Price predictions have always been a stumbling block in cryptocurrency analysis. There are thousands of articles on price predictions, even on our blog. Everyone reads, but no one really believes it.
We decided to explain what price prediction really is and learn the basics of analysis. Spoiler: Your high expectations may disappoint you.
Is it even possible to predict any price?
Well, if we consider tarot cards or fortune telling, the answer is definitely no. The first step for a beginner is to enter a “price-predictions-dot-com” site and get the exact numbers. And then his investment dreams are shattered. Why?
The point is, these websites use machine learning algorithms, which means that behind the numbers are formulas. As the crypto market is very volatile, these numbers can change every day (or even hourly). Machine learning has been successful in the case of stock price predictions.
The price of cryptocurrency depends on several things:
- Market mood and the events behind it
- Internal competition;
- Economic and security issues, and more.
The price is not the problem that we have to foresee. However, we can analyze the charts to understand the trend.
A little theory
In general, there are three types of price analysis: technical, fundamental and sentimental.
- Technical analysis is based on historical activity of the asset. Those who prefer this method are convinced that the price patterns repeat themselves over and over again. It can be compared to the meteorologist and the weather forecast – it can be both true and false.
- Fundamental analysis is based on the events and the whole company / team behind the behavior of the project. Those who adopt fundamental analysis believe that every sudden increase in prices is a phase of correction.
- Sentimental analysis is based on opinion of the main actors. Using this method, journalists, bloggers, and influencers can change the direction of an asset’s price.
So, in order to get the most accurate prediction, we need to combine all these methods. However, this will not work for short trading (since nothing actually works for short trading).
3 tips to follow
If you’re new to crypto and don’t want to dive into the moving average, here are 3 simple things to consider.
- DYOR (or do your own research)
Obvious, no? However, some people overlook this point. Why is this so crucial? You won’t believe it, but your brain and critical thinking can work magic. If you dive deep into the project you want to invest in, it might help you not lose money in the future (due to scams or immature documents).
- Follow the social networks of trendsetters
We all remember the events that happened after Elon Musk’s tweets (if not, take a look). The main message is to follow all the financial experts or influencers who can move the market.
Who else to follow on Twitter?
3. Read the news a lot. We mean a LOT
If we speak in terms of fundamental analysis, there is a good chance that an event can cause prices to fall or rise. There can be any type of restriction or acceptance anywhere in the world. If you are up to date with current crypto news, you can easily predict future price movements.
So how should we predict the price?
The point is, we don’t need to predict anything. Since the nature of the crypto market is extremely volatile, in fact, you cannot get the exact price of Bitcoin in two months, three days, and five hours. However, if you understand the overall market situation, you will be prepared for any change in the market. In addition, you will be able to guess the future price.