The impact of market mood on trade results in crypto currency
Cryptographic currencies have become popular in recent years and their prices are known to be very unstable. One of the main factors that affect the results of negotiation in cryptographic currency is the mood of the market. In this article, we will explore how market mood affects the negotiation of cryptographic van and we will discuss its influence on investment decisions.
What is a market feeling?
Market mood refers to investors’ collective attitude or humor, according to a specific class of supplies, securities or active. It is influenced by several factors, such as economic indicators, news and opinions of investors. In the context of cryptographic currency, market feelings can be categorized in three types:
- Speculative Feeling : Investors buy cryptocurrency coins hoping to earn quick money from price changes.
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- Main Sinior : Individual investors who seek short -term gains or assumptions in the cryptocurrency market.
How market mood affects negotiation results
Market mood can significantly affect trade results in the crypto currency in many ways:
- Price Volatility : A level feeling affects the price movement increasing or cushioning. For example, the mood of the low market (for example, the sales signal) may lead to a sharp drop in price, while the market up (for example, purchase signal) can result in a rapid increase in prices.
- Risk tolerance : A level feeling affects the risk of investors. When feelings are negative, investors may be more prone to risk and less likely to invest in a cryptographic currency, leading to a fewer negotiation and price.
- For example, Beary’s mood may indicate resellers to sell their positions, while the opinion of the Bull market can make them buy them in the market.
- Portfolio diversification
: Market distribution can affect portfolio diversification. When investors are optimistic about cryptocurrencies, they can attribute more capital to this property, leading to the increase in the amount of negotiation and price.
Case studies: How market mood affects negotiation results
Several case studies show how market mood affects the results of trading in cryptographic currency:
- Bitcoin (BTC) : In 2016, the price of Bitcoin jumped abruptly with about $ 600 to over $ 19,000, guided by speculative feelings that grew while investors sought alternative investments.
- Ethereum (ETH) : In 2017, the price of Ethereum increased from $ 200 to $ 4,900, under the influence of institutional sense of investment companies such as Circle and Andressen Horowitz, supporting the project.
Risk of relief of market feelings
To relieve the risks of cryptocurrency market feelings, traders can use different strategies:
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- Position Size : Limit the management size and maintenance of the consistent investment thesis position.
- Risk Management : Spending stops, limited orders or other risk management risk management techniques.
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Conclusion
The Moody market plays a significant role in trade formation results in cryptocurrencies. Although speculative feelings can lead to quick prices, available institutional can affect long -term trends.