Analytical Guide For Bitcoin Trading
Bitcoin created by Satoshi Nakamoto in 2009 has become one of the most popular trading instruments. In early 2017, Bitcoin (BTC) traded steadily at a range of $ 800- $ 1,100. But by the end of 2017, BTC was able to reach its highest price at $ 19,891. This means that within 12 months, Bitcoin is able to grow up to more than 2,000%. Until now, there are no other trading instruments such as forex, stocks, or bonds that can provide a rate of profit of that.
The greater the public adoption of Bitcoin, the greater the price fluctuations that occur. If during 2017 BTC is dominated only by the Bull, at the beginning of 2018, appeared various parties that suppress the price of Bitcoin Bear. Different ways of trading Bitcoin also appear, but because the principle of trading for any instrument is almost the same, (selling at a more expensive price), then the analytical process was not much different from the way analysis in other markets. Broadly speaking, Bitcoin analysis is divided into 2 types, namely Fundamental and Technical Analysis.
Fundamental Analysis And Technical Analysis Fundamental analysis is a method of analysis based on issues, rumors, and various events that directly or indirectly have an influence on the performance of a market. Some experts have an opinion that this Fundamental Analysis is more suitable to be used in making long-term decisions. The technical analysis itself is a technique used to project the trend of a price. This analysis is done by studying market data in the past, such as Price Action and Volume. Technical analysis can be done with various methods such as Price Action, Chart Pattern, or using indicators such as RSI, Moving Average, and so forth. Fundamental Analysis For Bitcoin Trading Bitcoin’s fundamental analysis is not much different focusing on factors that can affect the law of demand and supply.
- Factors Affecting Supply (Offer) Bitcoin
- Factors Affecting Bitcoin Demand
- So in general, for Fundamental Analysis In Bitcoin Trading, the most important thing to be considered is
- Technical Analysis In Trading Bitcoin After understanding about Fundamental Analysis, the next method we should know is technical analysis.
Factors Affecting Supply (Offer) Bitcoin
As we know, Bitcoin only has a maximum supply of 21 million units. But in fact, it has been confirmed that Supply in circulation will be much less because there Bitcoin that can not be used by anyone. Bitcoin cannot be used because the private key is lost or other causes. In fact, there are rumors saying that the creator of Bitcoin, Satoshi Nakamoto, has locked at least about 1.1 million units of Bitcoin in his personal account. Until now, it is known there are about 4 million units of Bitcoin that can not be used due to various factors. So if we understand more, this fixed supply of Bitcoin is specially designed so that the value of BTC coins will continue to increase.
It can happen because along with the demand (Demand) which continues to grow, the price will increase if supply (Supply) also does not increase. Under certain conditions, the Fundamental that comes in the form of news, rumors, or rumors can make people lose confidence in Bitcoin and choose to sell their Bitcoin. Thus, the condition will immediately make Supply larger than Demand, and make the price of Bitcoin plummeted. Some of the negative fundamentals associated with Bitcoin are typically associated with rejection and blocking of international or government banks, hacking of the Bitcoin platform, and other negative news that could harm Bitcoin’s image.
Factors Affecting Bitcoin Demand
Some variables such as transaction activity related to BTC functions as cryptocurrency and digital assets may affect Demand Bitcoin. At first launch, of course, Demand (Demand) on Bitcoin is very small, and its use is not yet widespread, so the price is still low. But with the increasing popularity of Bitcoin, then Demand this cryptocurrency was shot. In addition, can be used as a medium of exchange, Bitcoin is also an instrument in the spot trading. This can cause the request to jump at any time. For example, there is positive news about the adoption of large corporations or financial institutions against the Bitcoin payment system. In this case, the public’s optimism about the potential and credibility of Bitcoin will increase, so that the number of Bitcoin buyers will also rise.
So in general, for Fundamental Analysis In Bitcoin Trading, the most important thing to be considered is
- Nature of News: Negative News leads to the addition of Supply, Positive News is able to make Demand increases.
- News Source: Only take news from professional and trusted sources.
- Core News: If it can affect the stability or existence of an instrument, then it is worth noting. Subject: Only
- Subject: Just take note of the news that has the subject of prominent people in the world of finance, central bank, monetary, and government.
Technical Analysis In Trading Bitcoin After understanding about Fundamental Analysis, the next method we should know is technical analysis.
As mentioned above, technical analysis retrieves past data for review and retest. The users of this technical analysis assume “History Repeated Itself”. There are three most common and powerful Technical Analysis Methods we will discuss this time, though there are dozens of other methods already emerging.
- Trendlines – Trendlines or Trend Lines, as the name suggests, is used to determine the current trend of price movements.
Trend Lines can be drawn from a series of High Lower (Lower High), and Low is getting higher (Higher Low equals Trend Rise). Trend changes can be identified earlier when the price breakout the trendline level.
- Support And Resistance – If the trend line uses a slope taken from Low or High, then Support and Resistance use a horizontal line at the Low or High level. The so-called Level of Support level tends to make the price back up, and become the price barrier down. While the Resistance level tends to make the price to go back down and become the price barrier going up further. By identifying these level values, we can draw conclusions about where the coins will be. From the example above, it looks like the resistance level of $ 8,141.2 becomes the price barrier to go further. This is evident from the price that was immediately rejected from that level and decreased. Then the Support level of $ 7.823.0 also directly provides greater purchase support, so the immediate price bounces up from that level.
- Supply And Demand – The concept is similar to Support and Resistance and is often identified. However, Supply and Demand here use the consolidation area (equilibrium) as its base. For example, the consolidated area around the level of $ 7.914.7 s / d $ 7.815.2 immediately responded well by the buyer, and the price was pushed up
The advantage of using this technique is that we can easily calculate how many Risk of each order is done. This is so easy because usually, we put Risk (Stop Loss) outside the area. In addition, Reward determination is also easier, because we live to calculate the amount of price movement with the area.