Impact of market feeling on trading results: A study on cryptocurrency
Cryptocurrency, a digital or virtual currency that uses security cryptography and is decentralized, has gained significant attention in recent years. The adoption and fluctuations of price were influenced by various factors, including the feeling of the market. This article aims to explore the relationship between market feeling and trading results on cryptocurrency markets.
What is the feeling of the market?
The feeling of the market refers to the general attitude or mood of a market towards a particular asset. It includes emotions, attitudes and expectations that traders and investors have about the potential of growth, profit or loss. In the context of cryptocurrency, the feeling of the market can vary from bullish (optimistic) to bear (pessimistic).
How does the market feel the prices of cryptocurrencies affects?
Research suggests that market feeling plays a significant role in determining cryptocurrency price movements. When investors are optimistic about the potential of a growth asset, they tend to buy more, increasing demand and pushing higher prices. In contrast, when investors are pessimistic, they sell more, reducing demand and increasing lower prices.
A study published in the Journal of Alternative Investments found that the market feeling has a significant impact on cryptocurrency prices (1). The researchers analyzed the data from 2017 by 2020 and found that:
- When the market feeling is positive (ie, optimistic about the potential of an asset), cryptocurrency prices tend to increase.
- On the other hand, when the market feeling is negative (ie, pessimistic about the potential of an asset), cryptocurrency prices tend to decrease.
Types of market feeling: Bullish and Bearish
There are two primary types of market feelings: bullish and bear. Each has distinct implications for trading results:
* Bullish feeling: Investors expect a certain cryptocurrency to increase in value, which leads to increased demand and higher prices.
+ Features: positive expectations regarding the potential of a growth asset, optimistic attitude towards the future of the market.
+ Results: higher cryptocurrency prices, increased purchase activity.
* Bearish feeling: Investors are pessimistic about the potential of a particular cryptocurrency to grow or appreciate value.
+ Features: Negative expectations regarding the potential of a growth asset, the ugly attitude towards the future of the market.
+ Results: lower prices of cryptocurrencies, decreased sales activity.
Square examples of cryptocurrency
The Covid-19 Pandemia highlighted the impact of market feeling on cryptocurrency markets. For example:
- In March 2020, when the pandemic was declared by China and other countries, the price of Bitcoin (BTC) increased to a new level of all time.
- However, in April 2022, following the increase of global economic concerns and inflationary pressures, the price of the BTC decreased.
Conclusion
The impact of market feeling on trading results on cryptocurrency markets is significant. Understanding how investors perceive the potential of an assets of increasing or appreciation of value can help traders make the knowledge of the case about buying and selling assets. Analyzing the data on market feelings, traders can get information about the potential price movements and adjust their strategies accordingly.
In conclusion, the relationship between the feeling of the market and the traded results is complex and influenced by various factors, including investors’ expectations, economic conditions and global events. Recognizing these dynamics, traders can better browse the cryptocurrency markets and make more informed decisions about the investment in this rapid evolution.