Three Things to Look for in Market Charts for Crypto and What They Mean

Charts can be confusing, especially when they are only for a year old crypto. This is why the other variables listed below are valuable when assessing whether to include a currency in your portfolio. These will help you decide on a good time to buy, or ‘entry point’ as well when to cash out or what is known as an ‘exit’ point.

Learning to read some basic information about a potential investment is a really good way to get a feel for something that you may include in your portfolio. Aside from research that you can generally conduct about a specific currency, which I wrote about in this article, you can look at its market performance so far and look at how healthy its circulation is. The more activity a currency has, the better.

Firstly, it is possible to identify cycles in charts that span over a few years. For example, each time there was a halving event with Bitcoin, there was a massive price increase in the months after. Every time this happened, the price grew higher than the last. While this is by no means a guarantee that this will happen again in the future — all factors indicate that this is highly probable, depending on other variables.

Other noteworthy events include a new coin’s release across different platforms. There can be very a quick surge in prices in the immediate aftermath of its debut. While it is not necessarily indicative of the real value after the hype has subsided, it can serve as an attractive short-term investment. You could potentially see a 50% increase in your investment in a short period if you play your cards right. This is often referred to as a ‘pump and dump’ and is at the forefront of many cryptocurrency scams.

You will also notice that certain companies beginning to accept cryptos as a form of payment will impact their performance, even if it is only temporary. Keeping an eye on any news that pertains to cryptocurrencies will help you read charts and intuitively develop a sense of prices.

Three of the primary data available on charts that you should be particularly interested in when contemplating including in your portfolio are:

Market Capitalization

This is calculated by the number of shares or coins currently on the market multiplied by the individual value. Comparing the market cap of coins that have been around for a similar time gives you an idea of how strong this current market is.

Circulation

Circulation indicates how much of the currency is in use in the market. Many cryptos may be unclaimed or lost for various reasons, including lost wallet keys or crime. This makes it important to look at how much of the mined and available currency is moving around. This is a more accurate way to gauge the currency.

Another way to look at more specific information regarding circulation can be to look at the data regarding the length of time the currency is held for. Apps such as Coinbase have this information freely available, although this is only relevant to the usage on their site. However, working out on average people holding their currencies for and what percentage of people are buying and selling on a given day is a fairly good barometer for its popularity.

Time in the Market

Particularly of interest when looking at younger altcoins, this gives you an idea of how long a crypto has been in circulation. When you cross-reference this information with performance and market capitalization, you can get an accurate picture of public sentiment, practicality, and potential shelf-life. Even if the coin has only been available for less than a year, steady growth during this period is a positive indicator, especially if its cost is low.