Cryptocurrencies have become a popular topic for investors and traders around the world. However, many people are intimidated by the complex terminology that is often associated with this industry. One of the most important skills you can develop as a cryptocurrency investor is the ability to read crypto numbers.
Crypto numbers refer to the numerical values used in cryptocurrencies, such as prices and market capitalizations. By learning how to interpret these numbers, you can make informed investment decisions and avoid common mistakes.
In this article, we will provide a detailed guide on how to read crypto numbers. We’ll cover everything from basic concepts like decimal places and trading volumes, to more advanced topics like order books and technical analysis.
We understand that not everyone has experience working with financial instruments or technology-based assets such as cryptocurrencies. Therefore, we will explain each concept as simply as possible while still providing enough depth for readers who want to learn more about them.
Decimal Places
The first thing you need to know when reading crypto numbers is decimal places. Cryptocurrencies generally use eight decimal places (or nine in some cases) when presenting their values.
For example, Bitcoin’s smallest unit of measurement is called a Satoshi (0.00000001 BTC). Ethereum uses Gwei (0.000000001 ETH) as its smallest denomination.
Knowing the number of decimal places used in a currency’s value will help you better understand price fluctuations or market capitalizations accurately.
Price Charts
Next up are price charts – easily one of the most important tools when it comes down to understanding crypto prices! Understanding price charts allows an investor/trader/buyer/etc., gauge past performance trends before diving into new ones quickly effectively three things: opening price; closing price; volume metrics –
Opening Price refers Aira 1st recorded cost at which respective currencies traded typically calculated at midnight/12 am UTC/GMT+0 daily.
Closing Price refers cryptocurrency latest buying rate available before end-of-day on a preceding day. Due to market fluctuations, slight variations between opening and closing prices may occur.
Volume Metrics refers to the amount of currency traded in a specific time frame, usually by hour, days or weeks. By comparing volume metrics with price charts tells us more about cryptocurrency trending status? If there’s an increase in trading volume, it indicates impeding positive price action – incrementing demands exceeding supply usually translated into higher buying Pressures; correspondingly opposite when as orders placed on exchanges decrease relative to currencies circulating number which drives down demand pressing price downwards!
Market Capitalization
Market capitalization is an essential crypto number that directly relates to how much money is invested in cryptocurrency coins/tokens. Coin/token market cap calculated by multiplying current coin/token value by the total number of coins/tokens currently being circulated this value constantly changes due to increased/decreased trading activity/orders placement/exchange listings/etc., still highlighting how popular respective digital assets are shaping up.
To calculate the market cap accurately (if you don’t want formula: Current Price x Circulating Supply), always check out data from top cryptocurrency analytic firms and sites like Coinmarketcap!.
Order Books
Order books refer collection all executed trades for a chosen exchange platform at any particular moment – illustrates live/emerging trends indicating buy/sell volumes/positioning planned trade entries or exits if utilizing technical analysis skills-/algos.
An order book can look overwhelming at first but understanding it has its profitable advantages! It serves as an illustration for people who’re interested presenting liquidity confirmation about cryptocurrencies they intend purchasing suggesting probable outcomes if one buys or sells using visible open orders summary-for both sellers/buyers lined up queued waiting have their terms met/matched ensuring right purchase/sale choice based actual present-day analytics helping make informed decisions rather than guessing games after all!
Technical Analysis
Finally set-up your Technical indicators & Charts accordingly analyzing valuable information before making heavy bets/hedging/cross-margin-exposures!. Here is some standard ones:
Bollinger Bands: These measure whether prices are overbought or oversold. If the price goes above the upper Bollinger Band, it indicates an asset’s alarming state being overvalued.
Moving Averages: average of cryptocurrency prices that helps traders/data scientists/data-analysts to keep track of trends in real-time classic testing method used determine potential buy/sell entry points as well.
Relative Strength Index RSI): measures assets selling/buying pressure changes relatively easily indicate times when putting strong buying pressure/place sell limits for better returns may be done/when certain levels considered complete indicating a particular end which calls for an exit.-used commonly technical analysts tacticians predictions formulate trading strategies accordingly!
Volume Indicators -, both positive & negative divergence, essential metrics highlighting Trend volume increase/decrease validating existing trend-formations
Crypto numbers boil down complex crypto terms like market caps and order books into measurements that we can easily understand. By learning how to read these numbers correctly, investors and traders gain insight about future investments’ decisions- their historic performance levels illustrated on charts with appropriate indicators making calculated risks – investments/re-investments/exits/profits all affordably plausible!