Similar to other kinds of assets, a crypto price is also depended on supply and demand, which can change under the effect of mass opinions, the press and social media. Accordingly, many investors analyze the crypto market psychology in order to predict short-term and mid-term price action of a cryptocurrency. Along with fundamental and technical analysis, this method also could help investors significantly.
Crypto Market Psychology Analysis
Market psychology is actually the identification of the communal tendency of investors towards a financial asset (a crypto). This concept exists in all financial markets and can even affect their cycles. Market psychology also shows the amount of demand. It can help investors predict the market profitability trend by analyzing the demand.
In order to understand the market psychology, users have to be familiar with few steps. The first step is to collect the market participants’ ideas and opinions. To do so, referring to social networks along with following the relevant news can be an appropriate option. On the second step, checking the whales’ activities is beneficial (twitter account @whale-alert). The reason is that these transactions can affect the market psychology significantly. Then, you can follow psychological indicators and price signals on CoinMarketCap website. Finally, predict the probable price trend by referring to Google. As an example, a high number of searches for the phrase “How to sell cryptocurrencies” could indicate a decrease in hope for an uptrend in the market.
In general, using the combination of market psychology study with fundamental and technical analysis, we can identify short-term and mid-term price action, control personal emotions and predict profitable opportunities. Market psychology analysis besides more activities and gaining experience can lead to more beneficial results. But keep in mind that, these methods are not always efficient. Therefore, it is reasonable to carefully check the probable risks.
What do you think about the current status of crypto market psychology?