Ethereum

The Future Price of Ethereum — Technical Analysis

Digitex Futures
• Dave Reiter
April 12, 2021

Similar to other coins and tokens, Ethereum has generated a substantial rally throughout the past six months. Specifically, ETH has increased 498%, outperforming BTC by approximately 60% during the same time period (see chart 1 below). So, where do we go from here? How will ETH perform for the remainder of 2021 and beyond? Let’s explore the details.

The Future Price of Ethereum — Technical Analysis 1

The Difference Between Ethereum and Ether

In terms of market capitalization, ETH is the second-largest cryptocurrency in the crypto universe. Only Bitcoin has a larger market capitalization. ETH has enjoyed some explosive price moves throughout its brief 6-year history. But, before we analyze the future price direction of ETH, let’s briefly discuss the difference between Ethereum and Ether.

There seems to be some confusion regarding these two crypto terms. Ethereum is a blockchain-based platform used for writing autonomous smart contracts and decentralized applications. Ether is the cryptocurrency that serves as the fuel to power the smart contracts, apps, and other transactions on the Ethereum blockchain.

Although most people in the crypto community (including many crypto websites) use these words interchangeably, they are actually quite different in terms of how they are used in the crypto ecosystem.

Use Cases for Ethereum Blockchain Continue to Expand

In this article, we will be analyzing the price direction of Ether (ETH), the cryptocurrency. However, it’s also important to discuss Ethereum, the blockchain, because it lays the foundation for the current ETH bull market. It seems almost impossible to believe that Ether was trading below $100 per token less than 15 months ago (see chart 2).

The Future Price of Ethereum — Technical Analysis 2

Over the course of the past 15 months, ETH has exploded to the upside by increasing 2,226%. Since March 2020, ETH has been one of the top-performing cryptocurrencies within the entire crypto universe. Ether easily outperformed Bitcoin during this particular time period, 2,226% versus 1,388%.

The majority of Ether’s gains can be attributed to the fact that the total number of use cases for the Ethereum blockchain has increased substantially. Unlike the Bitcoin blockchain, Ethereum can be used for multiple applications across a wide variety of industries. Several of these applications have evolved into legitimate and profitable business enterprises with exponential growth potential. Let’s briefly examine a few of these Ethereum-based businesses.

DeFi (Decentralized Finance)

Without question, the most exciting new business linked to Ethereum is decentralized finance, more commonly known as DeFi. Although DeFi has been in existence for less than four years, it has gained an incredible amount of interest from venture capital firms and angel investors who see the enormous potential in this new space.

Without going into great detail, DeFi competes head-to-head with the legacy financial services industry, with an estimated value of $26.5 trillion by 2022, according to data gathered by The World Bank. Based on these numbers, the upside potential in DeFi is massive. This is great news if you are an owner of ETH because the overwhelming majority of the DeFi ecosystem operates on the Ethereum blockchain.

NFTs (Non-Fungible Tokens)

Another business venture associated with Ethereum is non-fungible tokens (NFT), which have witnessed a tremendous wave of enthusiasm from investors and speculators during the past few months. Very briefly, non-fungible tokens allow non-fungible assets to possess unique properties that completely change the user and development relationship of these assets.

Examples of non-fungible digital assets include digital collectibles, such as in-game items and characters, virtual pets, and representations of fine art. By attaching unique properties such as immutability and scarcity to non-fungible assets, it substantially increases the value of said assets.

Almost the entire NFT industry operates on the Ethereum blockchain, which is obviously bullish for ETH. Arguably, the most exciting part of NFTs is the fact that young people are heavily involved in this exciting new space. Consequently, this will provide Generation Z with an opportunity to familiarize themselves with cryptocurrencies and other digital assets. This is very bullish from a long-term perspective.

In addition to DeFi and NFT, the Ethereum blockchain is also actively engaged in enterprise software, which is used by organizations, businesses, charities, schools, and governments to handle day-to-day operations across a wide variety of internal departments within each organization.

