The covid pandemic has taught investors so many things. One of the key learnings was, cryptocurrencies like Bitcoin and Ethereum are not alternative investment options. During the last 2 years, some cryptocurrencies have emerged as a very stable investment option, albeit with volatility, but all other financial markets have also witnessed the same volatility to be fair.
This is the reason more people are considering allocating more money to cryptocurrencies instead of just relying on fiat finances.
However, investing in cryptocurrencies is not that easy.
Because crypto markets are highly unpredictable and volatile, just like all other financial markets, you can even say more volatile than traditional finance markets.
So, if you wish to make the best returns on your investment in cryptocurrencies, you require a fundamental and technical analysis of coins. You need to craft a concrete trading strategy based on this research and analysis.
Here, technical analysis simply means tracking historical data of cryptocurrencies like price movement and volume. You need to collect this information and analyze the same in order to forecast future price movements.
You need to analyze cryptocurrency charts to predict the future price movement of coins so that you can make a well-informed decision on when to enter a particular currency and when to exit with decent profits. Cryptocurrency charts are graphs that show the historical price movement, volume, and time intervals of coins. These charts form patterns based on past performance. It helps to find investment opportunities in the future.
In this post, know in detail about Cryptocurrency live charts and how to analyze charts.
In order to read charts, you should be well aware of what volume is and price movement.
Volume basically represents the total amount of crypto coins traded (bought and sold) in the last 24 hours.
From the historical data, you can check volumes of coins in the last one week, 1 month, 3 months, and a year. Likewise, you can check price movement for different time periods.
Volumes confirm the trend of these periods of time. Because volume is a measure of how much one coin has been traded over the period of 24 hours, 1 month, 3 months, or a year.
Large trading volumes over time indicate a strong trend while low trading indicates a weaker trend.
Apart from that, let's see some other important things in the chart.
2 important things you must see during crypto chart analysis
1. Support and resistance level
Support is a price level where you can expect the downtrend to pause. Because demand for coins is higher at that price level. Buyers think that the price level is attractive to buyers. So, prices do not drop lower than that level due to increasing demand.
Likewise, resistance is a price level when the price doesn't move up after a particular point because of the selling trend.
2. Market cap and diluted market cap
The market cap of a coin is the total number of coins in circulation multiplied by the current price of the coin. A fully diluted market cap indicates a market cap when all coins are issued. It means the maximum supply of the coin multiplied by the current price.
For example, the maximum cap of Bitcoin that ever was minted is 21 million, and nearly 90% of coins are already minted and in circulation as of now.
With the help of this total supply and current circulation, you can have an idea about the future supply of coins in the market. The market cap shows the size of the coin. You can assume more stability in large market cap coins.
How to analyze cryptocurrency live charts like a pro?
First of all, select the time frame in the chart. You can select from 5 minutes to 24 hours, daily, weekly, and monthly charts.
Then, look for the volume in the particular time frame. It will give you an idea about strong or weak trends.
See the price movement and candlesticks.
There are two types of candlesticks 1. Bullish 2. Bearish
Green candles on the graph are bullish and red are bearish
The green candle indicates the price has increased over a particular time and the red indicates the price has decreased
Wicks of candlesticks represent the highest and lowest prices during the selected time. These candlestick combinations form chart patterns that help to predict future trends.
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This is it for now about cryptocurrency charts. We hope that this article has provided you with useful information on cryptocurrency charts. Now that you know everything of importance related to crypto charts, let’s get you started with crypto trading. All the best!