How To Understand and Analyze Crypto Markets
Let’s face it, analyzing and understanding today’s crypto markets can be a bit of a bear with the seemingly endless stream of information that’s pouring in about every coin. Just when you think you’ve got the bull by the horns and a cryptocurrency is about to take off or spike as the result of some promising news, its price graph will tank in the opposite direction. This may have been predicted by analyzing the charts leading up to the dump.
THIS IS NOT INVESTMENT ADVICE
This article will touch on key aspects of cryptocurrency technical analysis (TA)
Time I$ Money…
Yep, you’ve heard it a thousand times, but if you think about it… it makes good sense. The more personal time you invest into learning how to invest, the more knowledge and earning potential you will possess. So, spend some time to make some money.
Before you can start analyzing and predicting the performance of cryptos, you will need to develop a basic knowledge of coins which are making prominent advances in the market. There are plenty of crypto news sites that continuously update the performance of certain coins, but the best way to gain that knowledge is to do it yourself. Instead of simply reading crypto news articles that are merely stating which coins are making moves, try to follow them on your own by using crypto performance sites like coinmarketcap.com. It is possible to spend hours and hours researching all the information about the top coins in the market.
Once you’ve found some promising coins, start your research and follow some news resources which may keep you up to date with their performance — but don’t listen to just any source… find some reputable sites that you enjoy using.
Use your best judgement with YouTubers, vloggers, and other video influencers who have been continuously praising the potential of specific coins. More often than not, these shillersare being paid to report positive news to spark interest in its non-existent capabilities. Instead, do your own research by reading up on the facts and objective details about certain coins and their project or platform. Ask yourself this question before judging a cryptocurrency:
”What is the exact reason that this coin will perform like a rock or like a rocket?”
Key statistics to look at when researching a coin include its market capitalization, circulating supply, and price. These are the most important stats regarding the performance of a particular coin. Understanding the fundamental stat differences between a top coin and a low value coin will aid you in your analysis.
Do your eyeballs spin around when you look at graphs?
Although reading up on the news of cryptocurrencies can provide subjective thoughts and analysis, charts and graphs represent unarguable facts that show the past performances and trends of all assets. The key terms to focus on when understanding crypto markets through graphs and charts are technical analysis and trends.
Technical analysis (TA) is one of the tools used by traders to analyze the crypto market. It focuses exclusively on graphs and past performance trends. At times, this can serve as a more accurate way to predict the performance of coins over reading up on their projects. TA utilizes trend lines and statistical data to predict which direction the price of a cryptocurrency will lean. Despite the high volatility of cryptocurrencies, traders who use TA overlook the rapid price movement to create linear patterns based on a series of higher highs or lower lows.
Other components of TA are trading volume and moving average. It’s pretty simple: higher trading volumes are seen more often with stronger trends. While you’re analyzing the possible upward or downward trend of a coin, check on the trading volume to see if it has increased or decreased. At the same time, use the volumes to predict when a trend will slow down or even stop all together. For example, if the trading volume is increasing over time during a downward trend, we can expect the trend to slowly change direction and vice versa. The moving averages of a coin can also be extremely helpful when analyzing a trend. Moving averages are calculated by looking at the mean price of a coin over a certain period of time. It indicates the potential breakout of an upward trend if the price moves up in comparison to its moving average. These prices can be compared with each other to form a new TA graph, serving as another accurate way to predict trends through statistics and technical analysis.
Work Smarter Not Harder
The key to understanding crypto markets will rely on two things: knowledge and drive. If you put in the time and effort of researching, you will subsequently understand what is happening in the crypto sector. After standing back and observing how the market is moving, you’ll eventually begin analyzing trends and forming your own predictions based on the resources you use. The crucial concept here is to work smarter by keeping everything simple: facts are your best friend.
Don’t waste your time planted in front of a screen monitoring price changes; instead,take note of daily price changes. Try not to watch hours of hyped up “top coins of the month” videos that likely have little-to-no tangible support backing up their claims. Stay current by watching tutorials and “how to” informationals about technical analysis until you are comfortable with it.
Be patient, have some fun, and stay knowledgeable. Most of all, don’t rush the process.
What was the best strategy you have found, and what was your hardest lesson to learn? Tell us in the comments below.
