The impact of market feeling on the cryptocurrency trading results

Cryptocurrencies have gained popularity in recent years and their prices are known to be highly volatile. One of the key factors that influence commercial results in cryptocurrencies is the feeling of the market. In this article, we will explore how the feeling of the market affects the trading of cryptocurrencies and we will discuss its investment decisions.

What is the feeling of the market?

The feeling of the market refers to the collective attitude or to the mood of investors towards a given class of shares, bonds or activities. It is influenced by various factors such as economic indicators, news events and investors’ opinions. In the context of cryptocurrencies, market feeling can be classified in three types:

• Speculative feeling : investors who acquire cryptocurrencies in the hope of realizing quick profits from prices oscillations.

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How the feeling of the market affects the trading results

The feeling of the market can have a significant impact on trading results in cryptocurrencies in different ways:

• Price volatility : the feeling of the market influences prices by amplifying or dampening them. For example, a feeling of the bearish market (for example a sales signal) can lead to a strong drop in prices, while a firing market feeling (for example, a sign of purchase) can involve a rapid increase in prices.

• Risk tolerance : The feeling of the market influences the risk tolerance of investors. When feeling is negative, investors can be more adverse to risk and less likely to invest in cryptocurrencies, bringing to lower volumes and trading prices.

• Trading strategy : the feeling of the market affects the investment decisions taken by the traders. For example, a feeling of the bearish market can induce traders to sell their positions, while a firing market feeling can make them regain on the market.

• diversification of the portfolio : the feeling of the market can affect the diversification of the wallet. When investors are optimistic on cryptocurrencies, they can allocate more capital to these activities, leading to an increase in volumes and trading prices.

Study cases: how the feeling of the market affects the negotiation results

Several cases study show how market feeling affects the negotiation results in cryptocurrencies:

• Bitcoin (BTC) : In 2016, the Bitcoin price rises to the stars from about $ 600 to over $ 19,000, led by a speculative feeling that has grown while the investors sought alternative investments.

• Ethereum (ETH) : in 2017, the price of Ethereum increased from about $ 200 to over $ 4,900, influenced by an institutional feeling that has seen high profile investment companies such as Circle and AndreeSsen Horowitz in support of the project.

Risks of market feelings mitigation of risks

To mitigate the risks of market feeling in cryptocurrencies, operators can use various strategies:

• diversification : spread investments in several cryptocurrencies to reduce exposure to any activity.

• Dimensisation of the position

  : limit the size of the position to manage the risk and maintain a coherent investment thesis.

• Risk management : implement arrest orders, limit orders or other risks management techniques to control losses.

• Investment thesis : develop an investment thesis that takes into account the feeling of the market and consequently adapt the trading strategies.

Conclusion

The feeling of the market plays a significant role in modeling commercial results in cryptocurrencies. While speculative feeling can lead to rapid price movements, institutional sentiment can influence long -term trends.

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