Just like any investment, cryptocurrencies also require analysis for people to understand the current value, standing, and progress in the market. This information is important because it gives you an idea whether the coin you’re currently using is in for a bullish or bearish run. Different metrics are used to track a cryptocurrency’s growth in the market.
Cryptocurrency traders and users should be knowledgeable in interpreting market analysis about crypto. Learning how to read data allows the user to make informed decisions on holding, buying, and selling their assets.
Technical analysis – It is a form of analysis that aims to track the trends in the market by using historical data as the main reference. This includes studying price movements and other metrics such as trading volume and usage. People who use this method believe that the price of a certain asset is determined by the trends surrounding it. When a currency is experiencing a fluctuation or a steady growth, technical analysts use previous data to identify the causes of the movement in the market.
Fundamental analysis – This type of analysis has a different approach when it comes to interpreting data. Usually, fundamental analysts look at factors such as economic indicators and management to identify the current status of a certain currency. For example, if a cryptocurrency is experiencing a bullish run, they will note the improvements on the blockchain or the adoption of a country that uses it.
Sentimental analysis – This is an approach that sees users as the main player in the growth of a certain currency in the market. People like influencers, traders, and journalists play a big role in how a certain asset will fare in the market. Sentimental analysts believe that well-researched information is not enough; they believe that any changes in a currency’s growth can be predicted based on people’s perceptions and expectations.
What are the most common tools you can use to analyse the cryptocurrency movement in the market?
Cryptocurrency analysis can be presented in different ways. It could be projected in charts and graphs. This entirely depends on the researcher’s preference. If you want to stay in the know about digital assets, one thing you can do is to read as much news as possible. Don’t stick to one source.
Always cross-check the articles you read with other sites to make sure you’re not missing out on anything.
Additionally, don’t bank all your trust on charts and statistical records. While these show you the movement of cryptocurrencies, they don’t depict the metrics on why they took these turns in the crypto-economy. Charts and graphs only show the surface. If you want to have a bigger picture of digital assets, read articles, watch interviews, and seek advice from people who have first-hand experience in using cryptocurrencies.
What’s the best analysis to use for digital assets?
Technical analysis is arguably the most commonly used tactic for interpreting data on cryptocurrencies. However, it doesn’t show you why these market changes are happening. Issues such as breaches, regulations, transaction volume, adoption rates and third-party apps are not included in technical analysis. Before diving into cryptocurrencies, make sure you’re armed with the best tools.
What are the most common types of graphs used for cryptocurrencies?
There are various types of visuals used to depict cryptocurrency growth. Here are some of them:
Line price chart
The line price chart is one of the basic methods for presenting cryptocurrency growth. It is most commonly used to give people an idea of crypto price changes over a specific period. The line represents the movement of the currency. This type of chart has two variants: linear and algorithmic. For the linear chart, the price is split into two equal sections.
Meanwhile, the algorithmic chart presents cryptocurrencies depending on their percentage changes. Both charts have different purposes in their own right. If you want to instantly see the price change of a certain asset, you should opt for a linear chart. However, if you want to see trend changes, you should opt for an algorithmic chart.
Aside from line price, you can also see the volume indicator below a line price chart. This shows you the number of digital assets that have been traded for a certain month.
Candlestick charts are one of the most informative visuals used for cryptocurrencies. Compared to linear charts, candlestick charts don’t only change the price changes but also the movements of a cryptocurrency in a given period. Most traders use this chart because it shows the highest and lowest price of an asset and its open and close price.
This type of chart is usually green or red. The colours depict whether or not a certain coin is up for a bullish or bearish run. The green colour means bullish, while the red colour means bearish.
Additionally, candlestick charts have several coloured lines. These are called ‘Moving Average Indicators’. Usually, they depict the average price of a coin based on its value in the previous months. It will show you 3 moving lines that represent the past 7, 25, and 99 days.
Market depth chart
A market depth chart shows you the supply and demand scenario in the crypto sphere. This chart helps you to easily determine whether you can sell or buy your coins. The green side of the charts represents the number of assets that have buy orders. Meanwhile, the red side depicts the number of assets with sell orders. At the centre of the chart, you will see the current market price of the coin.
Market depth chart projects real-time changes in the crypto market. So don’t be surprised when you see sudden upward and downward changes in the chart. Aside from that, you will also see the Order Book section, which shows the real-time movements of buy and sell transactions. The buy-side of the book is in green while the sell section is in red.
Reading charts is important, especially if you’re investing in cryptocurrencies. Analysing market growth such as dips and hikes in the crypto market help you understand the next step you should take.
What are the different trend phases in the crypto market?
Accumulation phase – The accumulation phase in the market is the period when investors begin buying and selling their cryptocurrencies. During this phase, the price of the coin doesn’t undergo many changes because there’s a small percentage of individuals who are in the know.
Absorption – Also known as public participation, the absorption period is the time where the market is already gaining traction from the public. Usually, the trends are set by the “experts” in the trade.
Distribution phase – This period starts once the price of the assets begins to retrace due to lack of supply. Investors will start to sell their assets to the market.
Different cryptocurrency analysis terms you should know about
To better understand cryptocurrency analysis, you have to know the basic terms used in graphs, articles, and analysis reports. Here are some of the most common terms to get you started:
Uptrend – The uptrend is a period in the market where assets’ value goes up.
Downtrend – This movement in the market usually refers to the downward movement of assets.
Sideways trend – Sideways trend means that asset trends are in horizontal movement.
Bearish – Bearish is a term commonly used in analysis articles. When a cryptocurrency is going for a ‘bearish run’ it means that its value is taking a dip.
Bullish – Bullish is a term used to describe an upward movement in the crypto market.
Cryptocurrency in 2020
Cryptocurrency experienced steady growth for 2020. Right now, as the economy is experiencing instability due to the pandemic, a lot of countries are leaning towards wide-scale cryptocurrency adoption. The pandemic is allowing more and more people to imagine a world without cash; every transaction done is through wallets and travels at lightning speed without paying costly fees. Additionally, by using digital currencies, consumers can now settle all transactions without lifting a finger.
Effects of Digital Assets
In many countries, cryptocurrencies are becoming more popular. The idea of going cashless appeals to most people, especially now that close contact is prohibited. With its efficiency, seamless, and borderless nature, digital assets seem to be the answer during this unprecedented time. Many people are considering investing in digital currencies. At the moment, they currently have appeal to a lot of users because of the efficiency, cost-effectiveness, and transparency they champion.
Cryptocurrency impact on the economy
Hop on the cryptocurrency train and start investing now. Before you start your crypto venture, prepare yourself with the accurate knowledge on how you can grow your digital funds. Grow with the market when you read our analysis of digital assets. We will discuss progress in the economy, exchange rates, places to get your assets, and other vital information that you will need to get you started on the digital realm.
Decentralized Exchange Advancements
What makes cryptocurrency appealing to users is its decentralized nature. Learn more about decentralisation and its connection with digital assets here at CryptoShimbun.
Cryptocurrency Scams 2020
When it comes to digital assets, it’s almost impossible for some people to tell if they are being hacked or not. That’s because online scams are so well-crafted that even the most attentive person can fall prey to these ploys. 2020 has seen some of the biggest cryptocurrency heists. Big names in the crypto sphere such as Elon Musk, Charles Hoskinson, and Vitalik Buterin have been used to execute these unscrupulous acts.
Here at CryptoShimbun, we will give you the latest updates on the schemes happening within the crypto sphere. Aside from that, we will provide you with information on how you can spot these red flags to avoid getting victimized by these unfortunate incidents.