How can you predict the price of crypto Bitcoin?

Technical and Fundamental Analysis

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Jay Crypto

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Last updated Jul 27, 2022 at 6:59 PM

Posted Jun 28, 2022 at 1:00 PM

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The recent global pandemic spurred interest in alternative ways of earning income.  Crypto markets gained a lot of followers, and investors started to look for strategies to help them analyze the market. Predicting the price of Bitcoin can help traders to forecast crypto trends, but how is it possible to foresee how well these cryptocurrencies will perform? For analysis and Bitcoin Price Prediction, there are two main schools of thought that are helpful – fundamental analysis and technical analysis.

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Fundamental Analysis: Bitcoin Price Prediction

Fundamental Analysis is the technique of assessing the value of any digital asset based on different financial factors and related economies. The fundamental analysis of Bitcoin or any other specific asset will include looking at the overall crypto market trend, economic trends that can affect the price of an asset, and sentiment around that asset. 

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Analysts try to evaluate all the tangible and intangible factors of the target asset to measure its intrinsic value. The currently available information about the project and its team can be helpful for this type of analysis. The crypto fundamental analysis is implemented for long-term investment in the assets. So keeping an eye on the upcoming Bitcoin related news and events can be helpful to forecast the market trend, particularly the Bitcoin Price Prediction.

Technical Analysis: Bitcoin Price Prediction

Technical analysis is the process of evaluating the value of an investment based on historical market data about a specific asset. The history of the asset is a valuable source of information and it is used to guess the next possible movement of the asset. Technical analysis is a numbers-driven strategy; with the help of different technical indicators in the market, it can project the future outcome. 

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The market analysts and investors use statistical equations, technical indicators, and charts to identify patterns. These patterns support either a buy or sell signal of the digital asset. Instead of seeking the intrinsic value of the asset, technical analysts use computational and mathematical skills to identify patterns in the price chart of the asset to forecast the next move. Technical analysis is used for the short-term investment of any asset. The following are among the different technical analysis signals that can be helpful for this type of analysis:

  • Simple Moving Averages (SMA)  are indicators in the crypto market that help identify market trends by averaging the daily price of the asset over a fixed time. The signals for the short or long trade are generated once a short duration moving average (MA) crosses a long duration MA.
  • Momentum Indicators are tools used by investors and traders to get a better idea of the price change of a particular crypto asset. A lot of momentum indicators are present for the analysis of crypto assets, and each indicator generates short and long trade signals based on underlying formulas. Convergence/Divergence (MACD), Bollinger Bands (BB), Stochastics, and many others are popular momentum indicators.
  • Trend lines  are used to indicate how a particular asset has behaved in the past. Trend lines often come in handy if an asset’s price attains an all-time-high and there is no prior price history. 
  • Support and Resistance level  is the particular indicator that uses the previous history of the asset. Support is a price spot where buyers have invested and resistance is the area where most investors sell the asset. Usually, traders try to buy at the support and sell at the resistance.

Bottom Line:

Crypto fundamental and technical analyses are two different things; each has its pros and cons. One thing to keep in mind is that there is no guarantee that these indicators or research will necessarily accurately predict the direction for the crypto market. These analysis techniques are ways to guess the movements of the market, but the actual crypto market is way more volatile and speculative. 

There is a need for very high analytical and research skills to check the authentication of such techniques. Some people prefer fundamental analysis, some are in favor of technical analysis. Most traders combine both techniques to analyze the market. If you’re new to the market, then spend enough time learning the techniques that can be helpful in trading.  

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