The magic of comparing charts between assets: A strategic perspective in trading
One of the most useful tools I have incorporated into my trading is comparing charts between different assets. It is a technique that, although it may seem simple, opens a new dimension to understand how the market behaves and how cryptocurrencies interact with each other. Today I want to share with you how I do it and why this strategy can make a difference in your analyses.
Comparing assets with each other: ETH/BTC, XRP/ADA, and more
When I compare assets like Ethereum against Bitcoin (ETH/BTC) or XRP against ADA (XRP/ADA), what I am really looking for are patterns of relative strength. This analysis helps me answer key questions:
Which of these assets is showing the greatest strength in the current market?
Which one is more likely to continue with an upward or downward trend?
Which of them is attracting more capital right now?
For example, if ETH/BTC shows a steady rise, it means that Ethereum is outperforming Bitcoin. This could be a signal to rotate part of my capital towards ETH if my technical analysis supports that decision.
Market capitalizations: A hidden key
Another factor I always analyze is the market capitalization of the assets I am comparing. This helps me understand how money is flowing in the ecosystem.
1. If a coin is rapidly gaining market capitalization, it may be a sign of institutional interest or a strong narrative backing it.
2. If a coin is losing market capitalization against its peers, it may be an indication of relative weakness or that funds are rotating into other cryptocurrencies.
For example, comparing the market capitalization of XRP with ADA allows me to see which of the two is capturing more interest and volume from the market. This not only helps me choose the strongest asset but also to understand where money might flow in the coming weeks.
How I apply this in my daily analysis
My process is quite structured:
1. I choose relevant pairs: I start by identifying pairs between assets that have correlations or are in similar sectors, such as memecoins (PEPE/DOGE) or smart contract cryptos (ETH/ADA).
2. I observe charts in multiple timeframes: I analyze from daily to weekly charts, looking for clear trends, accumulation or distribution patterns, and support or resistance areas.
3. I cross-reference with capitalization data: I use tools like CoinMarketCap or TradingView to compare the capitalizations of the assets and validate what I see on the charts.
4. I identify rotation opportunities: If an asset seems to be in an early phase of rising while its pair is losing strength, I consider rotating my capital towards the stronger asset.
Why is this technique so powerful?
It helps you identify hidden opportunities: Sometimes, an asset seems to be lateralizing on its USD chart, but by comparing it with another asset, you can see that it is gaining relative strength.
It gives you a broader view of the market: Instead of focusing only on individual charts, you learn to analyze the ecosystem as a whole.
It allows you to diversify strategically: By observing which assets are leading the market, you can adjust your positions to maximize your chances of success.
Conclusion: Look beyond a single chart
If there is something I have learned on this journey, it is that trading is not just about analyzing individual charts; it is about understanding the big picture. Comparing assets, observing their capitalizations, and evaluating their relative strength has allowed me to make more informed and strategic decisions.
I invite you to try this technique in your analysis. It will not only help you identify clearer opportunities but will also give you a much deeper perspective of the market. And remember: trading is not guessing, it's understanding the movement of capital and acting accordingly.
#CompareToWin
#LetsTalkAboutTrading
