How to best predict the crypto market and protect your funds.
Staying afloat in the volatile crypto world is largely dependent on your overall understanding of the market. Yes, it can be hard to predict but it’s not impossible! To make accurate market behavior predictions, you need a firm understanding of both fundamental and technical analysis, as well as keeping an eye out for key market indicators and any strategies you can implement. Of course, there are always bullish patterns and crypto candles too!
Fundamental analysis. This analysis includes researching as much as you can about the project, financial, and on-chain metrics.
Fundamental analysis is used to determine a token’s value. Once you’ve investigated a token’s background and its creators, you can begin to understand whether the coin represents good market value. For example, is this an industry-changing project? Or does the analysis suggest a quick decline? By applying these methods and gaining sufficient knowledge, you can make a right decision.
Technical analysis. This type of analysis is based on charts that factor in price changes, order sizes, and turnover values.
Technical analysis involves observing the market historically and keeping your eyes peeled for any trends. You can look at trading volumes and any shifts in price! This method is the most efficient way to study how profitable a token may or may not prove to be. By following price variations and patterns, the theory behind technical analysis can be applied to assume both long and short-term price variations.
Indicators: Market indicators can, mostly, be grouped into four specific categories: Momentum, Volume, Trend, and Volatility.
Momentum indicators, such as the Stochastic Oscillator, compare the most recent closing price of an asset against any maximum price variations (high and low) during a defined period.
Volume indicators (known as on-balance volume or OBV), meanwhile, use technical analysis to predict any obvious changes in an asset’s stock price.
Trend: Moving averages, such as Simple Moving Averages (SMA) and Exponential Moving Averages (EMA), track, quite simply, the average movement of an asset’s price across a specified time frame.
Volatility: Bollinger bands (or Boll Indicator), Standard deviation and ATR are three examples of volatility indicators. Volatility indicators are best used to detect potential fluctuations in the market, by highlighting whether or not an asset is being overbought or oversold.
For more information about our crypto indicators, please click here.
Strategies: There are four main strategy methods that you can apply when trading: position trading, scalp trading, swing trading, and day trading. Always pick the strategy that suits you best!
A position trade is close to a buy-and-hold investment strategy. The idea is to capitalize on trends in the crypto market by identifying strong tokens and holding onto them until the time is right to trade, so when you notice a price rise.
Scalping trading is extremely fast-paced. A crypto scalper can make up to 20 trades in a few minutes, though it takes a lot of energy to do so. As crypto prices can change rapidly, a scalper has to watch for increases in trading volumes and know the exact exit point before even beginning the trade. The key to successful scalp trading is using a trading platform with fast execution times so you avoid lag time.
Swing trades are somewhat the opposite of scalp trades, as the time frame of a swing trade is usually longer. The idea around swing positions is to spy any ‘swings’ in the crypto market — these can occur over days, weeks, and even months!
Day trading involves opening and closing asset positions on the same day and is viewed as short-term crypto trading. With day trading, your goal is to increase profits as the price of a token moves, though you should always consult technical indicators to suss out potential entry and exit points.
You can read more about managing a volatile market in our article: Crypto Prediction Guide: Understand The Market and Predict Future Behavior.