Cryptocurrency trading, in its essence, is not much different than conventional stock trading, and that’s Bitcoin basics. Most Bitcoin price prediction is based on market movements, serving a necessary purpose, to provide information, and live.
On the other hand, Bitcoin price predictions also contribute to the overall market sentiment. These sentiments allow the analysts and traders to examine the pattern based on the real-world information and use it to their advantage.
Recently, Bitcoin traders have had enough of Bitcoin price predictions, and cries were heard in different corners of the cryptosphere. Most people were sick of different predictions that would enable them to cover their losses, taken as a utopian cry for hope since the Bitcoin price line was dodging most predicted patterns.
Bitcoin price predictions and basic trading psychology
Traders were feeling insecure; therefore, the market kept going into a head and shoulder pattern loop one after another. The loop started on the 6th of October and lasted almost 20 days ending on the 23rd of October.
Bitcoin price chart by Trading View
The trend started with a short pattern that started forming at the BTC/USD price of $7800 range and ended at $7300 range by the time the pattern completed.
Bitcoin price charts are a telltale of the Bitcoin trader’s struggle to keep the currency afloat as soon as it entered the first head and shoulders pattern. It was identified, and traders tried to sustain the market; however, it was not enough since most traders and hodlers are playing for long-term gains.
The market eventually crashed after 20 days of resistance. This is a classic example of how market sentiment can affect the price movement.
When volume is high, traders unlucky enough to be losing money in their positions feel the sharp sting of their losses. To alleviate the pain, traders quickly close their positions (at a loss). As losers exit the market, a trend based on high volume is likely to be short-lived.
Investopedia explains this Bitcoin price movement is a result of losers exiting the market, and high volumes are likely to be short-lived.
Bitcoin trading volume data from 7th to 23rd of October verify this theory as any raises in the trading volume corresponds with a bump up in the price movement.
The trading volume shot up to $21 billion, finally breaking the Bitcoin price movement with sheer force, and the price kept rising with the trading volumes.
How to read a Bitcoin price prediction?
We are flooded with Bitcoin price prediction articles and charts every day, but only a few of them are actually of any use in real-time trading. Traders have to rely on their deduction of price movements and patterns using the signals they seem fit.
The trick is to make sure that the prediction is not ignoring any of the three major stakeholding players in the Bitcoin price movement.
- Retail traders, who hold a crucial position in the market with their collective force, each trader holds a low position individually otherwise.
- Trading Volume, one of the significant indicators can often explain how the market can sway in the days to come; however, not a definite solution on its own.
- Hodlers or Whales, hodlers, or whales are either top shot individual traders or institutions looking to make the most. Their intervention sways the market.
All of these indicators have the power to move the market in one swift move. Unless a Bitcoin price prediction takes all of these things into account, the probability of an accurate follow-through is very low. Whenever you come across a BTC prediction, you can analyze the quality of it based on the primary indicators. Happy trading!
This is a reprinted article