These daily operations would include such tasks as human resources, supply chain management, database management, CRM, security, and billing systems. Enterprise software companies are using a privatized version of the Ethereum network to provide their services to companies like Microsoft, IBM, JPMorgan Chase, and Deloitte.

These are just a few examples of how the Ethereum blockchain is linked to industries and businesses across the global economy. Of course, this is extremely bullish for ETH because these companies and businesses must purchase ETH in order to pay for their services on the Ethereum blockchain. Many crypto experts believe that the number of use cases for Ethereum will continue to expand as blockchain technology becomes more common throughout the global economy.

Using TA to Forecast the Price of ETH

Technical analysis has been extremely useful in forecasting the future price direction of ETH. Let’s review a few of these indicators.

Arguably, the most reliable technical indicator in modern history was created by a twelfth-century Italian mathematician by the name of Leonardo Fibonacci. The vast majority of mathematical historians consider Fibonacci to be the greatest mathematician of the Middle Ages. In fact, many experts in the field of mathematics claim that Fibonacci was one of the ten greatest mathematicians of all time.

Fibonacci made several important contributions to the field of mathematics throughout his life. However, he will always be most famously known for Fibonacci numbers, which are a sequence of numbers developed by Fibonacci circa 1202.

Fibonacci numbers are used in the study of nature, music, agriculture, computer applications, price forecasting, and several other fields of study. Stock and commodity traders use “Fib” numbers to calculate support and resistance levels.

The most common Fib levels are:

  • .236
  • .382
  • .500
  • .618
  • .786
  • 000

It’s not uncommon for financial assets like cryptocurrencies to fluctuate between Fibonacci support and resistance levels for long periods of time. When a major breakout finally occurs, it usually marks the beginning of a substantial move.

The crypto trading community would love to know the final top in ETH before a new bear market ensues, probably near the end of 2021 or early-2022. Of course, it’s impossible to accurately forecast the final top of any speculative asset. Cryptocurrencies are particularly difficult because we have such a small sample size of historical data. However, we can use Fibonacci numbers to develop an educated forecast concerning the final top for Ether. Please review the calculation on Chart 3 below:

The Future Price of Ethereum — Technical Analysis 3

There are several different ways to use Fib levels as a forecasting device. The most popular format involves calculating the price difference between two important price levels. For this particular calculation, we selected the historic high from January 2018 and the subsequent low achieved in December of the same year.

The majority of Fibonacci experts agree that .618 is the most significant Fib level. Therefore, we will use this number in our calculation. Based on the Fibonacci calculation, the final top for this cycle will be 4,921.73. If ETH follows the same path as the 2017 bull market, the top will occur in late-2021.

Another useful technical indicator is the Relative Strength Index (RSI), which was created by J Welles Wilder Jr, one of the greatest technical analysts in the history of financial markets. RSI is a momentum indicator that measures the overbought or oversold condition of a speculative asset. RSI is typically displayed in an oscillator format, which fluctuates between 0 and 100.

Generally speaking, a market is considered overbought if the RSI reading exceeds 70. Conversely, the market is considered oversold if the RSI reading falls below 30. Many traders will use a reading above 70 as a trigger to generate a sell signal and a reading below 30 will generate a buy signal. However, this is not a good strategy to follow in a momentum-fueled environment like cryptocurrencies. Please review Chart number 4:

The Future Price of Ethereum — Technical Analysis 4

The RSI reading has been above 70 since November 9, 2020, when ETH was trading @ 446.10. Obviously, this was not a good time to sell ETH. In fact, this would have been a great time to buy Ether. Therefore, an argument could be made that the optimum way to use RSI for trending markets like cryptocurrencies is to wait for a bullish breakout above 70 as a buy signal. A bearish breakout below 30 would constitute a sell signal. Trying to pick tops and bottoms in a trending market is a recipe for disaster. As Chart #4 clearly demonstrates, the best course of action is to follow the momentum.

