all taxpayers to a certain degree of risk. In his view, it may be wiser for the government to hold crypto in its reserves, rather than actively trade it. For individual investors, the key decision lies in whether to take profits now or continue holding — as each path carries its own set of risks.

Following the announcement of the planned crypto reserve, there was an initial market rally, but the excitement quickly tapered off. According to Shunyet Jan, the overall market response was underwhelming, partly because the reserve would be built using seized assets. He notes that this reserve is unlike traditional reserves, such as for oil or food. While Bitcoin might resemble a digital version of a gold reserve, Jan believes its price is more closely tied to the tech sector than to gold. Still, Bitcoin tends to be more stable than most other cryptocurrencies.

DustyBC emphasizes that one of the main risks of a Bitcoin reserve is its price volatility, which could affect public trust. A sharp price drop, for instance, could undermine confidence. However, Jan adds that while some governments have previously banned gold ownership, such restrictions aren’t possible with Bitcoin, due to its decentralized nature.

Jan also believes that nations with more crypto-friendly regulations are more likely to adopt Bitcoin earlier on a national scale. That said, he doesn't think it’s necessary to use Bitcoin in a formal national reserve, since crypto can easily be converted into fiat when needed.

DustyBC points out recent developments in Pakistan, which is becoming more crypto-friendly. He notes that while countries generally don’t want to be the first or last to adopt crypto, it may not matter much in the long run — as long as people can spend and convert it freely, national adoption becomes less critical.

BTC, ETH, SOL, XRP & ADA – the ‘chosen ones,’ or just a coincidence?

The conversation around a crypto reserve isn’t limited to Bitcoin. Other major cryptocurrencies, such as 

 are also part of the discussion. According to DustyBC, the selection process for these assets happened behind closed doors, making it unclear whether there were any incentives or political motivations behind the choices. He speculates that past lawsuits or ongoing regulatory negotiations may have influenced the decision-making.

Jan highlights that Bitcoin is already widely being used as collateral in both crypto-native and traditional financial systems. He points to 

 as a clear example, describing them as an old-school real-world asset (

) structure now applied to crypto. He also notes that many users on Bybit already post BTC as collateral when trading. Thanks to solutions such as 

 (WBTC), even traditional finance platforms can accept BTC as collateral — further embedding it into established financial infrastructure. 

In Jan’s view, Bitcoin isn’t just aspiring to become part of the mainstream — it’s already there, functioning like 

 and fitting seamlessly into familiar financial tools.

As for why altcoins weren’t included in the initial strategic reserve announcement, DustyBC believes this was a prudent decision — governments likely need more time to understand the inner workings and use cases of each altcoin. Still, he expects altcoins will eventually be incorporated into any such reserve. One practical reason Bitcoin was chosen first, he adds, is that the government already holds a significant amount of it from previous seizures, whereas acquiring altcoins would require fiat conversions.

DustyBC supports the government's current selection of cryptocurrencies for the reserve, acknowledging that each asset chosen brings unique benefits. However, he also cautions that adding more cryptocurrencies introduces additional risk. Importantly, he emphasizes that the US won’t be the only player in this space. Other countries may opt to build their reserves with different cryptocurrencies, which could influence global market dynamics in significant ways.

The crypto reserve playbook — how should you trade this news?

Although the market didn’t react as strongly as expected to the announcement of a US crypto strategic reserve, Shunyet Jan believes the news is still highly significant, and, moving forward, should be on every investor’s radar. One way to 

 while staying engaged in the market, he suggests, is through the use of 

DustyBC expects further instability before Bitcoin’s price begins to settle. He’s uncertain whether the traditional four-year cycle will hold in light of this new development, which could signal a gradual shift toward less volatility over time.

While Jan doesn’t foresee a major market rally from the news of the reserve alone, he does anticipate increased institutional participation. Since institutions typically trade less frequently than retail investors, this shift could lead to a more stable market, with reduced price swings.

DustyBC emphasizes that there are no guarantees in crypto. Still, he believes the US-based cryptocurrencies mentioned in the reserve announcement are likely to receive more attention going forward. Additionally, other US-origin cryptos not named may also gain traction as the conversation around regulation and adoption evolves.

Jan remains confident in crypto's long-term potential, but doesn’t claim to know which asset will ultimately lead the charge. His personal strategy involves holding US-based 

 for the long term while actively trading others. He emphasizes that every investor is different, and should make decisions based on 

This Learn 101 livestream session sheds light on a pivotal moment for the crypto industry, when digital assets are no longer just speculative tools, but are entering the realm of national strategy. Whether the planned US crypto reserve becomes a new form of digital gold or remains a bold regulatory experiment, one thing is clear: the game is changing. As governments, institutions and traders navigate this evolving landscape, staying informed and adaptable will be key to making the most of the opportunities — and challenges — ahead.

Bybit Learn livestream: Crypto reserve: New gold rush? featured image

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Learn Live ICYMI: Crypto goes national — new gold rush, or regulatory experiment?

bbSOL allows users to earn staking rewards on Solana while retaining liquidity, making it a versatile tool in the realm of DeFi. Learn more here.

