Can You Really Predict Crypto Trends?
Is there a method to this madness?
If there were one word to describe the crypto market, that would be volatile. Or unpredictable. Or random. Ok, we can’t settle on one word, but you understand where we’re going with this. In its brief history as a standalone market, crypto has proven to be wildly erratic, making it challenging for even the experts in the field to predict, project, or guestimate the market’s direction. Today, we’ll try to decipher whether crypto trends are indeed identifiable or simply impossible to forecast. Let’s dive right in.
Why are crypto trends so hard to predict?
Crypto carries some unique features that make it harder to predict than traditional markets. We’ve done the research for you, and here is a list of those reasons to help you contextualize this reasoning:
- Crypto is new: when a market is as new as crypto, it’s hard to find enough information that would lead you to make a buying or selling decision on an asset. Indecision leads to frequent price fluctuations.
- Security concerns: blockchain technology is a work in progress, a new breed of technology that many struggle to understand and others try to manipulate. Security concerns around the architecture and functionality of the technology can lead to sell-offs.
- Fraud and manipulation - being so new, crypto is a market polluted with bad actors ready to pry on newcomers’ lack of information and inexperience. Crypto scams are widespread and common, which makes the market more volatile.
- Speculative nature: crypto assets are by nature hard to predict because they aren’t pegged to real-world goods. The price is purely speculative and based on hype, demand, and supply.
Crypto shares commons traits with traditional markets
Sure, crypto is unlike any other trading market we know of but let’s not forget that it’s still powered by the same forces that dictate movement in other markets. Much like forex, stocks, or commodities, demand, supply, and market sentiment move the needle in the crypto market. The crypto ecosystem is more complex and unique, but the market forces remain largely unchanged.
There are essentially three states the crypto market can be. Rising — ‘bullish’, falling — ‘bearish,’ or constant — ‘flat’.
The crypto community is where trends are born
Having identified some similarities between crypto and more traditional markets, let’s now talk about an element that distinguishes crypto from the rest — the community. Never have we seen an asset driven by its community to such an extent before. Whether Telegram, Twitter, Discord, or GitHub, the crypto community is the liveliest, most engaged group ever recorded.
Crypto is heavily based on investor sentiment, and there is no better place to spot that than the aforementioned platforms. The Bitcoin Fear Index is an excellent example of the power of these groups, a place to gauge how investors feel towards the cryptocurrency. These platforms are where a project’s potential can be unearthed or even where projects die. People express their fears, doubts, comments, and recommendations and create a tidal wave of momentum regarding an asset.
Look no further than the leading man himself, Elon Musk, and how his tweets moved the crypto market.
Poolside with Polkastarter featuring CoinMarketCap
To get some information on the topic, we thought it would be a good idea to call in the experts. In the next episode of our podcast, Poolside with Polkastarter, we welcome Molly Zuckerman, Content Lead at CoinMarketCap, to discuss “How To Spot Emerging Trends in Crypto.”
To catch the episode, make sure you tune in on September 12, 4 PM UTC.
⏰Set up a reminder here: https://twitter.com/i/spaces/1lDGLndZwYaxm
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