Do you need to understand crypto charts to invest in cryptocurrencies?
The value of cryptocurrencies can rise and fall massively within a very short time frame, making for a highly volatile ride for investors. Reacting quickly to market forces can make all the difference to your investment, so learning how to make the most of opportunities is key to success.
Here at Zeply, we’re on a mission to make the buying, storing and trading of Bitcoin and other digital currencies as easy and safe as we possibly can. So we’ve put together this helpful guide telling you all you need to know about cryptocurrency price charts.
What are cryptocurrency charts?
You may start by learning how does cryptocurrency work. At their most basic level, cryptocurrency charts show the value of a specific digital currency over a set period of time. If you’ve ever looked at a stock market or business graph then you’ll be instantly familiar with the general layout. A single line goes up and down across the page or screen, showing how the value of the commodity has risen and fallen.
The aim of every investor is to buy cryptocurrency when the point of the graph is at a low point, selling your digital asset when they reach the apex – and that’s the difficult part! But with the help of graphs showing your preferred crypto’s upwards and downwards trends, it’s possible to make some informed decisions that could reap you the best rewards.
A beginner’s guide to reading cryptocurrency charts
Crypto charts usually let you view them over a range of time frames, whether that’s a complete history of a specific digital asset or just the past 24 hours. Zooming in and out lets you spot repeating patterns. It’s historically been the case that prices rise dramatically following a crypto halving event, for example, in which it takes twice as long to mine each Bitcoin than it did previously when crypto mining. This is the sort of information that can easily be spotted from a Bitcoin chart, even for those with no previous experience of buying crypto.
It’s worth viewing crypto charts in tandem with the latest crypto news stories, as they have such a strong impact on values. There’s a very clear link between big businesses investing in or selling crypto – or even making comments about a digital currency on social media – and an almost immediate corresponding rise or fall in its value.
Even a basic understanding of crypto charts can give you a good indication of the best crypto to invest in right now. Successful outcomes can’t be guaranteed, but you can definitely give yourself a real advantage if you learn how to make the most of the information available to you.
Candlestick crypto charts
So far, we’ve taken a look at the more basic cryptocurrency and Bitcoin charts in which a single line connects the high and low-value points over time. Even the most cursory glance often shows massive peaks and troughs, giving a pictorial insight into the high volatility involved. But as far as the top cryptocurrency traders are concerned, the best crypto charts are candlestick charts, which are rather more complex to understand.
Instead of one single line connecting all the points on a basic crypto chart, the candlestick chart is made of lots of coloured columns which resemble candles, hence the name. Each candle represents the time frame that you’ve chosen for the chart, which could be minutes, hours or much longer. In general, the bigger investors tend to want to examine the situation in as much detail as possible, so five minutes is a popular choice.
Reading a candlestick crypto chart
Every candlestick shown represents your chosen time frame. Colours are used to show whether a crypto commodity has risen or fallen during each period. Green tends to be the preferred colour to show a rise in value accompanied by buying pressure – also known as a bear market. Red is the usual colour selected to show the falling prices of a bear market with increased selling pressure. The taller the candlestick, the greater the amount of interest in the crypto at that time.
Candlesticks can have a ‘wick’ attached to either end or even at both ends. This shows that the price climbed or fell to these levels during the time frame specified, although it will have ended the period within the volume shown by the candlestick itself. For the best results, all of this information needs to be studied in accordance with Dow Theory, which drills down into the phases of market trends in great depth.
If you’re wondering how to make money with Bitcoin on a major scale, then reading a candlestick crypto chart is something you’ll definitely want to be reading up on. But for all other investment purposes, the less specific basic chart should be more than sufficient.
Is it essential to read crypto charts before investing?
Major Bitcoin and altcoin investors wouldn’t consider trading without first consulting their preferred cryptocurrency charts live on their PCs or smartphones. It may not be possible to predict exactly what a cryptocurrency is going to do, but studying candlestick crypto charts provides traders with invaluable information. Spotting a pattern and reacting quickly to it can make or break an investment, so if you’re planning on making a big investment, you’ll definitely want to be up to speed with candlestick charts.
Of course, not every cryptocurrency investor intends to build up a massive portfolio. When you’re buying and selling smaller amounts of the digital asset in a crypto exchange, you might as well consider that it’s not really worth your while to spend too much time on the decision-making process. And it’s by no means obligatory – some smaller investors manage very well without ever examining a crypto chart in any great detail. But having some idea of the general trend at the time of your intended purchase or trade can greatly improve your chances of ending up in profit when trading cryptocurrency. Even a cursory glance at one of the more straightforward crypto charts could point you in the right direction, even though it can’t tell you exactly what’s going to happen next.
As any Zeply review would tell you, we believe in making the world of cryptocurrency available to everyone. We’re all about empowerment, and we think the more information you have, the better your crypto investment decisions are likely to be. That’s why we want to provide you with the best crypto app and crypto wallet, and let you conveniently buy crypto with credit card, and, soon, buy crypto with PayPal.
Get started with crypto trading with Zeply
Are you dipping your toes into the cryptocurrency trading waters for the first time? You don’t have to go at it alone with Zeply – we’re here to help you through the process with a helpful guide to cryptocurrency trading and plenty of useful information and walkthroughs. Whether or not you decide to study the crypto charts, we’re on hand to make sure the buying, storing and trading of your crypto, with some of the lowest cryptocurrency transaction fees in the market, is as easy and intuitive as we can possibly make it.
