Bitcoin is the world’s most prominent cryptocurrency and is often traded against USD, so the pair is highly responsive to news and events surrounding both assets.
BTCUSD traders keep an eye out for any regulatory developments that could impact the industry, such as comments by the US Federal Reserve that suggest new restrictions on crypto trading causing some volatility in the pair.
Technical Analysis
Crypto markets can be highly unpredictable and the price of cryptocurrency may go either up or down at any given moment, making investment risk analysis essential before proceeding with your plan. Before investing, conduct thorough research and due diligence as well as fully comprehend all associated risks before investing.
Technical analysis is founded on the notion that market trends repeat themselves and recognizing these recurring patterns can help traders predict future market movements. Technical analysis is an indispensable skill for any trader.
Trend lines are created by connecting high and low price points on a chart, the more points connected the stronger the trend will become. Resistance and support levels are identified using various calculations; when prices breach resistance they signal that momentum could push prices higher while breaking through support is indicative of an impending downward trend.
Moving averages and oscillators are popular technical indicators used by traders, helping to detect patterns in price action while also being customizable by changing the number of moving averages and oscillators that are tracked.
Fundamental Analysis
The BTC/USD pair connects one of the world’s most dominant cryptocurrencies to one of its most influential fiat currencies. It is an extremely volatile market driven by news relating to either currency or its respective economy.
Bitcoin’s price reflects demand for this digital asset, which can be affected by media coverage, influential opinions and regulatory developments. Furthermore, its limited supply and subsequent reduction (known as halving events) contribute to rising prices over time.
Investors may also examine on-chain metrics such as transaction volume, address creation and network fees to gain an understanding of a digital currency’s future usage. Unfortunately, these metrics are less reliable than project or financial metrics and take longer to gather. Therefore, their analysis should only be employed as part of a comprehensive trading strategy; all investments involve risk; therefore it is wise to take your experience, risk tolerance and personal goals into consideration before initiating trades.
News Impact
News surrounding Bitcoin has been mixed. Positive developments like the US levying a capital gains tax on cryptos and major companies such as Tesla and MicroStrategy Incorporated committing significant resources into crypto investments have helped push prices higher; while negative ones such as Chinese authorities’ ongoing crackdown and Janet Yellen’s comments suggesting cryptocurrency should be limited have contributed negatively.
Bitcoin supplies are limited, driving up demand. Furthermore, the recent halving event reduced mining incentives further restricting supply.
Investor sentiment has been buoyed by the prospect of the Securities and Exchange Commission (SEC) possibly approving a Bitcoin exchange-traded fund (ETF). BlackRock (NYSE:BLK) recently registered an Ethereum trust in Delaware as an initial step towards creating such an ETF, potentially increasing investor demand and pushing up BTCUSD prices as it announces itself publicly; its news could also cause other cryptocurrency prices to increase dramatically.
Trading Strategy
One popular trading strategy involves recognizing and capitalizing on cryptocurrency’s upward or downward trends, using historical price data analysis and technical indicators like the relative strength index (RSI). To do so, traders will typically examine historical price data along with technical indicators like the relative strength index (RSI). Divergences within an RSI divergence typically signal when the trend shifts; when shorter moving average crosses above longer one (known as golden cross) while death crosses indicate it might shift downward.
Another strategy involves using the On-Balance Volume (OBV) indicator, which combines price action and trading volume. Often this strategy is applied when comparing Bitcoin and Ethereum as any breakout in one tends to predict it for both currencies – breaking out trading can be highly profitable if applied correctly with proper risk management in mind.
