Understanding of the cryptocurrency market: a guide to crypt, trend lines, work test (power) and prices of prices
The world of cryptocurrency has grown exponentially in recent years, with new coins that emerge daily. However, market navigation can be overwhelming even for the most experienced traders. In this article, we will deepen the essential concepts that will help you make informed decisions on the investment in cryptocurrencies.
What is cryptocurrency?
Cryptocurrencies are digital or virtual currencies that use encryption for security and are decentralized, which means that they are not controlled by any government or financial institution. The best known cryptocurrency is Bitcoin (BTC), but others such as Ethereum (ETH), Litecoin (LTC) and Monero (XMR) have gained popularity.
Trendy lines: a powerful tool in the cryptocurrency market
The trend lines are a fundamental concept in technical analysis, used to predict future price movements. In the cryptocurrency market, the trend lines play a crucial role in identifying potential signs of purchase and sale.
A trendy line is a line that connects two points on a price graph, indicating the direction of the current trend. There are different types of trend lines, including:
* Simple Moving Media (SMA) : a mobile average of a specific period (e.g. SMA of 50 periods) used to identify the conditions of sovereign offset and superimposed.
* Exponential mobile media (Ema)
: an EMA that regulates the weight of the prices passed according to their size.
* The divergence of average mobile convergence (Macd) : a combination of two trend lines that help identify the signals of purchase and sale.
When using trendy lines in cryptocurrency trading, it is essential to consider the following:
- Identifies the trend line and its strength
- Search for purchase or sale signals based on the crossover of the trend line
- Consider support and resistance levels around the trend line
Proof of Work (Pow): the energy behind the cryptocurrency
Cryptocurrencies such as Bitcoin use a process called Proof of Work) to guarantee transactions and control the creation of new units. Pow provides for the resolution of complex mathematical puzzles, which require significant computational power.
Here’s how it works:
- Miners compete to solve these puzzles in an attempt to validate transactions.
- The first miner to solve the puzzle can add a new block to the blockchain and is rewarded with freshly coined coins (prizes).
- Since more miners join the network, the level of difficulty increases, making it more difficult for solo miners to solve the puzzles.
Pow has several advantages:
* Security : Pow makes transactions safe by requesting significant computational power.
* Incentive Mining : the prizes system encourages miners to participate in the network and validate transactions.
However, Pow also has some disadvantages:
* Energy consumption : POW requires substantial energy consumption, contributing to greenhouse gas emissions.
* Risk of centralization : the extraction pool can concentrate the property, making it more vulnerable to centralization.
Price action: the emotional side of cryptocurrency trading
Price action is a crucial aspect of cryptocurrency trading that involves the analysis of price movements to predict future trends and identify potential purchase and sale signals. It is not just about technical indicators; These are also emotional decisions.
Here are some key aspects of the price action:
* Graphic models : identifies graphic motifs such as head and shoulders, triangles or wedges.
* Support and resistance levels : Identify the areas where prices tend to bounce (support) or pull forward (resistance).
* Indicators : Use various indicators such as RSI, MacD or Bollinger bands to analyze price action.
When it comes to prices:
- Search potential purchase signals when prices form a new fund.