Bitcoin is the world’s premier cryptocurrency and an influential force within the crypto market. Acting like digital gold, its store of value has many similarities with precious metals such as gold.
Price action against the US dollar can serve as an early indication of market sentiment for cryptocurrency assets. A positive US rate decision could drive its price upwards, while negative news could see its value sink lower.
Crypto-to-fiat currency pair
Cryptocurrency pairs provide traders with a way of expressing the value of one cryptocurrency against another, making price movements easier to predict and speculate upon. Their performance can be affected by market volatility, economic events, supply and demand as well as supply fluctuations. Knowing how to trade cryptocurrency pairs is an invaluable skill that any trader should hone.
The BTCUSD pair combines Bitcoin and the world’s leading fiat currency, the US dollar. It symbolizes how many USD are needed to buy one BTC. This pair is popular because of its high liquidity and daily trading volumes; making it attractive pairing for traders looking to take advantage of market volatility. However, traders should remember that BTCUSD can be highly volatile and lead to major losses; good risk management practices must therefore be observed and news events or regulatory changes may cause abrupt reversals that lead to major shifts.
Fundamentals
Fundamental analysis in the cryptocurrency market is becoming ever more vital as its long-term growth accelerates. There are various metrics and yardsticks used for fundamental analysis; most traders focus on three main categories for analysis – network value, transaction volume and on-chain models.
Understanding the fundamentals of crypto markets may seem complicated, yet understanding them is vital for making smart investments. Many investors focus on determining token intrinsic values which may be difficult to evaluate as cryptocurrency markets don’t provide as much data compared to legacy assets such as earnings reports or profit and loss statements.
Trading volume is also an indicator of liquidity and should be taken into consideration as it indicates potential trading opportunities in BTCUSD market. Furthermore, block reward halvings have been proven to drive up prices, creating opportunities in this regard.
Technical analysis
Technical analysis is becoming an increasingly popular alternative to fundamental analysis for securities analysis. This method of security evaluation relies on chart patterns and trend lines which can be replicated, though its results cannot guarantee an exact outcome; rather it can help improve valuation estimates overall.
Technical indicators on BTCUSD indicate a bearish sentiment. This includes the appearance of a head-and-shoulders pattern and formation of a symmetrical broadening wedge – breach of which would likely signal further price declines and an intensification of selling pressure.
As well as these technical indicators, a glance at the MACD line (comprising 26 period EMA and 12 period EMA) may provide another indicator for buy or sell signals. A buy signal occurs when it crosses above Signal line while sell signals arise when MACD crosses below it.
Regulatory bodies
The cryptocurrency scene can be volatile, which can be traced to major regulatory bodies’ impactful influence over BTCUSD. When government regulates against decentralisation and blockchain technology, such as US Treasury Secretary Janet Yellen’s recent comments regarding cryptocurrency use restrictions caused investors to express pessimism about the future of cryptocurrencies.
However, if regulatory bodies create conducive environments for the cryptocurrency industry, this will have a positive effect on BTCUSD prices. If major companies such as Tesla or MicroStrategy Incorporated invest large sums of money into Bitcoin this would also have a beneficial effect. Furthermore, Germany and UK’s introduction of regulations friendly towards crypto would also have an advantageous outcome on its value pair.
