Anyone who has had any experience with the cryptocurrency industry has likely already spotted the volatility of crypto prices. The prices are moving up and down, seemingly for no reason, as well as with no break.
With the prices of cryptocurrencies constantly going up and down, it seems impossible to predict what will happen next. And, if you can’t predict their movements, how can you ever profit from crypto trading?
The good news is that you can, in fact, predict what will happen to the prices with relative accuracy. The bad news is that it will only work for short-term price changes. As in, you can learn how to predict price movements within a few minutes. Let’s talk about how you can do it.
Strategies for Predicting Crypto Price Movements
Cryptocurrencies are very volatile for several reasons, one of which is the fact that they have no real-world asset that backs them and gives them value. You can see how stablecoins, in comparison, remain perfectly stable thanks to the fact that they are backed by fiat currencies or other assets that have a relatively fixed value.
Cryptos like Bitcoin do not enjoy such benefits, and so their prices tend to change very easily and get impacted by pretty much anything. So, in order to be able to predict how they will change, you should keep an eye out on:
1) The News
The news plays a major role in changing crypto prices. Whenever a crypto project makes the news for whatever reason, its price tends to see a significant short-term change. Everyone will see the same news, and hurry to buy some tokens of the said project if the news is positive.
In cases it is negative, those who already hold some coins will likely hurry to sell them in order to avoid losing their money, as they expect that the coin’s value will drop. In doing so, they will cause the price to drop with their own actions. The news itself can include anything, from a new crypto project partnership, changes in legislation, or even an influential individual saying something about crypto.
So, if you wish to know what the price will do, keep track of the most influential news sources.
You could say that the crypto industry is an industry built on speculation. Everyone who has spent any time within can confirm this, as the price of an asset can go up or down simply if enough people believe that it will go up or down.
Speculative investors enter long or short positions based on these expectations, and by doing so, they are impacting others’ thoughts and expectations.
A similar thing can happen with crypto betting on platforms such as AlphaPlay. This is a decentralized organization with a form of collective ownership. As such, it eliminates the risk of human factor influence by relying on smart contracts on the blockchain.
Meanwhile, the platform allows its users to bet on the real cryptocurrency rate, and double their bets within 5 minutes. However, it is an interesting and more exciting approach than taking up traditional positions. The prices are 100% fair, as the data is taken from the world’s leading exchange, Binance.
The platform has also created its own ALPHA ERC20 cryptocurrency, which is available for sale as part of the Alpha Gambling loyalty program until August 8th, 2020. Token owners are receiving 6% of all platform turnover as a bonus. At the same time, anyone can win up to 90% of the turnover as prizes, and earning 4% simply from playing with friends or from referrals.
3) Coin Movements
Another way to predict what will happen to the crypto price is to keep an eye on the amounts of coins that are entering exchanges. This is relatively easy to do through blockchain explorers, and a Twitter account Whale Alert does it constantly.
By keeping an eye on how the coins move between wallets, or whether or not they are entering exchanges, you can tell if the whales are planning to buy or sell huge amounts of coins. Since most people expect that whales have insight that they do not, they will follow the whales’ lead.
So, if a whale deposits a huge amount of BTC, everyone will expect that the price of BTC will drop, and they will start selling it. Once again, in doing so, they are (more often than not) the ones that are causing the crash. The same happens if the whale buys a huge amount of BTC, only this time, the price surges as everyone gets encouraged about BTC.
This is how whales are controlling and manipulating the market, but they are still useful for those who are interested in profiting from price moves.
These are some things to pay attention to if you wish to be able to predict and benefit from very short-term crypto price movements. In essence, it all comes down to keeping track of what happens in the crypto community and reacting to it between the event and the price reaction.
If you are quick and confident enough, you can make good money by trading crypto in this manner. But, as always, do not invest more than what you can afford to lose, as things can always take an unexpected turn. That’s just how it is with crypto.
Disclaimer The views, opinions, positions or strategies expressed by the authors and those providing comments are theirs alone, and do not necessarily reflect the views, opinions, positions or strategies of CoinGape. Do your market research before investing in cryptocurrencies. The author or publication does not hold any responsibility for your personal financial loss.
Andrey is a digital entrepreneur with more than 10 years of experience, IEO Adviser, Hackernoon and BitTorrent investor. He believes that actual usefulness is the best PR for any project.