Cryptocurrencies are the most volatile asset class in financial markets. Therefore, it is important for traders to track cryptocurrency quotes in order to find the most powerful trends, attractive entry points to the market, as well as profit-taking levels. In addition to the standard set of price levels (opening, closing, maximum and minimum prices per day), changes in prices per day and week are also important. These factors significantly affect the development of trends and indicate the direction of market movements.
Trading volume and current market capitalization can affect the inflow or outflow of investments in cryptocurrencies, which can cause a significant change in quotes.
Types of cryptocurrency quotes
The total number of cryptocurrencies reaches almost 3,000 items in the middle of November 2019.
The most common cryptocurrencies :
- Bitcoin (BTC);
- Ethereum (ETH);
- Ripple (XRP);
- Bitcoin Cash (BCH);
- Litecoin (LTC);
- EOS (EOS).
Most often, cryptocurrency quotes indicate the current value expressed in US dollars (USD).
Thus, so-called cryptocurrency pairs arise, for example, BTC/USD. Traders and investors interested in trading cryptocurrencies through alternative traditional currencies such as the Australian dollar, Euro or Japanese yen will track other cryptocurrency pairs:
In addition, there are so-called cross-rates, when they indicate the value of one cryptocurrency relative to another.
The most popular cross rate is :
In addition to the current value, cryptocurrency quotes also indicate the opening price of the trading session, the closing of the previous day, as well as the maximum and minimum value of trading.
The cryptocurrency price change expressed as a percentage is the most important indicator of market volatility. The higher this indicator, the higher the volatility. With a positive change in prices, they speak of a bullish trend (buyers prevail over sellers), a negative value indicates a bear market (sellers dominate).
The overall level of capitalization of the cryptocurrency market, as well as its dynamics, are strong drivers of quotes. With a significant influx of investments in cryptocurrencies, a psychological factor is triggered when investors rush to invest at attractive prices. In this case, a positive change in cryptocurrency quotes can reach tens of percent per day. A scenario in which prices rise or fall rapidly is called a rally.
The largest change in Bitcoin price for the week reached + 20.7% in June and -19.7% in September 2019.
The volume of trades per day and week also matters. The greater the volatility in the market, the faster the trading volume grows, which indicates increased activity of sellers and buyers. In relatively calm market conditions, trading volume will be below average. The ratio of the trading volume of different cryptocurrencies and the level of capitalization may indicate market share.
For example : the trading volume of Ethereum grows in relation to the turnover of Bitcoins, the BTC/ETH cross rate will fall.
All of these factors affect the attractiveness of investments in cryptocurrencies, therefore cryptocurrency quotes are important for traders in the financial markets.