We live in a deterministic system where everything obeys fundamental physical and other laws. Each event is followed by another, and so on. Each event has a cause and effect, respectively. You probably know about the “butterfly effect”: even one small incident can dramatically change the course of history. And the crypto market is no exception. Any rate behavior can be explained by influence of any factor. For example, the collapse of the stock market in March 2020, associated with the introduction of quarantine measures due to COVID-19, was followed by a sharp decline in the value of cryptocurrencies.
This was not difficult to predict, if you regularly follow events in the world. It’s quite simple: people panicked, and they began to feverishly get rid of their assets: stocks, bonds, and cryptocurrencies. In times of crisis, people are in dire need of fiat currencies. For this reason, USD and Euro began to grow in price.
Today we will tell you how to identify signs of growth for cryptocurrencies, and understand when it is better to buy or sell bitcoin.
News
News analysis is the basics for any crypto analyst. You need to constantly monitor the news background to predict the price behavior. Depending on the situation, news can be a strong or insignificant factor. Therefore, it is necessary to take into account not only the nature of the news, but also the power of its influence. For example, the ban on mining in China may have a certain impact on the market. The same applies to approaching crises. But the ban on cryptocurrency trading in any small region is unlikely to have a significant impact on the crypto market. Follow the political and economic situation in the world to understand when to buy bitcoin.
Trading sessions
The market is cyclical, and all events are repeated. Moreover, there are events that repeat with a certain period. Read on the Internet about economic super cycles and pay attention to when financial crises occurred in the world, and you will find a certain pattern.
As for trading sessions, everything is very simple: depending on the time zones, there are certain times of trading activity. The largest amounts are concentrated in the Chinese and American markets. Try to track yourself on the charts, in what time periods the market activity is strongest. Use the Volume indicator as an assistant for this purpose.
Ratio of long and short positions
This indicator shows how many LONG and SHORT positions are currently open in the crypto market. This indicator is often used by margin traders. The point is that the big players direct the market movement, after which all other traders have to follow the whales. Many traders and investors consider this indicator to be the “Holy Grail”. Of course it’s not. But it can also be used for predicting the exchange rate.
How to use the indicator
When an overwhelming number of positions are open, it is profitable for large players to open positions in the opposite direction. For example, if the number of longs is 85%, and the number of shorts is only 15%, this means that the strength of buyers is beginning to run out, so it’s time to open short positions, thereby pushing many buyers out of the market and taking profits for yourself. The reverse is also true. But keep in mind that this is not a universal rule and there are exceptions. Sometimes sellers and buyers can wait a long time before they act, waiting for a better opportunity and acting against the expectations of the crowd.
What to do if you expect growth, but things did not go according to plan
Such situations on the crypto market are not uncommon. Even professional players make mistakes, not to mention ordinary traders. But if this situation happened to you, you can go at least three ways:
Option #1. Continue to hold the position, wait for the subsequent growth to sell at a profit or minimize losses. A good option if you plan to store bitcoin for several years. But over a short distance, the price may fall even lower.
Option #2. Average the position. If you grow, you will be able to offset the losses from the previous purchase and even make a profit. However, if the price continues to go down, the losses will be even greater. You can average it repeatedly, but you need to approach this strategy wisely, otherwise one day you will run out of money to average another losing position.
Option #3. Compensate for losses by selling at a higher price. Yes, you can do that. There are services that buy cryptocurrency at a higher price than that on many exchanges. They do this by interacting with platforms that are off-limits to many traders.
One of such services is the HiRiBi Bitcoin exchange. The service allows you to sell Bitcoin for PayPal at the highest price. You can sell BTC for 10% more than the exchange rate and thus not only fix losses, but also get a profit.
For example, you bought bitcoin for $10,000, and it fell by 5% to $9,500. In this case, with HiRiBi, you can sell Bitcoin to Paypal at the price of $10,450. This way you could get an additional $450 even when the exchange rate drops. This is called inter-exchange arbitrage. Also, you do not need to register on the exchanges yourself. You just need to buy BTC on any crypto exchange or exchanger and sell it on HiRiBi.
We wish you all a profit!
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