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How is cryptocurrency market analytics done

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The forecast rate of cryptocurrency is a very difficult matter, so they are mainly engaged in professionals. But even a novice trader can analyze the situation on the market and draw his own conclusions. It should be remembered that the cryptocurrency market has its own characteristics.

How to forecast the price of a financial asset

Since now Bitcoin and other liquid coins have turned into financial instruments, the forecasting of their quotes is carried out according to the same rules. First, the situation in global markets is studied, and then a close analysis of a specific asset is carried out.

Disputes between the proponents of technical and fundamental analysis do not make sense, because there is an extremely rare increase in shares during the collapse of quotations. Of course, this happens, but it is an exception to the rule. To make a cryptocurrency forecast, you need to know the mood of investors. And it depends on the following factors:

  • economic statistics;
  • policies of regulators and governments;
  • the direction of liquidity flows;
  • GDP growth dynamics.

It is strange to assume that the policy of the Federal Reserve System or the Bank of England influences the Bitcoin rate, but it really is. When the Federal Reserve raises interest rates, investors tend to buy dollar-denominated assets. Naturally, against this background begins the decline in prices of other trading instruments. They just act as the opposite side of the deal. For example, the price of a cryptocurrency may fall, not because of negative information. The situation is much simpler - investors do not buy a pair of BTC / USD but sell it.

That is, liquidity flows are leaving the cryptocurrency market in the dollar. Of course, Bitcoin has a huge number of competitors. However, in terms of capitalization, it is among the outsiders. The sum of $ 200 billion seems huge for a new asset. But it is at least 5 times less than the cost of Apple. And 50 times less than the gold market. Therefore, even a relatively small purchase or sale leads to a large volatility in the cryptocurrency market.

That is why Bitcoin and Ethereum are considered to be a difficult trading tool. Strong fluctuations in quotes promise a decent income, but sometimes it is very difficult to analyze and give an accurate price forecast. But fundamental analysis allows us to understand the trend direction and the market situation.

Technical analysis

A lot of information can give the study of graphs. If in previous years the price turned around a certain value, then after approaching it, the probability of getting a trend correction again increases. In addition, a large number of specialized indicators are used here. They show the activity of buyers and sellers, on the basis of which certain conclusions are made.

The problem of cryptocurrency is the relative youth of this asset. They could not accumulate historical data; for a financial instrument, 10 years is infancy. Therefore, it is recommended to study quotes on a chart only on small timeframes. If the investor has already decided to buy Bitcoin, then you should not do it without considering the quotes. If they are in a downtrend, a small pause will increase the profitability of the operation.

If you are interested in cryptocurrency, analytics will allow you to evaluate the investment potential. Just remember that any prediction is purely probabilistic in nature. And no matter how high its accuracy is, there is always a chance for a change in the situation. When governments make unexpected decisions, and politicians make harsh statements, anything can happen.

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