In addition to RSI, another momentum-based indicator is the Money Flow Index (MFI). This indicator measures the inflow and outflow of money into a speculative asset over a specific period of time. It uses price and volume to calculate trading pressure. Arguably, MFI is the purest way to determine the amount of money entering and leaving a particular asset class.

Similar to RSI, the index fluctuates between 0 and 100. In terms of trending markets like cryptocurrencies, the best way to apply MFI is to wait for a bullish breakout above 70 or a bearish breakout below 30. MFI is located at the bottom of Chart #5.

The Future Price of Ethereum — Technical Analysis 5

An Ether buy signal was generated @ 509.11 on November 23, 2020, when MFI penetrated the 70 level. MFI has been continuously above 70 for the past five months. This is a perfect example of why it’s best to follow the trend of the market and avoid the temptation to pick a top or bottom.

At least for now, the trend of ETH is clearly in favor of the bulls. The vast majority of technical indicators are forecasting a continuation of the bull market. In addition to technical analysis, the fundamental backdrop for Ether is extremely bullish, as more use cases are being added to the Ethereum blockchain. Eventually, this bullish cycle will end and a new bear cycle will begin. However, this current bullish phase could easily continue for the remainder of 2021.

Don’t forget that whether the price of ETH goes up or down, you can make money trading ETH futures on our zero-fee rapid-fire ladder trading platform. Sign up here to find out how easy it is to profit from even the smallest of price fluctuations when you’re not constantly losing out to commissions. 

Digitex Futures writers and/or guest authors may or may not have a vested interest in the Digitex Futures project and/or other businesses mentioned throughout the site. None of the content on Digitex Futures is investment advice nor is it a replacement for advice from a certified financial planner.

April 12, 2021
Digitex Futures

The Future Price of Ethereum — Technical Analysis

Dave Reiter
Ethereum

Similar to other coins and tokens, Ethereum has generated a substantial rally throughout the past six months. Specifically, ETH has increased 498%, outperforming BTC by approximately 60% during the same time period (see chart 1 below). So, where do we go from here? How will ETH perform for the remainder of 2021 and beyond? Let’s explore the details.

The Future Price of Ethereum — Technical Analysis 6

The Difference Between Ethereum and Ether

In terms of market capitalization, ETH is the second-largest cryptocurrency in the crypto universe. Only Bitcoin has a larger market capitalization. ETH has enjoyed some explosive price moves throughout its brief 6-year history. But, before we analyze the future price direction of ETH, let’s briefly discuss the difference between Ethereum and Ether.

There seems to be some confusion regarding these two crypto terms. Ethereum is a blockchain-based platform used for writing autonomous smart contracts and decentralized applications. Ether is the cryptocurrency that serves as the fuel to power the smart contracts, apps, and other transactions on the Ethereum blockchain.

Although most people in the crypto community (including many crypto websites) use these words interchangeably, they are actually quite different in terms of how they are used in the crypto ecosystem.

Use Cases for Ethereum Blockchain Continue to Expand

In this article, we will be analyzing the price direction of Ether (ETH), the cryptocurrency. However, it’s also important to discuss Ethereum, the blockchain, because it lays the foundation for the current ETH bull market. It seems almost impossible to believe that Ether was trading below $100 per token less than 15 months ago (see chart 2).

The Future Price of Ethereum — Technical Analysis 7

Over the course of the past 15 months, ETH has exploded to the upside by increasing 2,226%. Since March 2020, ETH has been one of the top-performing cryptocurrencies within the entire crypto universe. Ether easily outperformed Bitcoin during this particular time period, 2,226% versus 1,388%.

The majority of Ether’s gains can be attributed to the fact that the total number of use cases for the Ethereum blockchain has increased substantially. Unlike the Bitcoin blockchain, Ethereum can be used for multiple applications across a wide variety of industries. Several of these applications have evolved into legitimate and profitable business enterprises with exponential growth potential. Let’s briefly examine a few of these Ethereum-based businesses.

