V. Learn to Analyze Market Trends (Detailed Expansion)
Market trend analysis is a comprehensive judgment process of 'fundamentals + technicals + market sentiment', where these three aspects mutually validate each other to improve analysis accuracy. Below, each part's analysis methods, key focus areas, and practical applications are detailed.
(I) In-depth Breakdown of Fundamental Analysis
Fundamental analysis should focus on three levels: 'macroeconomic environment - industry dynamics - the project itself', each level has clear analysis focuses and information acquisition channels.
1. Macroeconomic Environment Analysis
Pay special attention to global macroeconomic policies, monetary policies, and geopolitical events, as these factors can influence the flow of capital in the overall capital market (including the cryptocurrency market):
Monetary Policy: The Federal Reserve's interest rate hikes or cuts have a significant impact on the cryptocurrency market. During interest rate hikes, the dollar appreciates, and market funds shift from risk assets (such as digital currencies) to dollar assets, leading to a drop in coin prices; during interest rate cuts, the dollar depreciates, and funds flow into risk assets, driving coin prices upwards. For example, in 2022, the Federal Reserve raised interest rates multiple times, causing Bitcoin's price to drop from $47,000 to $15,000; in 2023, the Federal Reserve paused interest rate hikes, and Bitcoin's price rebounded to over $40,000.
Geopolitics: Events like wars and regime changes can trigger market panic, leading to an increase in demand for safe-haven assets. At this time, mainstream currencies like Bitcoin may rise in the short term due to their 'safe-haven properties', but in the long term, the impact of the events on the global economy still needs to be considered.
Information Acquisition Channels: Follow the official website of the Federal Reserve, International Monetary Fund (IMF) reports, Reuters, Bloomberg, and other authoritative media to stay updated on macroeconomic dynamics.
2. Industry Dynamics Analysis
Focus on the policies, regulations, technical developments, and changes in the blockchain industry chain:
Policy and Regulations: The regulatory policies of various countries towards digital currencies are a core focus. For example, if the U.S. SEC (Securities and Exchange Commission) classifies a mainstream currency as 'securities', it may lead to the delisting of that currency in the U.S. stock market, causing a price crash; if China introduces policies to support the development of blockchain technology, it may drive the related currencies upwards.
Technical Development: Major breakthroughs in blockchain technology (such as Layer 2 scaling technology, cross-chain technology) enhance the application value of digital currencies. For example, the Ethereum merge (from PoW to PoS) reduced network energy consumption, improved security, and drove Ethereum's price from $1,000 to over $2,000.
Industry Chain Changes: The dynamics of industry chain segments such as exchanges, wallets, and mining companies will also affect the market. For example, if a major exchange experiences a security breach that leads to user asset theft, it may raise market concerns about exchange security, causing a short-term drop in coin prices; if a mining company announces a large-scale production cut, it may lead to a reduction in the supply of the corresponding currency, positively affecting the coin price in the long term.
Information Acquisition Channels: Follow blockchain industry media (such as CoinDesk, The Block), industry research reports (such as Messari, TokenInsight), and mainstream project official blogs to stay updated on industry dynamics.
3. Project Analysis
For specific traded currencies, analyze their project positioning, technical team, token economics, and application scenarios:
Project Positioning: Assess whether the project addresses real industry pain points and whether it has irreplaceability. For example, Bitcoin is positioned as 'decentralized electronic cash', while Ethereum is positioned as 'decentralized application platform'; the different positioning leads to different market performances.
Technical Team: Review the backgrounds of team members (such as whether they have blockchain industry experience, technical research capabilities), past project experiences, and whether the team is open and transparent (such as whether they use real names and whether they regularly update project progress).
Token Economics: Analyze the total issuance, circulation, distribution mechanism (such as team holding ratio, community incentive ratio), and destruction mechanism of the token. For example, if a certain token has a total issuance of 1 billion, with 50% allocated for community incentives, 30% for technical research, and 20% for team holdings, and the team holdings have a lock-up period of 1 to 3 years, it indicates relatively reasonable token distribution and less selling pressure in the long term.
Application Scenarios: Check whether the token has practical application scenarios and whether it is widely used. For example, Ethereum's token ETH can be used to pay gas fees and participate in DeFi (decentralized finance) applications, with a rich array of application scenarios and relatively stable demand.
Information Acquisition Channels: Project official white papers, GitHub repositories (to check technical research progress), Discord and Telegram communities (to understand community activity and user feedback).
