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Crypto investors have many tools to predict market trends and analyze coin prices, but it’s mainly for the experienced or professionals. How can the novice get started in this complex market and gain a profit? How do investors predict Ethereum price or other cryptocurrencies price trends? Will Ethereum price go up or down in the short/long-term?
We are going to elaborate on three commonly used analytical methods to help new investors have a further understanding of ETH price prediction.
How to Predict Ethereum Price Trend With Fundamental Analysis?
Some investors or crypto novices may ask what is fundamental analysis? And how to predict Ethereum price trend or how to judge Ethereum price trend with this analysis method? The fundamental analysis of cryptocurrencies includes crypto-related news and events, state policies, project fundamentals, etc. Most investors usually focus on technical analysis but neglect the state policy’s impact on the crypto market.
Below we will introduce these aspects, hoping to help investors taking advantage of the analysis to predict Ethereum price trend.
Fundamental analysis is a method to determine the “intrinsic value” of a cryptocurrency and shows its general health condition. By investigating internal and external factors, investors can confirm whether the asset is overvalued or undervalued.
From the project fundamentals, what counts most are the total supply and market cap and the exchange holdings, etc.
ETH Total Supply and Market Capitalization
In the crypto market, market capitalization is of great importance as it shows the dominance of the token in the market. Deemed to be the world’s second-largest cryptocurrency only second to Bitcoin, Ethereum’s position is also reflected in market capitalization and total supply. After this round of bull market, its dominance has been rising, even more, compelling than Bitcoin.
After the recent downturn, the market cap of Ether is $251,882,953,455.39, a huge number in the crypto market. From a financial point of view, the total supply of 116,657,824 Ether also represents a solid fundamental. Let alone the consensus mechanism update which will switch from PoW to PoS in 2021, will save more energy.
Crypto Exchange Holdings
Exchange Ethereum holdings have been on a clear downward trend since September 2020, plummeted in January 2021, according to Santiment.
The decrease indicates that the number of users who choose to withdraw coins from exchanges to their own wallets has increased. From March last year to January this year, as ETH price rising significantly, the exchange outflow has increased by 6 million.
This might reflect investors’ optimism about Ethereum future, and an increase in the number of investors who bullish on its long-term value.
Events and Crypto-related News
Crypto-related events and news will bring new market fluctuations. For example, if there is news that is good for the crypto market, traders and investors could be bullish on Ethereum. On the contrary, if bad news targets crypto, traders would be bearish on ETH as well as other cryptocurrencies.
If a country that never supports cryptocurrency gives it legislative protection or support, this will be a major event that affects the crypto market and offer investors a good opportunity.
For instance, in June, Chinese major banks announced to refuse to provide banking and settlement services to customers who engage in crypto-related transactions. Banks and payment institutions cannot open accounts related to crypto.
Soon after that, Ether fell by about 6%, and other cryptocurrencies also fell sharply. This is a piece of big news that impacts token prices recently.
How to Predict Ethereum Price Trend With Technical Analysis?
The fundamental analysis basically focuses on environmental changes and always considers different aspects of the trading environment, including but not limited to the global economy, use cases of tokens, regulatory regulations, and any other breaking news that may affect market sentiment.
Dissimilarly, technical analysis is generally analyzing historical ETH price movement. Thus it helps traders better make ETH price predictions and give evidence on how to predict Ethereum price trends.
It holds different views on price movements. Its supporters assume that all external factors that play a role in the fundamental analysis have already contributed to the current price of the token. But forecasting the next movement of token price means analyzing historical price trends. They will use a large number of charting tools and technical indicators to judging the ETH price trend.
Moving average – A technical indicator shows the average price of ETH during a set period and is regarded as a signal of long or short.
Oscillating indicator – It’s popular in foretelling the potential changes in price trends. The popular oscillating indicators include Stochastic, CCI, RSI, and Moving Average Convergence and Divergence (MACD), etc. They are used to indicate whether the market is overbought or oversold.
Fibonacci – This indicator is usually suitable for price analysis of cryptocurrencies, whether of Bitcoin or Ether. The significant lines are 38.2%, 50%, and 61.8%. Investors can try to judge the next price trend of ETH through the indicator, whether it’s going to end or continue.
Volume – A basis and important indicator that tells the amount of trading value over a period of time. Changes in volume will cause great changes in the relevance of certain movements. Movement under high trading volume is deemed to be reasonable and indicates an unchanged direction.
How to Predict Ethereum Price Trend With Sentiment Analysis?
It is also important to analyze market sentiment, as it shows investors’ thoughts and emotions about the digital asset. It does not always reflect specific market trends or results of fundamental analysis. However, it can have a significant impact on ETH prices. By analyzing market sentiment, investors can try to predict ETH price trends or movements. It’s essential in the field of cryptocurrency, where the statements and attitudes of market participants also carry significant weight.
But how to make Ethereum sentiment analysis?
First, be sure to follow official social channels, keep up with posts on social media such as Telegram groups. Certainly, investors need to be reserved with those opinions, but it helps to know the main trend in the community.
Second, observe the transactions of whales from the blockchain. Because they hold a large amount of ETH and the operation will have a significant impact on the market sentiment. It will tell a potential signal of will Ethereum price go down or up in the long short term.
Other helpful tools should be market sentiment indicators and price signals provided on some block info websites. Similarly, Google searches indicate a clear trend. For example, an increase in the number of “how to buy Ethereum” searches when the price was going up is obvious market sentiment.
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Summary: Combine Different Analyses
Learning to analyze the price trend of ETH with fundamentals and technical data can help investors understand the value and developing trend of the project more clearly, and avoid falling into short-term speculation. This kind of thinking is especially important for crypto novices who have just entered this huge market.
The main advantage of the fundamental analysis is that it allows investors to know why certain movements occur and what is happening at the moment. In the meantime, technical analysis provides another way of judging the market by analyzing recurring historical trends within a specific time frame.
To make full use of the analyses, investors are better to use both fundamental and technical analysis in combination. And at the same time, follow the main trend of market sentiment to help seize the opportunity.