Eugene Netso
Eugene Netso 4 minutes reading from Bitcoin

What Does the Price of Cryptocurrency Mean for Any Market?

💲Let’s talk supply and demand.

I often get asked about where does the price of the token or a coin come from?

What actions of market players are behind its value?

cryptocurrency cryptotrading BTC crypto

The most important thing of any market is the price.

Price is a balance of supply and demand.

One party is someone who wants to sell and the other wants to buy.

The balance between them defines the price.

cryptocurrency cryptotrading BTC crypto

Based on that we can try and predict where the price will go.

If there are more buyers than sellers = the price will go up. And vice versa.

Then we can figure out which groups of people (entities) want to buy and sell, and when they do that.

cryptocurrency cryptotrading

For example, at the beginning of BTC, the main entity were miners.

Once in every four years halving happened and the reward for them also halved.

Miners made up the majority of trades.

That’s where 4 year BTC growth cycle coming from, especially the first three cycles.

A year or two before the halving the market is in the “correction” period.

After halving there is a huge pump, because the number of offers halved at once.

Now the market has grown and miners are far from being the majority and they are not the source of the supply.

Crypto

Now big corporate entities are in the market and they are making the cycles.

For example they have a fiscal year which they depend on and that’s where the correlation with the stock market coming from.

Same big entities are selling stocks and crypto.🤷🏻‍♂️

cryptocurrency market

Greed and fear cycles are the same in crypto and stock markets.

Cycles repeat themselves but there is always something new, hard to predict.

cryptotrading cryptomarket StockMarket Finance

Funds (I’ve talked about them in the thread) have certain conditions.

For example, when something happens they can only hold on to 70% or start to sell.

Also, their planning horizon is way longer than retail traders.

crypto cryptotrading BTC trading

Eugene Netso on TwitterEugene Netso on Twitter

Main players behind the funds are the whales – they create supply/demand ratio.

There is a level of support/resistance in trading.

It’s the balance of supply and demand when two big interests cross. In charts these are the spots/prices with large trading volume in the past.

Also we need to figure out the life cycle of these players, their signatures so we can predict where the market goes and algorithmize our strategies.

cryptotrading Crypto trading BTC

There are some players out there with high hit rate we can trace.

When they are buying, the price will likely go up and vice versa.

It’s hard to find these guys, but if you look closely, you’ll see their traces.👀

cryptotrading Crypto trading BTC

This post is based on this twitter thread.

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