The popularity of cryptocurrencies as an investment tool continues to grow. Predicting the prices of different cryptocurrencies is crucial for traders and investors. By itself, the exchange SOL to ETH is technically not so complicated. It’s much more difficult and more important to choose the moment when your trade will make a profit.
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Features of the cryptocurrency market
The cryptocurrency market is historically young, very volatile, and very emotional. Any of these characteristics in itself already greatly complicates the possibility of forecasting. Some members of the crypto community hold a radical opinion that the classical methods of analyzing financial markets are not applicable to crypto at all.
In fact, not everything is so sad, although it is really more difficult compared to established traditional markets. One way or another, the price forecast of any asset is based on fundamental and technical analysis.
Fundamental analysis of cryptocurrencies
Fundamental analysis is designed to determine the real value of an asset and its compliance with market realities. In the world of traditional finance, there are relatively clear timelines of events that directly or indirectly affect the market, such as reports on changes in GDP, labor market dynamics, inflation, changes in the Fed’s key rate, etc.
Since cryptocurrencies are decentralized and still poorly integrated into the global economy. There is still no clear schedule of significant events for the industry. And the legal framework governing the circulation of digital currencies has not yet been developed. Therefore, in the crypto world, everything is more spontaneous, and not very predictable, especially when it comes to forecasts for the medium and long term.
However, fundamental factors in the cryptocurrency market are also present and should be paid attention to. Among them:
- The project team, its experience, and its reputation in the industry.
- Roadmap and other content of the white paper of the project.
- The relevance of the problem that the project plans to solve.
- Features of monetary policy.
- The presence of a minimum viable product and the degree of its readiness for mass use.
- The volume of transactions, the size of commissions, capitalization, trading volumes, etc.
It is worth considering that in the context of a small capitalization of the cryptocurrency market as a whole. Market sentiment and price dynamics can be very strongly influenced by news.
Technical analysis
Technical analysis is partly based on mathematical and statistical calculations. It is a set of forecasting tools based on chart and order book data. Thanks to the development of computing technologies, tools and methods of analysis continue to improve.
The development of computer technologies in the second half of the last century contributed to the improvement of tools and methods of analysis, as well as the emergence of new methods that use the capabilities of computer technology.
Leading analytical services
WalletInvestor
The site provides daily short-term and long-term forecasts for more than 880 coins, which are based on historical data, market trends, and technical analysis. The service uses machine learning algorithms.
TradingBeasts
Another popular service with short-term and long-term forecasts and numerous technical analysis tools.
DigitalCoinPrice
The site provides a detailed retrospective analysis of price dynamics and market trends, as well as short-term and long-term forecasts for more than 1500 cryptocurrencies.
A careful study of the data of analytical services shows that forecasts often consider more than one scenario and estimates from different sources sometimes differ greatly. No method, no trader, and no service give 100% accurate cryptocurrency predictions.
It is almost impossible to take into account a huge number of variables, so it is unlikely that ideal win-win strategies will ever appear. Any situation needs to be assessed comprehensively, focusing on sources you trust and based on your own experience.
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