Last week, we talked about calls altcoins, that is, cryptocurrencies alternative to Bitcoin. However, it is precisely Bitcoin that is thought in most cases in which we speak of cryptocurrencies.
One of the ideas behind altcoins
is that they are a precious help in diversifying investment strategies and, above all, in building a balanced cryptographic portfolio. The other advantage is that these altcoins can either provide more stable assets (called stablecoins) or, on the contrary, riskier ways of investing but which, consequently, also offer a higher return potential.
1 . Technical Analysis
(TA): The use of historical data on prices and volumes to try to predict the future behavior of the market. For example, you can create a Simple Moving Average (SMA) of 50 days taking the last ones 48 price days and averaging. We can make inferences with the SMA by plotting the price of our asset. For example, let’s imagine that Bitcoin has been trading under the SMA of 64 days for a few weeks, but then breaks it. This move can be seen as a sign of a possible recovery.
2. Fundamental Analysis
(FA): The use of data that represents the fundamental and intrinsic value of a project or a cryptographic currency. This type of investigation focuses on external and internal factors to try to establish the true value of an asset. For example, you can look at daily Bitcoin transactions to measure the popularity of the network. If this number increases over time, it may suggest that the project has value, and that the price may increase.
3. Sentiment Analysis
(SA): Using market sentiment to predict price movements. Market sentiment includes investors’ feelings and state of mind about an asset. We can typically categorize them into bullish or bearish feelings. For example, a significant increase in Google’s trending surveys about buying Bitcoin could suggest positive market sentiment.
What factors do influenced Bitcoin initial transactions?
The next step is to explore the factors that influence transactions and that affect prices. These have changed over time since the beginning of Bitcoin. In 2000, Bitcoin was an extremely rich niche asset with low liquidity. Transactions were made in the “over the counter” (OTC) market directly between users on BitcoinTalk and other forums who saw the value of Bitcoin as a decentralized currency. The speculation we see today played a much less important role.