How to Analyze Bitcoin and Cryptocurrencies for Traders

Getting acquainted with the basics of cryptocurrencies is exciting. There is a tendency to get carried away and feel ready to play on the big stage. However, there is a ton to learn in this nascent sector if you are to have a sustainable trading journey.

This reality holds even for highly automated trading platforms like CryptoAltum. Traders may think that there is no need for analysis when utilizing a tool like Metatrader 5 (MT5) with high levels of sophistication. Nonetheless, an informed presence in the market is like a birds-eye view of the landscape. 

The growth in crypto trading platforms has been a wonder to behold. A platform like CryptoAltum, active since 2019, has a global client base. Digitization and blockchain have broken the national borders that define some financial markets. 

Additionally, intrinsic incentives like an additional 25% on all deposits  and zero commissions provide an edge in trading. High leverage trading is another valuable tool because of the potential to magnify earnings significantly. CryptoAltum’s leverage of 1:500 is the highest rate in the market. It goes without saying that leveraged trading has its risks and should be handled carefully. 

Comparing Crypto and Stock Trading

There are some similarities and differences between how traders in crypto markets and traditional equities operate.

Technical analysis is similar in many respects. Prices in all financial markets respond to indicators that traders can study. The significant difference is that leading crypto assets like Bitcoin have significant speculative aspects. Therefore, these assets are much more volatile than stocks and other equities. Crypto trading has incorporated stablecoins to balance the risk; hence, Bitcoin and USDT are the most popular deposits on CryptoAltum. 

Nonetheless, this volatility presents its opportunities. They may make fundamental analysis more momentary. On the flip side, they respond much more to news events, and such analysis or information can be precious.

How To Analyze Bitcoin And Cryptocurrencies

There are three general types of analyses for cryptocurrency markets. These are:

• Technical Analysis

• Fundamental Analysis

• Sentiment Analysis

First, technical analysis refers to tracking patterns, indicators, candlesticks, and all kinds of charts. Fundamental analysis gathers qualitative information like history, token fundamentals, and such data. 

Sentimental analysis is mainly about judging market sentiment. Crypto trading typically operates in waves of trader enthusiasm, and getting a feel of these trends is vital. Many trades happen because of the fear of missing out (FOMO). Therefore, relying on sentimental analysis alone can be misleading. 

The fundamental analysis lays the foundation for every crypto trader. There is every reason to learn about a digital asset before making trades. Every detail about a cryptocurrency project is relevant. Some cryptocurrency tokens have an uncertain future purely based on the development team. Others could be undervalued because they are still early in their roadmap. Such nitty-gritty information could be the difference between making informed trades using powerful apps like the MetaTrader 5 crypto broker or chasing the wind. 

Technical Analysis

When trading at a high level, technical analysis can be a great skill to have. Trading platforms like CryptoAltum have crypto price charts to provide a live picture of market trends. Candlestick charts are a common feature for traders as they provide helpful information such as highs, lows, and closing prices.

Trend lines are a notable aspect of basic technical analysis. Traders can discover chart patterns to predict market movements. Accordingly, they can follow growing and declining trends to determine the viability of making trades.

The specific tools that traders utilize vary from platform to platform. Support and resistance levels are also notable for their value to technical analysis. This data informs where the optimum orders could be. It is typical to sell/short at resistance and buy/long at support until the trading range breaks. CryptoAltum has short and long positions available for easy day trading. 

Balance Fundamental And Technical Analysis 

Automated trading is easily accessible in the modern age. That access should not undervalue the role of technical and fundamental analysis. You have the tools and resources to learn how to analyze cryptocurrencies. Therefore, take time to understand the various aspects of the crypto assets in your portfolio before making trades. Such balance is vital in making informed trades on crypto brokerage platforms. 

Additionally, ensure that you learn risk management in trading. High leverage trading needs prudent risk management to trade safely. Trading has its inherent risks but incorporating analysis and risk management can make the experience worthwhile.