In an exciting development for crypto enthusiasts, Bybit has launched bbSOL, the world's first exchange-backed 

. This innovative product allows users to earn 

 rewards while retaining liquidity, opening new avenues within 

 and restaking to understanding how restaking works, this comprehensive guide will equip you with all the essential information to make the most of Bybit's latest offering.

bbSOL is a liquid staking token you receive when staking SOL on Bybit. It represents your staked SOL in Bybit’s stake pool, and serves as a receipt to later redeem your SOL along with any earned rewards.

When you stake SOL, you receive bbSOL tokens in return, representing your staked assets. These tokens allow you to earn staking rewards and participate in 

 without giving up access to your original tokens.

The process works by depositing SOL into Bybit’s liquid staking protocol, which manages staking for you. As rewards accumulate, the value of bbSOL steadily increases relative to SOL, reflecting the staking rewards earned after each Solana epoch (every 2–3 days). For example, if you hold bbSOL for one year, its value against SOL could rise significantly.

Your rewards are automatically reflected in the growing value of bbSOL, with no manual claiming necessary. When you decide to unstake, you can easily exchange bbSOL for SOL, along with any accrued rewards, with Bybit offering instant unstake options.

However, using bbSOL comes with risks, such as slashing penalties if the validator misbehaves, as well as potential volatility in bbSOL’s value as compared to the underlying SOL. However, despite these risks, bbSOL provides a convenient way to earn staking rewards while participating in the DeFi ecosystem.

 for users looking to maximize their crypto assets 

Trade bbSOL with up to 10x leverage by using your 

. Margin trading allows you to amplify your exposure and potential returns while retaining access to your bbSOL holdings.

Use bbSOL as collateral to borrow a wide range of crypto assets. Bybit 

 enables you to unlock liquidity or pursue trading opportunities without selling your bbSOL, allowing you to hold onto your staking rewards.

 to earn hourly interest on your bbSOL holdings. This low-risk, passive income strategy lets you generate yield while keeping your funds readily available for withdrawal or use.

Institutional users can leverage bbSOL as collateral to access larger credit lines via 

 services. This service unlocks greater capital efficiency for firms seeking to optimize their treasury or trading strategies.

 that feature bbSOL in order to earn trading fees and incentives. This strategy can also help you hedge against 

, which can occur when the value of your deposited assets decreases from the time you initially deposited them. The loss only becomes permanent if you withdraw at the lower value.

 (DEXs) and on Bybit — giving you the flexibility to make the most of its benefits within both the Solana and Bybit ecosystems.

Restaking allows you to stake your bbSOL tokens again to earn extra rewards, further supporting the Solana network's security and efficiency. 

, a leading protocol in this area, offers a shared validator network that helps secure other Solana-integrated systems. By restaking with Solayer, you can increase your returns while contributing to the overall strength of the network.

Bybit’s crypto loan service enables you to use bbSOL as collateral, giving you the flexibility to borrow over 160 crypto assets. This means you can unlock extra liquidity or investment opportunities without unstaking your bbSOL, so you can continue earning rewards while maximizing your assets.

bbSOL comes with a straightforward fee structure, with the 

Frequently asked questions regarding fees

Fees are charged to maintain the sustainability and fairness of the bbSOL staking system.

2. How are fees collected? Do users pay extra?

3. How long should I hold bbSOL to generate positive returns?

Considering the 0.1% withdrawal fee, it typically takes two to three epochs (approximately four to six days) to break even and start earning positive returns.

4. What happens if I invest in bbSOL and redeem it immediately?

Immediate redemption may result in a minor loss due to the fee structure.

5. What are the staking and redemption mechanisms for bbSOL?

Before you get started, please ensure that you’ve already created a Bybit account. If you don’t have one, you may follow our sign-up guide 

: Log in to your Bybit account and hover your cursor over the 

tab on the navigation bar at the top of the page. Then, click on 

: Click on the three horizontal lines located at the top-right corner of the page to search for bbSOL trading pairs. There are a total of three pairs: bbSOL/USDT, bbSOL/USDC and bbSOL/SOL.

: Input the amount of bbSOL you would like to purchase in the trading pane on the right side of the page. Once you’ve confirmed the details, click on 

: After you’re logged into your Bybit account, hover your cursor over the 

tab on the navigation bar at the top of the page. Then, hover your cursor over 

: A pop-up window will appear for you to input the amount of SOL you would like to stake to receive bbSOL. Once you’ve checked the accuracy of all the details, click on 

: After you’ve logged in to your Bybit account, hover your cursor over the 

: Select your preferred asset to convert to BBSOL by clicking on the drop-down for 

. Then, input the amount, verify the details and click on 

How to redeem your rewards through On-Chain Earn

: Input the amount of BBSOL you would like to redeem, verify your details and click on 

: Navigate to the Bybit homepage and click on the 

tab at the top left corner of the page. 

 and proceed to create your Bybit Wallet.