DeFi (Decentralized Finance)

Without question, the most exciting new business linked to Ethereum is decentralized finance, more commonly known as DeFi. Although DeFi has been in existence for less than four years, it has gained an incredible amount of interest from venture capital firms and angel investors who see the enormous potential in this new space.

Without going into great detail, DeFi competes head-to-head with the legacy financial services industry, with an estimated value of $26.5 trillion by 2022, according to data gathered by The World Bank. Based on these numbers, the upside potential in DeFi is massive. This is great news if you are an owner of ETH because the overwhelming majority of the DeFi ecosystem operates on the Ethereum blockchain.

NFTs (Non-Fungible Tokens)

Another business venture associated with Ethereum is non-fungible tokens (NFT), which have witnessed a tremendous wave of enthusiasm from investors and speculators during the past few months. Very briefly, non-fungible tokens allow non-fungible assets to possess unique properties that completely change the user and development relationship of these assets.

Examples of non-fungible digital assets include digital collectibles, such as in-game items and characters, virtual pets, and representations of fine art. By attaching unique properties such as immutability and scarcity to non-fungible assets, it substantially increases the value of said assets.

Almost the entire NFT industry operates on the Ethereum blockchain, which is obviously bullish for ETH. Arguably, the most exciting part of NFTs is the fact that young people are heavily involved in this exciting new space. Consequently, this will provide Generation Z with an opportunity to familiarize themselves with cryptocurrencies and other digital assets. This is very bullish from a long-term perspective.

In addition to DeFi and NFT, the Ethereum blockchain is also actively engaged in enterprise software, which is used by organizations, businesses, charities, schools, and governments to handle day-to-day operations across a wide variety of internal departments within each organization.

These daily operations would include such tasks as human resources, supply chain management, database management, CRM, security, and billing systems. Enterprise software companies are using a privatized version of the Ethereum network to provide their services to companies like Microsoft, IBM, JPMorgan Chase, and Deloitte.

These are just a few examples of how the Ethereum blockchain is linked to industries and businesses across the global economy. Of course, this is extremely bullish for ETH because these companies and businesses must purchase ETH in order to pay for their services on the Ethereum blockchain. Many crypto experts believe that the number of use cases for Ethereum will continue to expand as blockchain technology becomes more common throughout the global economy.

Using TA to Forecast the Price of ETH

Technical analysis has been extremely useful in forecasting the future price direction of ETH. Let’s review a few of these indicators.

Arguably, the most reliable technical indicator in modern history was created by a twelfth-century Italian mathematician by the name of Leonardo Fibonacci. The vast majority of mathematical historians consider Fibonacci to be the greatest mathematician of the Middle Ages. In fact, many experts in the field of mathematics claim that Fibonacci was one of the ten greatest mathematicians of all time.

Fibonacci made several important contributions to the field of mathematics throughout his life. However, he will always be most famously known for Fibonacci numbers, which are a sequence of numbers developed by Fibonacci circa 1202.

Fibonacci numbers are used in the study of nature, music, agriculture, computer applications, price forecasting, and several other fields of study. Stock and commodity traders use “Fib” numbers to calculate support and resistance levels.

The most common Fib levels are:

  • .236
  • .382
  • .500
  • .618
  • .786
  • 000

It’s not uncommon for financial assets like cryptocurrencies to fluctuate between Fibonacci support and resistance levels for long periods of time. When a major breakout finally occurs, it usually marks the beginning of a substantial move.

The crypto trading community would love to know the final top in ETH before a new bear market ensues, probably near the end of 2021 or early-2022. Of course, it’s impossible to accurately forecast the final top of any speculative asset. Cryptocurrencies are particularly difficult because we have such a small sample size of historical data. However, we can use Fibonacci numbers to develop an educated forecast concerning the final top for Ether. Please review the calculation on Chart 3 below:

The Future Price of Ethereum — Technical Analysis 8

There are several different ways to use Fib levels as a forecasting device. The most popular format involves calculating the price difference between two important price levels. For this particular calculation, we selected the historic high from January 2018 and the subsequent low achieved in December of the same year.

