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The Role of Analytics in Crypto Trading

Simply put, analytics help traders make more informed, and therefore better trading decisions. Various mechanisms, techniques, and tools can help you anticipate events in the crypto market, and eventually, make a profit.

Crypto analytics is somewhat a niche for itself since there are many tools and apps specialized only in data analysis. While having dozens of options for gathering insight is great, some people would rather have everything they need in one place.

How Analytics Works

By observing price patterns from the past and following current indicators, you can analyze the charts and predict future movements in price.

For those with previous experience in market analysis, applying learned knowledge in crypto might be a smooth ride. If everything in crypto is completely new to you, you are not doomed to fail - just know it will take some time (and a lot of research) before you become a trading expert.

To further apprehend price movements, knowing these elements can help you understand the bigger picture better.

Social Analysis

While crypto represents an alternative approach to a traditional financial and societal system, it cannot live separated and unaffected by global occurrences. Follow the news and look for patterns.

Living in 2022 can be very confusing - FUD (fear, uncertainty, doubt) seems to be at its peak. Fear-affiliated behavior is much easier to foresee, that’s why e.g. terror is a great controlling mechanism.

Now, some threats are real, and we feel them every day - when we shop for groceries and spend so much more money than we used to, or when health systems around us are collapsing. If it influences your everyday life, it will influence the BTC price, too.

Pandemic, inflation, war, recession - all these affect many markets, including cryptocurrencies. Anticipation is key, and to further develop that skill, you need to look in the past.

Historical Data

Trading in the first years after the BTC launch was very different. Options for purchasing cryptocurrencies were very limited and often untrustworthy.

But at the very beginning, there were only two options for obtaining BTC - by mining it or by arranging a p2p transaction with fellow members of the Bitcointalk forum. Peer-to-peer trading was exactly how Satoshi envisioned the Bitcoin ecosystem - without intermediaries, just trustlessness.

Knowing historical data and how the entire movement evolved will point you in the right direction. Even for the simplest things, e.g. recognizing a bear market. It’s not a bear market just because someone said it on Twitter, it’s a bear market because the BTC price decreased by more than 20% in price from the recent high.

If you know ATHs and expected support and resistance lines, a bear market will not stress you out as much as it would if you were clueless.

Key Factors in Crypto Trading

Onto the technicalities. Crypto as a discipline consists of its technical, financial, and social parts. We discussed societal and historical influence, but let’s talk about concrete metrics you should follow when trading cryptocurrencies.

On-Chain Metrics

Blockchain data is a great resource, but extracting raw data can be difficult. Luckily, there are many tools that can do that for you, and crypto exchanges will usually provide you with decent basic analytics.

To fully comprehend on-chain metrics, you should watch for hash rate (for PoW currencies), status, active addresses, transaction values, and fees.

Financial Metrics

The financial aspect of any cryptocurrency includes liquidity, trading volume, and circulating supply.

You need to understand if a coin has a promising future, and good indicators would be strong liquidity (quick, easy, and successful transactions that don’t endanger the asset’s price), growing trading volume (see if there’s momentum), and circulating supply that’s not being manipulated.

DYOR on a Project

After you’ve reviewed all key metrics, it’s time to see if the project is relevant and trustworthy. You can do that by reading the project’s whitepaper, familiarizing yourself with the team, checking out the roadmap, comparing with similar projects, and looking further into tokenomics.

This will help you determine if the project is worth investing in - if all the indicators above are positive, there’s a good chance that buying this cryptocurrency is a sound investment.

All in One Place

So far, we mentioned on-chain and financial metrics, project background, and current context as key components of a good analytics process. All these pieces of information are available to you, but rarely in one place.

Transparency is key to decentralization, and that’s why everyone needs to have equal access to valuable data.

Dexvers freemium analytics is made for everyone to ensure safe and insightful trading. With advanced features, it will give you all the data to make a knowledgeable decision. For trading beginners, Dexvers has a swapping wizard to explain in detail every step. And for experienced traders, Dexvers offers a custom dashboard with any infographics you find important.


Disclaimer: The information provided in this post is not legal, accounting, or financial advice. The information should not be construed as investment or trading advice and is not meant to be a solicitation or recommendation to buy, sell, or hold any cryptocurrencies.

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