Bitcoin declined over the weekend, having failed to overcome the consolidation zone of $58,340.66 - $59,517.79. Now analysts point out another attempt to break through higher. Meanwhile, traders are puzzling out what is going on in technical charts of the most popular cryptocurrency. Let's discuss how to assess information which influences digital currencies.
Conventional assets are pegged to fiat money and have a value backed by reserve currencies. It is common knowledge that even fiat money is often sensitive to verbal interventions of influential figures such as leaders of central banks or members of rate-setting committees.
Unlike conventional assets, Bitcoin and other digital currencies are not backed by fiat money. Therefore, the bullish or bearish trend of Bitcoin depends entirely on changes in the demand/supply balance. What is the factor of major importance to make a digital asset win or lose favor with investors?
Experts polled by the BelnCrypto web forum gave interesting viewpoints.
Director of Alfacash Nikita Soshnikov pointed out great importance of opinions expressed by powerful people. Just a single post on the social media or a public remark is capable of setting the crypto market in motion. A vivid example is that Elon Musk mentioned Bitcoin once in his profile on a social platform that triggered a spike in the number one cryptocurrency.
Social media, in particular Twitter or Reddit forum, have become popular floors for market leaders. From the viewpoint of Soshnikov, it would be a good idea to subscribe to well-known crypto investors, owners of companies or popular traders to get to know sensitive information.
Nevertheless, it doesn't make sense to follow blindly any statement by big names. The crypto market is not regulated, hence no one bears responsibility for such public comments. Therefore, it would be better to make investment decisions resting on technical analysis and one's own market experience.
Holders of cryptocurrencies also can cause moves on market quotes. Director of CryptoTrade Alexander Fjodorov highlighted the importance of rhetoric from market famous people for the new crypto market. Nevertheless, comprehensive analysts could be only that one which combines a variety of data.
When it comes to mass media, it is the reputation of the author that matters, but not a periodical where the opinion was published. Nowadays, the crypto market is vulnerable to financial scams. Besides, due to high volatility and erratic dynamics of the market, even professional traders can make mistakes.
The thing is that mass media work under tough rules covering traditional financial markets. If a periodical published information that entailed losses of a company, this is the case when a lawsuit could be filed against that periodical. The crypto market is decentralized and lacks any regulation. Thus, this market offers big opportunities for market fraud and manipulations, especially verbal interventions.
Last but not least, above-said Nikita Soshnikov stressed that the crypto market is vulnerable to rumors. Investors could respond even to unverified information because driving forces could be sometimes doubts, lack of confidence, and a fear of missed profit.
My opinion is as simple as that. The basics of investment solutions are technical analysis and ongoing price action. This blend works well especially on condition of strong levels are determined right. Meanwhile, Bitcoin is trading in the area of $58,340.66 - $59,517.79. It means that the price could either reverse again leaving that zone as resistance or eventually break this area upwards to hit a new historic high.