The majority of Fibonacci experts agree that .618 is the most significant Fib level. Therefore, we will use this number in our calculation. Based on the Fibonacci calculation, the final top for this cycle will be 4,921.73. If ETH follows the same path as the 2017 bull market, the top will occur in late-2021.

Another useful technical indicator is the Relative Strength Index (RSI), which was created by J Welles Wilder Jr, one of the greatest technical analysts in the history of financial markets. RSI is a momentum indicator that measures the overbought or oversold condition of a speculative asset. RSI is typically displayed in an oscillator format, which fluctuates between 0 and 100.

Generally speaking, a market is considered overbought if the RSI reading exceeds 70. Conversely, the market is considered oversold if the RSI reading falls below 30. Many traders will use a reading above 70 as a trigger to generate a sell signal and a reading below 30 will generate a buy signal. However, this is not a good strategy to follow in a momentum-fueled environment like cryptocurrencies. Please review Chart number 4:

The Future Price of Ethereum — Technical Analysis 9

The RSI reading has been above 70 since November 9, 2020, when ETH was trading @ 446.10. Obviously, this was not a good time to sell ETH. In fact, this would have been a great time to buy Ether. Therefore, an argument could be made that the optimum way to use RSI for trending markets like cryptocurrencies is to wait for a bullish breakout above 70 as a buy signal. A bearish breakout below 30 would constitute a sell signal. Trying to pick tops and bottoms in a trending market is a recipe for disaster. As Chart #4 clearly demonstrates, the best course of action is to follow the momentum.

In addition to RSI, another momentum-based indicator is the Money Flow Index (MFI). This indicator measures the inflow and outflow of money into a speculative asset over a specific period of time. It uses price and volume to calculate trading pressure. Arguably, MFI is the purest way to determine the amount of money entering and leaving a particular asset class.

Similar to RSI, the index fluctuates between 0 and 100. In terms of trending markets like cryptocurrencies, the best way to apply MFI is to wait for a bullish breakout above 70 or a bearish breakout below 30. MFI is located at the bottom of Chart #5.

The Future Price of Ethereum — Technical Analysis 10

An Ether buy signal was generated @ 509.11 on November 23, 2020, when MFI penetrated the 70 level. MFI has been continuously above 70 for the past five months. This is a perfect example of why it’s best to follow the trend of the market and avoid the temptation to pick a top or bottom.

At least for now, the trend of ETH is clearly in favor of the bulls. The vast majority of technical indicators are forecasting a continuation of the bull market. In addition to technical analysis, the fundamental backdrop for Ether is extremely bullish, as more use cases are being added to the Ethereum blockchain. Eventually, this bullish cycle will end and a new bear cycle will begin. However, this current bullish phase could easily continue for the remainder of 2021.

Don’t forget that whether the price of ETH goes up or down, you can make money trading ETH futures on our zero-fee rapid-fire ladder trading platform. Sign up here to find out how easy it is to profit from even the smallest of price fluctuations when you’re not constantly losing out to commissions. 

Digitex Futures writers and/or guest authors may or may not have a vested interest in the Digitex Futures project and/or other businesses mentioned throughout the site. None of the content on Digitex Futures is investment advice nor is it a replacement for advice from a certified financial planner.

Latest News

Trading Tools

5 of the Best Cryptocurrency Trading Tools

Digitex Futures
Trading
• Christina Comben
March 14, 2020

Anyone with skin in the game has heard of CoinMarketCap or Coinbase. For many of us, the price of BTC, ETH, and DGTX are the first things we look at in the morning (even before checking the time. But if you’re regularly trading cryptos, you don’t need to do it alone. There are plenty of great cryptocurrency trading tools that can help. 

