Understanding How to Use Bitcoin Price Charts
Bitcoin price charts are integral to pegging the right value of this cryptocurrency. Most bitcoin-price charts are line pricing charts.
Such line pricing charts are the most popular and elementary forms used across even classrooms worldwide. Specifically, the bitcoin line-pricing chart tracks the value of 1 BTC in terms of a standard, fiat currency or another, (generally USD) across a specific period of time. Understanding Bitcoin price charts are all about decoding these.
How Bitcoin Line Pricing Charts Work
A line pricing chart displays different time-windows, including the past 12, or 24 hours, a single week/month/year, 2 years, 5 years and even a decade. Within a Bitcoin line pricing chart, there are two axes – Y and X. While the horizontal, straight line on the base of the chart represents the ‘X’ axis, the vertical line on the LHS is the ‘Y’ axis. The ‘X’ axis is labelled with numerous dates within a particular time-period. The ‘Y’ axis is labelled with the market price in specific currencies to display a single BTC’s current value. The particular graph has points plotted along the axes to display the value/price of a single BTC at any point in time or a particular date. The line connecting the plotted point on a graph offers a visual, image-based representation of bitcoin value movement across a specific time-frame.
Using a line pricing chart, one can analyse the bitcoin value. The price chart provides a 3-day time-window and starting as well as closing price-points. Identifying these movements is the primary step. Moving forward, investors can study external factors that precipitated an increase in price and this knowledge can be used to predict future market behaviour. Each major bitcoin exchange platform or wallet provider offers elementary line pricing charts with customised features, so the analytical tool can be effectively used.
Beyond Line Pricing Charts
While line charts work well for understanding value or price trends across a period of time, most bitcoin investors tend to study charts suited for high-volume, high-frequency trading, defining a bitcoin speculation point in the market.
Bitcoin investors seeking to gain value from assets can use these charts to sell existing reserves when prices rise and buy fresh reserves when they drop.
For this reason, advanced and sophisticated charting systems offer in-depth, detailed data on BTC volatility, including the candlestick chart. This type of chart displays the opening and end price, along with low and high prices for a 24-hour period.
Candlestick Price Chart
While closing prices are used to draw the price line in line charts, this can only provide an overview of what prices have been performing. Traders need additional data to draw conclusions. The most widespread is the candlestick price chart. It displays more data than the closing price; the opening price is shown by each candle along with the highest and lowermost price in a given period of time and the closing price. Further, the candle body’s colour indicates whether the closing price is higher than the opening price or lower than it.
Column Volume Charts
Another comprehensive and detailed chart to study as bitcoin knowledge expands is known as the column-volume chart. Line pricing charts reflect the value of trading BTC while column-volume charts show how many BTC are traded within a single period. This format of a chart is excellent for studying the rate of trading activity within specific date ranges/durations. Bitcoin investors can even combine this chart with line pricing charts, or candlestick charts and use the visual for tracking various data trends.
Predicting BTC Price Trends
Forecasting price movements of BTC is reliant on probabilities. Two main approaches to predict price development are the following – fundamental and technical analysis. The fundamental analysis examines the underlying economy, company or security forces. Technical analysis relies on past market data and historical volumes and prices found on price charts. Bitcoin price charts are much more valuable than plain tables and are available at the bitcoin price indices of exchanges such as Coindesk.
Disclaimer: “This article was contributed by the CEO of Blackmore Group, Phillip Nunn. Entrepreneur, financial expert, corporate evangelist, fintech and crypto trading authority, Phillip is an industry speaker and renowned thought leader on topics such as Fintech, Cryptocurrency and Blockchain technologies. Follow his blog at https://phillipnunn.co.uk/phillips-blog/”