: Once your Bybit Wallet has been created, hover your cursor over the 

: Enter the amount of SOL you would like to purchase in the order pane on the right side of the page, and click on 

: Once you’ve purchased SOL, hover your cursor over the 

: On the right side of the page, indicate the amount of SOL you would like to stake and click 

You’ll then be able to view your bbSOL holdings, total SOL yield and total SOL investment under the 

: Choose your preferred redemption method and click 

bbsol.png

Bybit Staked SOL (bbSOL): The World’s First Exchange-Backed LST

Trading

Still struggling to differentiate overbought and oversold levels? Read on the decipher the differences and use them strategically.

When an asset reaches an overbought level, it means extreme price movement upside from where the reversal is highly expected. Conversely, the oversold level indicates a possible reversal point after an extreme bearish pressure in the price. 

 price movements on an asset, it’s a signal for you to exit the market. However, traders often become confused when attempting to differentiate the overbought and oversold signals that may affect their trading results.

In the following sections, we’ll be discussing the core difference between overbought and oversold conditions, including their best use.

Overbought and oversold describes the price of an asset correlated to its intrinsic value. This leads to signals representing the market conditions determined by the news, earnings reports, events, and trends revolving around them. For example, the 

, it means the price is in bullish momentum for an extended period. Therefore, it’s trading at a higher price than its inherent value. As a result, traders will come to a consensus that the asset is overly expensive, which indicates a sell-off is about to happen. Hence, a reversal and pullback are imminent and the asset’s price will drop.

 indicates that an asset is trading below what it is worth at its current price. This happens when the asset is sold at an undervalued price over an extended period, signaling that it is already at its all-time low. As opposed to an overbought market, an oversold market often leads to an upward-direction rally, causing the asset’s price to surge.

 zig-zags, where there is a bearish correction after a bullish trend and a bullish correction after a bearish trend. Therefore, the core part of price analysis identifies the shift of the current trend, which is an extreme price reversal point.

Therefore, the overbought and oversold levels work like a rubber band in the financial market.

If you expand the rubber band and then let go, it will return to its normal position. The speed with which it does so depends on how much you’ve stretched it. The more you stretch, the quicker it will snap back to its original position.

Similarly, in the financial market, when the current trend moves to the overbought or oversold zone, the price has a greater possibility of returning to the 

Let’s have a look at a practical example of overbought price:

The above image shows that the price is moving higher with a strong bullish pressure without correction, which indicates an overbought price.

Now, let’s have a look at an example of oversold price:

Here we can see that the price is moving lower with a strong bearish pressure, with no correction, which indicates an oversold price.

How To Identify If a Market Is Oversold and Overbought

In the above section, we’ve seen that continuous movement toward the downside or upside is considered as oversold or overbought price, respectively.

But how do you identify the level from which the reversal may happen? Does it require overbought or oversold indicators?

First, we can spot an overbought or oversold level just by watching the naked chart. The idea is that when the price moves up and reaches a significant resistance, it will be driven down and, with support, it will rise gradually, as shown in the image below:

However, this method has one drawback: we don’t know whether the price will reverse from the horizontal level or not. Therefore, traders use 

, such as oscillators, to increase the probability of spotting an overbought or oversold market.

 (RSI) is the most popular and widely used overbought/oversold indicator for technical analysis among oscillators. The RSI indicator shows the possible overbought and oversold zone in a separate window below the main price chart.

Generally, the RSI value moves between the level of 0 and 100.

The RSI overbought oversold readings are as follow:

At first, traders should find the overbought or oversold readings from the chart, and then confirm it with the RSI readings.

 has moved to the resistance level, while the RSI indicator has moved above 70. As both of these indicator readings point to an overbought level, the price moves down with intense selling pressure.

 is similar to the RSI indicator but uses 80 and 20 as overbought or oversold levels instead of 70 and 30.

As with RSI, the stochastic oscillator also moves between 0 and 100. When its reading reaches above 80 under 20 levels, that’s the time to wait for the price reversal. 

Let’s have a look at how to identify the overbought level using the stochastic oscillator:

Here, we can see that the oversold price has moved down to the horizontal support level. In the meantime, the stochastic oscillator has moved below the 20 levels. As a result, the price has moved up as buyers become active from the oversold area.

The relative strength index and moving average convergence divergence (

) both work as overbought/oversold indicators to define a price reversal point. However, the RSI indicator does indeed show a more reliable result than MACD.

Based on statistical data, RSI delivers a higher success rate, with fewer false signals than MACD. On the other hand, MACD works well in specific trading scenarios related to it. Other factors keep RSI outpacing MACD.

The above image shows how MACD provides false signals, while there is no false signal in RSI.

How Reliable Are Overbought and Oversold Levels?

Overbought vs. Oversold Signals: What Are the Differences?

Grab Up to 5,000 USDT in Rewards

Grab Up to 5,000 USDT in Rewards