It’s All About Managing Risk

Any trader knows that one of the keys to being on their game is getting good at risk management. And when it comes to crypto, that’s almost like breaking in a wild mustang! After all, how do you tame a bucking bronco? If you go in blind, the raging animal will almost certainly stomp right over you. But what if you tried again armed with the knowledge of a well-trained expert?

Wild animals, just like crypto, are unpredictable. But you can start to identify patterns. Using the right tools will show you how to read the markets, how to make use of the price fluctuations between exchanges, and take an educated decision about when to buy or sell. You can even make profits not just when the price swings up, but when it tumbles back down again. You just need a little help.

Want to buy DGTX ahead of the mainnet launch? You can do it easily and straight from us through the Digitex Treasury. We offer an instant trustless transaction with no slippage and no need to go through an exchange. Simply click below.

BUY DGTX
Cryptocurrency Trading Tools Everyone Can Use

There’s a plethora of cryptocurrency trading tools out there and it really depends on your personal tastes and needs as to which you prefer. Many traders use several different tools depending on what they want to know and which metric they’re trying to gauge. However, the following five are ones that every trader should have in their arsenal. 

1. TradingView

You can’t trade crypto without being part of TradingView. This is one awesome platform that provides immense value to both traders and investors. Beyond insightful commentary, a killer forum, and useful tips and tricks from successful traders, there’s also a host of excellent tools on hand.

Learn from others the types of strategies they use, as well as how well they work for them. Share comments and feel like part of a trading community, so you’re not just alone at your keyboard all day! 

You’ll see in-depth trading analysis in the shape of charts and historical comparisons (as well as which traders get it right more often) and gain valuable overall market analysis. There’s also a bunch of info on stocks and forex, but the bulk of TradingView commentary is on crypto. 

This is a site for seasoned traders as well as newcomers, however, it’s especially useful for those who want to know how to compile a technical analysis and build up their trading knowledge.

2. CoinGecko

If you’re really new to trading and looking for a tool that doesn’t come with all the bells and whistles of TradingView, be sure to check out CoinGecko. One of the best things about this tool (besides being simple and streamlined) is the fact that it’s completely free and you’ll get an at-a-glance overview of the best performing cryptos on the market. Think of it as a couple of steps up from CoinMarketCap. 

Not only do you get to see quickly how well each coin or token is performing but CoinGecko also uses key trading features, such as market capitalization, public interest, liquidity, and how much developer activity there is on the blockchain to come up with its rankings.

You can take as much or as little as you want from this tool, as it even tracks community engagement with each currency, as well as provides historical data and information on mining difficulty, should you be interested. 

This is more of a tool for investors since it allows you to decide whether a project ticks all the boxes you need to feel confident in your investments.

3. Cryptowatch

Owned by Kraken, Cryptowatch presents another free charting resource that lets you track your favorite cryptocurrencies. You can check the charts and prices from all major exchanges, including Bitfinex, Bittrex, Bithumb, and Coinbase Pro. 

Cryptowatch gives you one up on the market since you can watch any given comparison, say, for example, the BTC/JPY chart, and compare it to the BTC/USD. By doing this, you can glean whether certain markets are front-running others–and step ahead of large orders to gain an economic advantage.

You can also use some of the most common trading indicators such as RSI (Relative Strength Index), exponential moving averages, MACD (Moving Average Convergence Divergence), and many more. Cryptowatch is right up there with TradingView in value, although is probably more suited to seasoned traders.

4. Bitcoinity

Bitcoinity has several key features to it that short-term traders will especially like. For example, it displays combined cryptocurrency order books, as well as shows the arbitrage between cryptocurrency exchanges through an easy-to-read arbitrage table. 

By visualizing the price difference between exchanges on Bitcoinity’s table, traders can capitalize through arbitrage trading. So, for example, let’s say that the price of Bitcoin was $3,800 on one exchange and $3,850 on another. The trader could simultaneously buy from one exchange and sell on another while capitalizing on the $50 difference in price.

