Cryptocurrency rate changes are often unpredictable.
For example, in September 2017, due to the ban on the circulation of digital currency in China, the bitcoin rate fell sharply.
As any segment of the financial market develops, regularities are established, the knowledge and correct application of which helps traders to profit even when the rate falls.
General trends in the movement cryptocurrency market can be analyzed with intelligent analytics.
For example, when Bitcoin falls, investors invest more in other currencies, dramatically increasing their value.
But it is possible to identify this market trend by analyzing rates to bitcoin, not to the dollar, which novice investors may not realize and conduct transactions at a loss.
Therefore, successful trading depends on knowing the patterns of the cryptocurrency market.
What is technical analysis, and does it work?
Technical analysis is comparing past data of an asset and looking for a pattern in past price movements.
In this type of analysis, the trading volume is all trades that were made during the selected period.
The dynamics of the analog transactions show the significance of the price movement.
But sometimes, this analysis does not allow us to predict the price movement.
It is more interesting when the volume decreases with the current trend.
In this case, there will soon be an “explosion,” and the price will either change its direction or intensify it.
Such an indicator only warns about the movement, but no one knows where it will go.
Other technical analysis sections also help get an accurate signal — For example, indicators (moving averages, oscillators), graphical figures, candlestick patterns, and others.
Technical analysis is often used for short-term investments because it does not consider a company’s future potential but is based only on the history of the asset.
Technical analysis is helpful for those who calculate a daily strategy for intraday trading.
Such research is conducted using statistical methods and charts, which can be used to determine specific patterns.
The total market capitalization of cryptocurrencies is an indicator reflecting the value of the entire crypto industry.
The deal is determined by adding the market value of all cryptocurrencies, including bitcoins, altcoins, stablecoins, and tokens.
Principle of Fundamental Analysis
Fundamental analysis is a type of determining the real value of assets.
It is used for existing business processes.
Internal and external project factors are used to estimate value.
It determines whether an investment or company is overvalued or undervalued.
The findings are used to set goals and determine project strategy.
Conducting a detailed analysis of crypto-assets using technical analysis is impossible.
To work in the cryptocurrency market, you need to be able to separate the market price from the real value of the project.
Technical analysis has its own advantages — It is impossible to get a complete picture of the traded volume without using technical and fundamental analysis.
That is why traders recommend combining these two types of analysis to work effectively.
Professional traders recommend understanding the workings of these two types of analysis in detail.
Because crypto-assets are directly dependent on fundamental and technical analysis.
Fundamental analysis consists of Onchain metrics and project metrics.
Financial metrics — The first method takes a long time to collect data.
These metrics are provided by the blockchain.
The user accesses the metrics after installing a node in the selected network.
At the same time, the data is exported.
Such metrics are not always profitable to use.
Therefore, traders prefer to use other data collection and analysis options.
Onchain metrics are designed to handle quantitative blockchain data.
Project metrics work differently.
It is based on qualitative metrics.
They allow you to assess the team’s performance, as well as plans for future business development.
The analysis is often conducted to assess business performance.
The third version of the metric is used to determine the importance of the asset in the market at the moment.
The financial metric determines the liquidity of the asset.
This assessment requires the economic performance of the crypto-asset.
The financial metric is important for evaluating the effectiveness of a project.
Today, the cryptocurrency market is leading the way.
Large and small businesses are investing in the development of crypto-assets.
Without training and understanding the market, it will be difficult to get started.
A beginner needs to study the cryptocurrency market indicators in more detail.
Analytical work is used to evaluate the effectiveness of the trade.
The analysis is an opportunity to evaluate performance.
The factual and theoretical analysis gives an in-depth understanding of the market.
Which one to choose?
Experience in the analytical field makes it possible to correctly assess the performance of crypto assets.
You can learn how each analysis works in practice.
With the experience come the skills to work in the cryptocurrency market.
The evaluation process is much faster.
For long-term investments, you are more suited to fundamental analysis and technical analysis for short-term trades.
If you are wondering which one suits your conditions best, it is best to study both types.
A valid cryptocurrency market forecast depends on the kind of market analysis.
Beginning business people should learn the analysis of the cryptocurrency market in more detail.