Hi all! We often wonder what is more effective: technical analysis or fundamental?
Let's look at some points objectively.
#ТехническийАнализ examines historical price and trading volume data to identify patterns and predict future price movements.
It works well in established markets where the price is influenced by many factors that average out fluctuations.
However, the market is very different from traditional ones:
*High #волатильность : Cryptocurrency prices can change dramatically over a short period of time, making technical patterns less reliable.
* Low #ликвидность : Compared to the stock or foreign exchange market, the cryptocurrency market has less liquidity. This means that even large players can manipulate the price, creating false signals for technical analysis.
* Investor Emotionality: Investor sentiment in the crypto market is highly volatile and often overwhelms rational factors, making it difficult to predict price based on historical data.
* Influence of external factors: News, regulatory changes, technological updates, actions of large players (whales) have a huge impact on the price of cryptocurrencies, which is difficult to predict using only technical analysis.
#Фундаментальный analysis plays a more important role in the crypto market.
It focuses on studying the cryptocurrency itself and its prospects:
* Technology: How innovative and promising is the technology behind cryptocurrency?
* Team: Who is behind the project? What is their experience and reputation?
* Application: What problem does cryptocurrency solve? How in demand is it?
* Competition: What is the competitive landscape? How strong is the cryptocurrency position?
General economic situation
also has a strong impact on the cryptocurrency market:
* Inflation: During periods of high inflation, cryptocurrencies can be considered a safe haven asset.
* Monetary Policy: Central bank policies affect the availability of fiat money, which affects the demand for cryptocurrencies.
* Geopolitical situation: Crises and uncertainty in the world can increase the demand for cryptocurrencies as a decentralized asset.
Eventually:
Technical analysis in the cryptocurrency market can be a useful tool for short-term trading, but it is not self-sufficient. Fundamental analysis and understanding of the overall economic situation play a much more important role in the long term.
Important:
* Combine different approaches: use both technical and fundamental analysis, take into account macroeconomic factors.
* Keep up to date with the news: follow events in the world of cryptocurrencies, regulation, technological developments.
* Manage Risk: The cryptocurrency market remains high-risk, and it is important to only invest what you are willing to lose.