Of course, that’s an extreme example since most exchanges display very similar prices. However, many traders use arbitrage to build up small profits over time.

Another useful feature of Bitcoinity is its tool that shows combined liquidity across all major exchanges. This allows traders to assess support and resistance levels and, for more experienced traders, calculate the price-point where major liquidity lies.

So, let’s say that the price of Bitcoin was $9,000 and there were 50,000 bitcoins on the buy-side of the order book, but 80,000 on the sell-side. That could be a sign of sell-pressure mounting which could drive price action down.

5. TensorCharts

Once you’re feeling comfortable with TradingView or Cryptowatch, TensorCharts makes a good next stop. It’s another free tool, but not for completely novice traders. Some of the advanced charts here might make your head spin if you’re not sure what to look for. 

Like Bitcoinity, you can see all the major cryptocurrencies. But TensorCharts uses order book heatmaps. These heatmaps pool data from order books across several different exchanges and display red and green blocks for orders waiting to be filled on either side.

This is an excellent way for traders to foresee price-action and get a decent impression of what the market makers are doing. There are several good videos explaining how TensorCharts works, so if you’re interested in taking your game up a gear, check this one out below.

https://www.youtube.com/watch?v=DUkFI5CaA7A

Want to try your hand at trading commission-free on the Digitex Futures exchange? With the beta version handling insane volume and the Trading Battle on every day, you can practice your skills on our trading ladder interface and hone your strategy before the mainnet release on April 27, 2020.

JOIN NOW
The Takeaway

Check out these awesome tools to add to your trading arsenal today. But do your own research as well. The type of tools a trader uses depends on their strategy, requirements, and experience. These five are just meant to get you started!

 

March 14, 2020
Digitex Futures
Trading

5 of the Best Cryptocurrency Trading Tools

Christina Comben
Trading Tools

Anyone with skin in the game has heard of CoinMarketCap or Coinbase. For many of us, the price of BTC, ETH, and DGTX are the first things we look at in the morning (even before checking the time. But if you’re regularly trading cryptos, you don’t need to do it alone. There are plenty of great cryptocurrency trading tools that can help. 

It’s All About Managing Risk

Any trader knows that one of the keys to being on their game is getting good at risk management. And when it comes to crypto, that’s almost like breaking in a wild mustang! After all, how do you tame a bucking bronco? If you go in blind, the raging animal will almost certainly stomp right over you. But what if you tried again armed with the knowledge of a well-trained expert?

Wild animals, just like crypto, are unpredictable. But you can start to identify patterns. Using the right tools will show you how to read the markets, how to make use of the price fluctuations between exchanges, and take an educated decision about when to buy or sell. You can even make profits not just when the price swings up, but when it tumbles back down again. You just need a little help.

Want to buy DGTX ahead of the mainnet launch? You can do it easily and straight from us through the Digitex Treasury. We offer an instant trustless transaction with no slippage and no need to go through an exchange. Simply click below.

BUY DGTX
Cryptocurrency Trading Tools Everyone Can Use

There’s a plethora of cryptocurrency trading tools out there and it really depends on your personal tastes and needs as to which you prefer. Many traders use several different tools depending on what they want to know and which metric they’re trying to gauge. However, the following five are ones that every trader should have in their arsenal. 

1. TradingView

You can’t trade crypto without being part of TradingView. This is one awesome platform that provides immense value to both traders and investors. Beyond insightful commentary, a killer forum, and useful tips and tricks from successful traders, there’s also a host of excellent tools on hand.

Learn from others the types of strategies they use, as well as how well they work for them. Share comments and feel like part of a trading community, so you’re not just alone at your keyboard all day! 

You’ll see in-depth trading analysis in the shape of charts and historical comparisons (as well as which traders get it right more often) and gain valuable overall market analysis. There’s also a bunch of info on stocks and forex, but the bulk of TradingView commentary is on crypto. 

