As the popularity of cryptocurrency investments continues to soar, mastering various analytical techniques becomes imperative for investors before diving into the market.
According to the Pintu Academy Team, there are three main types of analysis that can assist investors in making more informed investment decisions: fundamental analysis, technical analysis, and on-chain analysis.
Fundamental analysis involves a deep understanding of the underlying asset and its long-term potential. In the context of Bitcoin, a prime example of fundamental analysis is considering its limited supply, capped at 21 million coins, and the underlying blockchain technology. This showcases Bitcoin’s intrinsic value as a permissionless and censorship-resistant asset, thereby fostering widespread adoption from retail investors to large institutions.
In contrast to fundamental analysis, technical analysis focuses on historical data and price trends to predict future price movements. An important example in the context of Bitcoin is the Bitcoin halving process, occurring roughly every four years, which significantly impacts Bitcoin’s price. The halving reduces miners’ rewards, theoretically increasing Bitcoin’s price due to reduced new supply.
On-chain analysis is a more advanced technique often used by professional traders to gain direct insights from blockchain activity. “Using platforms like Glassnode, investors can track indicators such as Bitcoin inflow and outflow on exchanges,” explained the Pintu Academy Team. This information is invaluable for predicting short-term price movements based on market participant behavior.
It’s crucial for investors to utilize a combination of these three types of analysis to make more accurate decisions. Each type of analysis has its strengths and weaknesses, and by understanding all of these, investors can position themselves better in this volatile crypto market.
The Pintu Academy Team also advises beginners to leverage apps like Pintu, which provide various tools and features to facilitate the buying, selling, and investing in crypto securely and affordably. With features like Dollar-Cost Averaging (DCA), investors can invest periodically to mitigate the risk of sharp price fluctuations.
