Cryptocurrency: Basic analysis of cryptography – key indicators to watch
The cryptocurrency world has seen an increase in popularity in the last decade, and many investors and merchants have launched this new and unseaned market. As with all emerging investment opportunities, it is essential to carry out thorough research and to apply basic analysis when evaluating the potential of cryptocurrency.
What is cryptocurrency?
The cryptocurrency is a digital or virtual currency that uses cryptography for security and is not controlled by a single government or financial institution. Bitcoin (BTC), the most well-known example of cryptocurrency, was created in 2009 as an open source software project.
The most important features of cryptocurrencies
Before you get into the basic analysis, look at the most important features of cryptocurrencies:
- Limited Care : Most cryptocurrencies have limited coins or tokens, ensuring that their value is not artificially inflated.
- decentralized : Cryptocurrencies operate on a decentralized network where no entity regulates the flow of funds.
- Blockchain Technology : All transactions are recorded in a public ledger called a blockchain that allows transparent and secure transactions.
- Digital ownership : cryptocurrency ownership is digital, allowing investors to store their assets safely.
Basic analysis: Main indicators to watch
When evaluating the potential of cryptocurrencies, the basic analysis becomes crucial in understanding the fundamental rights proposal. Here are some key indicators:
- Price Movement
: Analyze the price movement of the cryptocurrency over time to identify trends and patterns.
- Technical indicators : Use technical indicators such as moving averages, RSI (relative strength index) and Bollinger bands to assess market emotions and potential buy/sales signals.
- Basic Analysis : Examine factors such as revenue growth, user base, adoption rate and competitive landscape to assess the sustainability of cryptocurrency.
- Regulatory Environment : Be aware of regulatory developments in target markets, as changes in laws or regulations can significantly influence the value of cryptocurrencies.
- Safety : Ensure the underlying technology is safe and resistant to hacking attacks.
Bitcoin (BTC) Analysis: Case Study
In order to illustrate the importance of basic analysis, let’s look at Bitcoin (BTC), one of the most widely marketed cryptocurrencies:
* Price Movement : BTC has been a consistently narrow province in the last decade with remarkable price fluctuations in 2017.
* Technical indicators : Moving averages and Bollinger bands suggest that Bitcoin is likely to continue its upward trend, leading to increasing adoption and institutional investments.
* Basic Analysis
: Bitcoin revenue growth was $ 14.3 billion from 2009 to 2020, while the user base increased from about 100 users to more than 70 million active titles.
* Regulatory Environment : Despite the regulatory challenges, Bitcoin is still a popular choice because of its decentralized and safe nature.
* Safety : The decentralized architecture of the Bitcoin network ensures that transactions are fake.
Other key players in cryptocurrency market
While Bitcoin was the most striking cryptocurrency, other noteworthy players are:
- ETEREUM (ETH) : A popular Blockchain platform with a strong developer of ecosystems and increasing adoption.
- Litecoin (LTC) : Faster and lighter alternative to bitcoin with a separate user base.
- Ripple (XRP) : Payment Network aimed at revolutionizing cross -border transactions with blockchain technology.
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