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Do you want to know more about crypto coins to maximise your chances and knowledge? If you’re depending on a surge of the SingularityNET price or a reclaiming of the 2021 peak for BTC, understanding the history of a coin can allow you to see the patterns, and make it a lot easier to figure out your next steps. Do you hold, pull, etc? In this guide, we explore tips for understanding the historical price movement of a crypto coin.
What is cryptocurrency?
Cryptocurrency is a digital or virtual form of currency that uses cryptography for security. It is decentralized and typically operates on a technology called blockchain.
A blockchain is a distributed ledger that records all transactions across a network of computers. It is the underlying technology behind most cryptocurrencies. Transactions on the blockchain are grouped into blocks and linked together in a chain, creating a secure and transparent record of all transactions. Unlike traditional currencies, cryptocurrencies are not controlled by a central authority like a government or a central bank. Instead, they rely on a network of computers (nodes) that collectively maintain the blockchain.
Owning cryptocurrency means you have a private key, a secret cryptographic code, that allows you to access and manage your funds. Public keys are used as addresses to receive cryptocurrencies.
Bitcoin (BTC) is the first and most well-known cryptocurrency, created by an anonymous person or group known as Satoshi Nakamoto. Ethereum (ETH) is another widely used cryptocurrency known for its smart contract capabilities, which allow for decentralized applications. There are thousands of other cryptocurrencies, each with unique features and use cases.
Cryptocurrency wallets are software or hardware tools used to store, send, and receive cryptocurrencies. Wallets come in various forms, such as online (web wallets), mobile apps, desktop software, and hardware devices. You can buy cryptocurrencies on cryptocurrency exchanges using traditional currency or other cryptocurrencies. Cryptocurrency regulations vary by country. Some jurisdictions have embraced the new tech of crypto, whereas others have imposed strict regulations or bans in the case of China for example. Before investing in or using cryptocurrencies, it's essential to conduct thorough research, stay informed, and consider your risk tolerance. Depending on your country's laws, you may be required to report cryptocurrency transactions and pay taxes on gains.
Why invest in crypto?
There is growth potential in cryptocurrency. The cryptocurrency market is still relatively new, and prices can be volatile. Many see this as an opportunity to get in early and see significant gains as the market matures. You get Independence from institutions. Cryptocurrencies are decentralized and can provide people with more financial freedom beyond government or banking systems. You can use methods such as candlestick patterns to maximise your time using cryptocurrency.
Here are 10 tips for understanding the historical price movement of a cryptocurrency:
Look at the market cap over time
The market cap shows the total value of all coins in circulation and can indicate overall growth or decline. Analyse the market cap graph over time. Look for steady upward trends, sharp spikes, long plateaus, etc. Compare the market cap relative to other major crypto coins to gauge market share growth.
Check the trading volume
Higher trading volumes generally mean more activity and interest in the coin. Low volumes could signal a lack of interest. Look at trading volume charts on both short and long-time frames. Spikes in volume often precede price jumps. See how volume corresponds to major news events. Low volume rallies may not be sustainable.
Research the technology and developments
Coins with innovative technology or anticipated upgrades may see price jumps based on speculation and hype. Research the core technology and roadmap. Look for unique innovations in consensus mechanisms, scaling solutions, privacy features, smart contracts, etc. Upgrades like proof-of-stake or sharding could impact price.
Follow news and announcements
Major partnerships, exchange listings or other news can positively or negatively impact prices. Follow cryptocurrency news sites and announcement channels closely. See how news of partnerships, integrations, or major company/institutional adoption impacts price over both the short and long-term.
Study the coin emission schedule and mechanism
Analyse the supply schedule. Coins with lower supplies or deflationary burns may see prices increase with demand. Higher supplies can dilute prices. Coins with fixed, decreasing supplies will be more sensitive to increased demand. Check if the project burns coins over time.
Look at GitHub activity
Increased development activity can foreshadow potential tech improvements that could move prices. Check developer activity on GitHub. Look for frequent code commits. More code updates signal potential improvements coming. Stagnant activity may indicate stalled progress.
Analyse price charts
Look at trends, support/resistance levels, trading ranges, peaks and valleys over time. Analyse price charts using indicators like moving averages, RSI, volatility, and volume. Look for support/resistance levels. See if growth is accelerating or stagnating.
Examine exchanges and wallets
Being added to major exchanges or wallets can increase accessibility and drive demand. Accelerating growth may signal rising popularity and future demand. Comment sentiment can also impact price.
Check social metrics
Coins with growing communities and engagement may indicate increasing popularity. Monitor social metrics like Reddit subscribers, and Twitter followers over time. Accelerating growth may signal rising popularity and future demand. Comment sentiment can also impact price.
Compare against BTC and ETH
Altcoin prices often follow Bitcoin and Ethereum price movements closely. Understand those relationships. Compare price movement relative to Bitcoin and Ethereum. Altcoins often follow BTC/ETH price direction. Understand the price correlation.
The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.