A Beginner’s guide for Cryptocurrency price analysis|Coinscapture

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Source:https://medium.com/coinscapture/a-beginners-guide-for-cryptocurrency-price-analysis-cbb9b7a097fa

Investing in any cryptocurrency requires a thorough understanding of the market, the underlying blockchain technology, and the risk associated with it, if not done cautiously. Also, it is important to know whether this is the right time to buy or sell with a little profit on the way. Along with it, a defined investment plan, an idea of losable money and lots of patience is needed.
Apart from these, analyzing the cryptocurrency charts, monitoring the cryptocurrency trading prices everyday and understanding the various cryptocurrency terms, could be a little tough task for the beginners. This article serves as a complete guide for cryptocurrency price analysis.
In the start, analyzing the cryptocurrency live charts can be quite confusing because pricing graphs just show lines going up and down. However, the data in it tell you the whole story about the cryptocurrency price fluctuations, including the starting point and at present where it is.
The cryptocurrency price fluctuation recorded is depended on the following factors:
  • Various regulations imposed in the cryptocurrency markets
  • Cryptocurrency adoption in the future.
  • The growth of the cryptocurrency in the market
  • The potential of the underlying technology to solve real-world problems.
Types of Analysis:
There are three basic types of market analysis namely fundamental, technical and sentiment analysis.
  1. Fundamental analysis:
Fundamental analysis evaluates the financial statements and key variables that affect the demand and supply of an economy or company. This is a reasonable approach as the price of an asset is entirely dependent on demand and supply.
Pros:
  • Very useful for long term investment
  • It gives reliable results as the entire financial aspects of a company is evaluated.
Cons
  • The required data is not easily available and only high authority people can access
  • Lengthy and complex procedure.
2. Technical analysis:
Technical analysis involves detecting statistical trends dependent on examining the price movements and trading volume. This approach helps for future market predictions; whether the cryptocurrency price will go up or down. Technical analysis is done using charting lines, charting patterns and statistical indicators & oscillators.
Pros:
  • A trend-based direction of crypto pricing is given to the analyst
  • Less time-consuming procedure.
Cons:
  • As different indicators are used by different analysts so varying results for the same crypto-asset is possible
  • The use of many indicators tends to give mixed and confusing signals, some pointing to sell while some pointing out to buy.
3. Sentiment analysis:
Sentiment analysis involves analyzing the mindset of the crypto traders, journalists, and influencers. This approach is based on the philosophy that the financial statement or statistical trends alone cannot tell you the full story of price fluctuations as it may include events like panic selling or purchase done based on public perceptions & expectations.
To get the best result of the sentiment analysis around always look for the available long and short data through various research tools. CoinsCapturehas provided much data about each cryptocurrency to the public through its API. Another potential source of information is Google Trends data providing insights into search interest for key terms.
Apart from fundamental, technical and sentiment analysis, the potential investors should also consider the hype around a cryptocurrency. As hype created plays a major role in the digital market affecting the market movements.
If starting your first journey into the complex world of cryptocurrencies, here’s a list of useful guides that will safeguard you on your way:
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