Per a report from the Cambridge Center for Alternative Finance (CCAF), fossil fuels have been the primary energy source for BTC mining since the start of the year. The CCAF recently updated its Cambridge Bitcoin Electricity Consumption Index (CBECI). Its study claims that 62% of all the energy the leading token has consumed so far consists of coal-based energy. BTC’s Energy-Intensive Mining Bitcoin employs the proof-of-work consensus mechanism to create new tokens and validate transactions on the blockchain. The PoW…
Cryptocurrencies have rallied over the past year like never before in history. Most cryptos went as far as achieving all-time highs. Even with high volatility, investors do not seem to back down at any moment. As a crypto investor, it would help if you knew how to predict surges during a bull run to be at par with the rest of the community.
One might think that predicting the movement of crypto prices is complicated. However, with a few pointers, you can determine which cryptocurrency will rise higher than others. It requires a knowledgeable eye, and that’s the essence of this article. It will give you insight and the ability to predict cryptocurrencies. Let us dive in:
Reserve Risk Indicator
A reserve risk indicator can show a price surge is about to happen in crypto. The indicator tells the confidence and conviction of long-term holders. It gives a long-term cyclical oscillator that models the ratio between the incentive to sell and the opportunity cost of not selling. Let us take an example with Bitcoin.
As the price increases, the incentive to sell also increases. When the reserve risk is low, it shows that the HODLer incentive is high. The unspent opportunity cost is rising, and the price is low. Hence, the next course of action is to invest. The process might be lengthy and prolonged. The accumulation of unspent opportunity costs takes a while.
Thus Reserve Risk lows often indicate late bear markets, and the bull market is about to begin. When the reserve risk is high, it shows late bull markets and a move into the bear market. When you study reserve indicators of other cryptocurrencies, you will easily compare and determine which one will go higher.
Trading volume in cryptocurrencies is the total amount of trades and value of crypto at a specific time. By looking at the trade volume, you can clarify two things. First, it shows the rise and fall in the market price. Also, it indicates that investors are actively trading whether a coin is or not.
Here is a scenario. If investors look into the trading volume of crypto, they might notice a general increase in the trading volume, the highest in, say, two years. It signals that crypto is gaining momentum. Hence, they have confidence that the trend will keep rising and that investors will make more purchases.
When the trading volume of one crypto is high compared to previous volumes, it is safe to deduce that it is about to experience a bull run. This is because speculators have started to enter the market and hence the rise in trading volume. So eventually, the prices will go up.
Moving averages are trend-following. They provide delayed feedback on a price shift that already occurred.
One of the most prominent time frameworks for trading and spending is the 20, 50, and 200-period moving averages. Short-term investors likewise use the five and 10-period moving average. However, they tend to whipsaw and might not be appropriate for everyone.
There are four kinds of moving averages: simple, exponential, smoothed, and weighted. The most common and major one is the simple and exponential moving averages.
For calculation, rapid-moving averages provide more weightage to recent price information. Therefore they tend to react rapidly to price changes. On the other hand, a simple moving average offers equivalent weightage for the price information. Thus, they tend to be relatively sluggish in reacting to price modifications.
For that reason, investors tend to utilize EMA for a much shorter time frame, such as 10 and 20, as they capture the modifications rapidly. On the other hand, the simple moving averages are used for the much longer time frameworks since patterns typically don’t alter direction rapidly.
When used, moving averages of different cryptos can tell you which one is performing better than the other one.
Relative Strength Index (RSI)
The relative strength index shows price change and functions as an oscillator. The values range from 0 to 100.
When the reading is below 30, it means that the crypto is oversold. On the other hand, above 70 indicates overbuying. However, be careful because the indicator does well in a range-bound market. So when it comes to trending phases, the signals may be false.
Here is what you should know about RSI. A divergence happens when the RSI moves in the opposite direction to the price. A clear divergence occurs when the RSI makes a more significant low while the price sets a lower low. It is typically a solid indicator that a price jump is coming.
A bearish divergence happens when the RSI collects a lower high while the price sets a more significant high and recommends the purchasing momentum is nearing its climax. On the other hand, a bull divergence occurs when RSI sets a higher high while price sets a lower low.
The Fibonacci retracement predicts the support and resistance levels of crypto. In addition, you can derive levels in a trend in which the price is likely to follow. Hence, you can identify Potential resistance or swing levels locating a swing high or swing low. Mostly, these numbers don’t lie once you become experienced.
A swing high is a candlestick at the top of a pattern at any provided time frame. It also has a reduced high on its sides. On the other hand, a swing low is the reduced candlestick of a pattern with a more significant low on either side. Thus, you can choose the Fibonacci retracement device in your trading software application and link a swing low to swing high when you determine these factors.
By determining the swing high and lows of different cryptocurrencies, you can range where the price will be and which will increase more.
Cryptocurrencies are highly volatile, and investors are well aware of that. However, if you choose to dip your ties in trading, you should practice identifying the primary trend. Thus, to find out which cryptocurrency will rise higher during a bull run, the key is to study the above indicators. They will give you a range of how much each crypto will grow, and you can then compare it with other cryptocurrencies.
Meanwhile, crypto is going mainstream. Different institutions have taken an interest in the past decade and even invested in crypto. It has been one of the reasons why analysts say that the prices are increasing. We can make predictions of the value in the next couple of months. But in reality, it is a new and speculative field without much history to base the prediction. So take your time to study before investing in any cryptocurrency.