This is a site for seasoned traders as well as newcomers, however, it’s especially useful for those who want to know how to compile a technical analysis and build up their trading knowledge.

2. CoinGecko

If you’re really new to trading and looking for a tool that doesn’t come with all the bells and whistles of TradingView, be sure to check out CoinGecko. One of the best things about this tool (besides being simple and streamlined) is the fact that it’s completely free and you’ll get an at-a-glance overview of the best performing cryptos on the market. Think of it as a couple of steps up from CoinMarketCap. 

Not only do you get to see quickly how well each coin or token is performing but CoinGecko also uses key trading features, such as market capitalization, public interest, liquidity, and how much developer activity there is on the blockchain to come up with its rankings.

You can take as much or as little as you want from this tool, as it even tracks community engagement with each currency, as well as provides historical data and information on mining difficulty, should you be interested. 

This is more of a tool for investors since it allows you to decide whether a project ticks all the boxes you need to feel confident in your investments.

3. Cryptowatch

Owned by Kraken, Cryptowatch presents another free charting resource that lets you track your favorite cryptocurrencies. You can check the charts and prices from all major exchanges, including Bitfinex, Bittrex, Bithumb, and Coinbase Pro. 

Cryptowatch gives you one up on the market since you can watch any given comparison, say, for example, the BTC/JPY chart, and compare it to the BTC/USD. By doing this, you can glean whether certain markets are front-running others–and step ahead of large orders to gain an economic advantage.

You can also use some of the most common trading indicators such as RSI (Relative Strength Index), exponential moving averages, MACD (Moving Average Convergence Divergence), and many more. Cryptowatch is right up there with TradingView in value, although is probably more suited to seasoned traders.

4. Bitcoinity

Bitcoinity has several key features to it that short-term traders will especially like. For example, it displays combined cryptocurrency order books, as well as shows the arbitrage between cryptocurrency exchanges through an easy-to-read arbitrage table. 

By visualizing the price difference between exchanges on Bitcoinity’s table, traders can capitalize through arbitrage trading. So, for example, let’s say that the price of Bitcoin was $3,800 on one exchange and $3,850 on another. The trader could simultaneously buy from one exchange and sell on another while capitalizing on the $50 difference in price.

Of course, that’s an extreme example since most exchanges display very similar prices. However, many traders use arbitrage to build up small profits over time.

Another useful feature of Bitcoinity is its tool that shows combined liquidity across all major exchanges. This allows traders to assess support and resistance levels and, for more experienced traders, calculate the price-point where major liquidity lies.

So, let’s say that the price of Bitcoin was $9,000 and there were 50,000 bitcoins on the buy-side of the order book, but 80,000 on the sell-side. That could be a sign of sell-pressure mounting which could drive price action down.

5. TensorCharts

Once you’re feeling comfortable with TradingView or Cryptowatch, TensorCharts makes a good next stop. It’s another free tool, but not for completely novice traders. Some of the advanced charts here might make your head spin if you’re not sure what to look for. 

Like Bitcoinity, you can see all the major cryptocurrencies. But TensorCharts uses order book heatmaps. These heatmaps pool data from order books across several different exchanges and display red and green blocks for orders waiting to be filled on either side.

This is an excellent way for traders to foresee price-action and get a decent impression of what the market makers are doing. There are several good videos explaining how TensorCharts works, so if you’re interested in taking your game up a gear, check this one out below.

https://www.youtube.com/watch?v=DUkFI5CaA7A

Want to try your hand at trading commission-free on the Digitex Futures exchange? With the beta version handling insane volume and the Trading Battle on every day, you can practice your skills on our trading ladder interface and hone your strategy before the mainnet release on April 27, 2020.

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The Takeaway

Check out these awesome tools to add to your trading arsenal today. But do your own research as well. The type of tools a trader uses depends on their strategy, requirements, and experience. These five are just meant to get you started!

 

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