How to predict Bitcoin price movements? Tips and Methods for Making Forecasts: In online forex trading Many people are worried, “I’m interested in investing in Bitcoin, but I’m afraid I’m going to lose it.” “I want to buy it before the price rises, but I don’t know when to buy it.”
Since the price of crypto assets (virtual currency) such as Bitcoin fluctuates greatly, there is a possibility that you will lose money depending on the timing of purchase.
In this blog, we will provide tips and methods for predicting fluctuations in Bitcoin prices.
Can you expect Bitcoin prices to rise or fall?
There is information that many people refer to in investment, such as corporate financial results information for stocks and employment statistics for Forex.
Is it possible to predict price movements of virtual currencies such as Bitcoin-based on some information?
It’s not limited to Bitcoin in the first place, but why do investment product prices rise and fall? Generally, the price is determined by the balance between supply and demand, and it is said that if the demand is higher than the supply, the price will increase.
Taking Bitcoin as an example, the more people are trying to buy Bitcoin, the higher the demand. On the other hand, the maximum number of Bitcoins that can be issued is 21,000,00.
There is a fixed supply limit, so if the demand for Bitcoin increases, its price will increase. Conversely, if the demand for Bitcoin decreases, the price will decrease.
In other words, by knowing the factors that increase demand, you can predict the timing of price increases to some extent in advance, which can be used as a reference when purchasing Bitcoin and vice versa, if you know what is causing the demand to drop, you may be able to sell or forgo buying before you lose.
How to predict Bitcoin price movements
What are some of the factors that influence the demand for Bitcoin? The following five points can be considered as factors that increase the demand for virtual currencies including Bitcoin.
1. Improving the name recognition of virtual currency
As the number of stores and services that can use cryptocurrencies increases, the popularity of cryptocurrencies will increase, and demand may increase.
Demand may also increase due to news reports such as major companies deciding to adopt virtual currencies.
Conversely, negative coverage of cryptocurrencies can lead to lower demand and lower prices.
2. Listing of virtual currency on an exchange
There are many cryptocurrency exchanges around the world. It is expected that the number of users will increase if minor cryptocurrencies are traded on previously unlisted cryptocurrency exchanges. Along with this, there may be cases where demand increases.
3. Impact of cryptocurrency updates
Each cryptocurrency has a developer. Developers are making daily improvements to improve the speed of cryptocurrency remittances and security measures.
If the improvement is reflected in the update, it will be more convenient and the price of the updated cryptocurrency may increase.
4. Burn reduces supply
Burn means incineration, which means reducing the number of issued and distributed virtual currencies. Burn’s purpose is to increase its rarity value by reducing the number and return it to investors.
5. Impact of currency crisis
A currency crisis is a sharp decline in the external value of a country’s currency due to concerns about its ability to repay debt. In countries in a currency crisis, the value of their currency is depreciating, so many people exchange for the currency of another country.
Therefore, there may be more exchanges for virtual currencies, demand will increase, and prices will rise.
Recently, each country has implemented monetary easing due to the corona disaster. This has reduced confidence in existing currencies, increased attention to Bitcoin as an asset to hedge inflation, and raised prices.
In addition to the factors described so far, there is also a method of predicting price movements using methods such as “technical analysis” and “fundamental analysis”.
1. What is technical analysis?
Technical analysis is an analysis method that predicts future directions and price levels from past price changes. Technical analysis uses charts to analyze historical price trends.
In the chart, analysis is performed using “candlesticks” that express price movements during a specific period, and “moving averages” that connect average values used to grasp price changes.
2. What is fundamental analysis?
Fundamental analysis is a method to judge whether the present value is cheap or expensive based on information on the world economy, economic indicators of each country, and political trends. Bitcoin predicts future price movements due to the factors mentioned above.
News that enhances the future, popularity, and convenience of Bitcoin is likely to be a factor in increasing prices.
On the other hand, if the news that damages Bitcoin’s reputation is reported, the tendency to sell will likely increase.
To grasp the price movement of Bitcoin in real-time
The freshness of information is important when gathering information on the five factors that increase demand introduced in “How to predict Bitcoin price movements”.
To analyze the future of Bitcoin, we cannot overlook the current reputation and events such as the latest updates. In particular, when a tie-up with a large company is announced, the price movement will be large, so be careful.
Refer to cryptocurrency experts and investors
It is also effective to refer to the statements of experts and investors and articles. As well as saying on SNS such as Twitter, it may be taken up by net news, so it is recommended to expand the antenna.
Will Bitcoin rise in April?
When you are researching Bitcoin, you may see that “Bitcoin will increase in price in April”. The reason why such a thing is said is that the price often rises in April as a result of analyzing past statistical data. Looking at the statistical data for the past 10 years, it seems that April is often bullish, and 8 out of 10 years have risen.
On the other hand, some investors have analyzed that “the price increase in April has no causal relationship” and “the reaction to Bitcoin’s decline in March is often the case”.
It is important not to simply believe in one piece of information, but to acquire information from various sources and gain the ability to select the necessary information.
It may be possible to predict the price movement of Bitcoin by collecting information transmitted on SNS such as Internet news and Twitter every day.
Some services distribute e-mail newsletters and news that send information about virtual currencies, so busy people may consider using them.
Efficient asset management may be possible by anticipating Bitcoin price movements and buying and selling. Cryptocurrencies are expected to continue to expand their market significantly.
It will be only a matter of time before the entry of even larger companies. The convenience of virtual currencies has the potential to grow, and it is easy to imagine that demand will continue to grow.
Cryptocurrencies are still volatile and some people may have a high-risk image. However, Bitcoin can be purchased from 0.001 BTC. If you haven’t purchased it yet, why not start by purchasing from a small number.
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