(II) Practical Application of Technical Analysis
Technical analysis should grasp the core logic of 'K-line patterns - technical indicators - volume-price relationship' and avoid mechanically applying indicators; it should be combined with a comprehensive judgment of the market environment.
1. K-line Pattern Analysis
Focus on reversal patterns and continuation patterns, which can indicate possible market trends:
Reversal Patterns: These include head and shoulders tops, head and shoulders bottoms, double tops, double bottoms, etc. Taking the head and shoulders top pattern as an example, the price rises to a peak and then corrects, rises to an even higher peak (the head), and then corrects again, with the correction exceeding the previous low point, indicating weakening bullish strength and a possible downward trend. For example, if Bitcoin's price rises from $20,000 to $25,000 (left shoulder), corrects to $22,000, rises to $26,000 (head), and then corrects to $21,000 (breaking the left shoulder's low), the head and shoulders top pattern is formed, and the subsequent price may drop below $20,000.
Continuation Patterns: These include rectangles, triangles, flags, etc. Taking the rectangle pattern as an example, when the price oscillates within a certain range, it indicates that the forces of bulls and bears are balanced, and after the oscillation ends, the previous trend may continue. If the previous trend was upward, it is highly likely to continue rising after the rectangle oscillation ends; if the previous trend was downward, it is highly likely to continue falling.
2. Comprehensive Use of Technical Indicators
Single technical indicators have limitations and need to be combined with 2-3 indicators for comprehensive judgment. Below, using the 'MACD + KDJ + RSI' combination as an example, we will explain how to apply it:
Buy Signal: The MACD forms a golden cross (DIF crosses above DEA), KDJ forms a golden cross (K crosses above D), and the RSI indicator rises from below 30 to above 50, indicating that bullish strength is gradually increasing, and entering a long position may be considered.
Sell Signal: The MACD forms a death cross (DIF crosses below DEA), KDJ forms a death cross (K crosses below D), and the RSI indicator falls from above 70 to below 50, indicating that bearish strength is gradually increasing, and entering a short position may be considered.
Notes: After the indicators signal, it is necessary to verify it with K-line patterns and trading volume. For example, if the MACD shows a golden cross but the K-line pattern is a double top and the trading volume shrinks, the buy signal may be invalid, and entering the market is not advisable.
3. Volume-Price Relationship Analysis
The volume-price relationship is key to judging the authenticity of market trends. Common volume-price combinations and divergences are as follows:
Volume-Price Coordination: In an upward trend, when the price rises, trading volume increases; when the price corrects, trading volume shrinks, indicating a healthy upward trend supported by funds; in a downward trend, when the price falls, trading volume increases; when the price rebounds, trading volume shrinks, indicating a clear downward trend with significant selling pressure.
Volume-Price Divergence: In an upward trend, if the price makes a new high but the trading volume does not, it indicates insufficient bullish strength, and a correction may occur; in a downward trend, if the price makes a new low but the trading volume does not, it indicates weakening bearish strength, and a rebound may occur. For example, if the price of Ethereum rises to $2000 (new high), but the trading volume is only 80% of the previous high (not a new high), caution should be exercised regarding the risk of correction.
(III) Market Sentiment Analysis
Market sentiment can influence short-term market trends. Beginners can use the following three indicators to judge market sentiment:
Fear and Greed Index: This index ranges from 0 to 100, with 0 indicating extreme fear and 100 indicating extreme greed. When the index is below 20, the market is in a state of extreme fear, which is often a good buying opportunity; when the index is above 80, the market is in a state of extreme greed, which is often a good selling opportunity. For example, in November 2022, the Bitcoin Fear and Greed Index fell to 10 (extreme fear), and then the Bitcoin price rebounded; in July 2023, the index rose to 85 (extreme greed), and then the Bitcoin price corrected.
Social Media Heat: Pay attention to the discussion heat of digital currencies on platforms like Twitter and Weibo. If the discussion volume of a certain currency surges in a short period and is mostly positive, it may drive the price up in the short term; if the discussion volume surges but is mostly negative, it may lead to a short-term price drop.
Exchange Trading Volume: When the total trading volume of an exchange suddenly increases (e.g., daily trading volume increases by more than 50% compared to the previous day), it indicates that market sentiment is active, and a major trend may occur; if trading volume continues to shrink, it indicates that market sentiment is sluggish, and the trend may be in a consolidation phase.
