Understand the impact of market feeling on cryptocurrency prices
The world of cryptocurrencies is known for its volatility and unpredictability. The prices that fluctuate quickly and without prior notice, investors constantly seek to understand how market feeling affects their investment decisions. In this article, we will immerse ourselves on the impact of market feeling on cryptocurrency prices and explore strategies to mitigate risks.
What is the feeling of the market?
The feeling of the market refers to the collective attitude or opinion of a group of individuals about the value or movement of an asset. It can be influenced by several factors, including news events, social networks trends and the emotional responses of investors. When market sensation is positive, this can cause a greater demand for assets, which increases prices. On the contrary, the negative feeling can lead to a price drop.
How does market feeling influence cryptocurrency prices?
- Fear of missing (FOMO): When investors believe that others buy a particular cryptocurrency, they are more likely to continue the step, creating an increase in demand and increasing prices.
- Speculations: The increase in social networks platforms such as Twitter has created an environment in which people can quickly share their opinions and emotions about cryptocurrencies, influencing market feelings and prices.
- Media coverage: The news or positive articles on a particular cryptocurrency can create a buzz among investors, resulting in greater demand and higher prices.
- Emotional response: Investors may feel strong emotions such as emotion, fear or anxiety when they see price movements, which can lead to impulsive decisions and a feeling influenced in the market.
Case studies: how market feeling affects cryptocurrency prices
- Bitcoin (BTC) during the 2017 Toro race: Bitcoin experienced a significant increase in prices after a series of new bruises events, including the prohibition of the Chinese Cryptocurrency Government.
- Ethereum (eth) after ICO’s boom: The rapid growth of the Ethereum project and its initial offer of initial pieces (ICO) led to a greater demand for ETH, which increases its price.
- Litecoin (LTC) During the Divan event 2017:
Litecoin experienced a significant increase in prices after the announcement of an event in half potential, which reduced the supply and the greatest demand.
Strategies to mitigate risk
Although market sensation can be unpredictable, there are strategies that investors can use to mitigate risks:
- Diversification: Divide investments on several cryptocurrencies to reduce exposure to a private asset.
- Dimensioning of the position:
Define a maximum investment size by cryptocurrency and maintain it during the negotiation day.
- Orders of the orders -los: Use arrest orders to limit potential losses if prices turn against you.
- Risk management tools: Use technical indicators, such as RSI (relative force index) and Bollinger bands, to monitor market sensation and adjust positions accordingly.
Conclusion
Understanding the impact of market feeling on cryptocurrency prices is crucial for investors looking to make informed decisions. By recognizing how emotions, news events and social networks trends can influence market feeling, we can develop strategies to mitigate risks and avoid impulsive decisions. Although no investment strategy can completely eliminate the risks, keep in mind the market sensation and the implementation of effective risk management techniques can help investors navigate the complex world of cryptocurrency trade.
Recommended Reading:
- “The Bitcoin Standard” by Saifdean Ammous
- “Cryptocurrency 101” by blockchain.com
- “The art of cryptocurrency trade” by Vitalik Butein
Note: This article is only for information purposes and investment advice should not be considered.