Topic: Is technical analysis negatively affecting cryptocurrencies? - page 4. (Read 1309 times)
I agree that speculation and volatility are problems. Speculation overall seems to be affecting cryptocurrencies if the general goal is to use them as an effective cryptocurrency.
I have to say upfront that I'm no fan of technical analysis, even in traditional asset markets. There are 2 main reasons for this:
1) There is no scientific proof that technical analysis works at all. The only correlation between technical analysis and true market movements is that it is widely believed. And this leads to the next point
2) TA is a self-fulfilling prophecy. If people stopped believing in it, it would stop working right away. If people find new patterns they only start actually working once they get enough traction for other people to believe in them.
1) There is no scientific proof that technical analysis works at all. The only correlation between technical analysis and true market movements is that it is widely believed. And this leads to the next point
2) TA is a self-fulfilling prophecy. If people stopped believing in it, it would stop working right away. If people find new patterns they only start actually working once they get enough traction for other people to believe in them.
There can't be scientific proof. Economics and markets can't be studied using the scientific method because cases can't be isolated and reproduced. There are far too many variables in play.
The best one can do is try to isolate trading setups and reproduce them, and then statistically backtest. My trading improved a lot when I stopped trying to use TA to make predictions. It's useful for signalling when the market has left equilibrium, and therefore when to react and what side of the market to be on.
At cryptocurrencies, however, those fundamental values don't work as there are rarely any. Most companies behind cryptocurrencies either have no product that is close to justifying their volume and value. Some of them (Bitcoin amongst them) do not even want to have one. Therefore they are subject to constant influence by those religiously believing in TA, which makes them an object of pure speculation. The fundamental values are "news", no matter the level of reliance.
I think the fundamentals are simply harder to read. The lack of hard numbers doesn't mean the fundamentals don't exist, but they are abstract and speculative and don't boil down to simple ROI calculations.
I find, in all markets, that the more market depth there is, the more applicable TA is. Really thin, low-volume markets (like small-cap altcoins) can be pushed around easily by news events and speculation about fundamentals.
yes, sometimes market is moveble you cannot expect what happened in the next one hour, minutes, and second you must be prepared to what happened in the next, because crypto currency market is very volability. you cannot trust everytime in technical analysis theory.
The problem come in when technical analysis based on traditional asset markets are used on Crypto currency markets. I think Bitcoin being both a currency and a commodity, complicates things a little and this makes traditional technical analysis unreliable. Most of the TA is done by people who are personally invested in the asset and this makes them unbiased. 
The people doing this, is just trying to manipulate the market in their favour.
The people doing this, is just trying to manipulate the market in their favour.
Crypto currencies are good when the market is over all good and if any bad news spread in the market then it also badly effect crypto and if we analyze things technically that would be a better option but still if the market have not potential if you work hard nothing you will get in return.
If people stop doing technical analysis then this strategy will no more as you said but we don't have any method to predict the prices of the crypto currencies so people comparing it with the old patterns and it also act same like that some times and the average growth of the cryptos are also following their path so it has negative effect in short term but in long term investment it can be really helpful.
yes, FUD will make other people anxious and make them participate in the sell panic trend. of course that is negative for crypto.
In this volatile cryoto market the technical analysis does work like astrology and nothing more. However, this is not the thing that is stopping crypt from being a usable and reliable method for everyday transaction use. In fact there is hardly any relation between these TAs and crypto's use in the daily transactions.
What about long term TA? I know traders who only trade on the weekly or monthly time frame, to cut out the short term noise. For instance, bitcoiners who buy the dip based on the "long term trend" are employing TA.
I have to say upfront that I'm no fan of technical analysis, even in traditional asset markets. There are 2 main reasons for this:
1) There is no scientific proof that technical analysis works at all. The only correlation between technical analysis and true market movements is that it is widely believed. And this leads to the next point
2) TA is a self-fulfilling prophecy. If people stopped believing in it, it would stop working right away. If people find new patterns they only start actually working once they get enough traction for other people to believe in them.
1) There is no scientific proof that technical analysis works at all. The only correlation between technical analysis and true market movements is that it is widely believed. And this leads to the next point
2) TA is a self-fulfilling prophecy. If people stopped believing in it, it would stop working right away. If people find new patterns they only start actually working once they get enough traction for other people to believe in them.
Yes, using technical analysis is like knowing what other people are thinking. It is indeed a self-fulfilling prophecy wherein when the group of people thinks that it will have a support or resistance in that level then it would come true because many of them believe so. After all, technical analysis is studying the previous behavior of the market hoping that it would be the same way in the future. If not, then we have those stop losses to lessen our risks of having bigger losses.
I have to say upfront that I'm no fan of technical analysis, even in traditional asset markets. There are 2 main reasons for this:
1) There is no scientific proof that technical analysis works at all. The only correlation between technical analysis and true market movements is that it is widely believed. And this leads to the next point
2) TA is a self-fulfilling prophecy. If people stopped believing in it, it would stop working right away. If people find new patterns they only start actually working once they get enough traction for other people to believe in them.
1) There is no scientific proof that technical analysis works at all. The only correlation between technical analysis and true market movements is that it is widely believed. And this leads to the next point
2) TA is a self-fulfilling prophecy. If people stopped believing in it, it would stop working right away. If people find new patterns they only start actually working once they get enough traction for other people to believe in them.
Yes, using technical analysis is like knowing what other people are thinking. It is indeed a self-fulfilling prophecy wherein when the group of people thinks that it will have a support or resistance in that level then it would come true because many of them believe so. After all, technical analysis is studying the previous behavior of the market hoping that it would be the same way in the future. If not, then we have those stop losses to lessen our risks of having bigger losses.
Exactly. I like your point about TA being a self fulfilling prophecy, because that's exactly what it is.
It's almost like a pump and dump group. When people think that a prediction is going to right, they are going to buy into it. And the larger the platform that some analysts have, the more likely their predictions they make will
I'd say that anything that is out of the scope of the long term pricing trend is quite irrelevant for bitcoin. There are going to be different market conditions in the very short run that are just completely random and unpredictable, and there are people trying to use TA to cover that. Is it negatively affecting traders, especially inexperienced ones that are blindly believing in it.
It's almost like a pump and dump group. When people think that a prediction is going to right, they are going to buy into it. And the larger the platform that some analysts have, the more likely their predictions they make will
I'd say that anything that is out of the scope of the long term pricing trend is quite irrelevant for bitcoin. There are going to be different market conditions in the very short run that are just completely random and unpredictable, and there are people trying to use TA to cover that. Is it negatively affecting traders, especially inexperienced ones that are blindly believing in it.
It seems that in the encryption market, graphical analysis is of no use to the market, can not play a reference role, those experts analyze a lot, but sometimes inconsistent with the market, so still rely on their own judgment, do not be misled by others.
I have to say upfront that I'm no fan of technical analysis, even in traditional asset markets. There are 2 main reasons for this:
1) There is no scientific proof that technical analysis works at all. The only correlation between technical analysis and true market movements is that it is widely believed. And this leads to the next point
2) TA is a self-fulfilling prophecy. If people stopped believing in it, it would stop working right away. If people find new patterns they only start actually working once they get enough traction for other people to believe in them.
1) There is no scientific proof that technical analysis works at all. The only correlation between technical analysis and true market movements is that it is widely believed. And this leads to the next point
2) TA is a self-fulfilling prophecy. If people stopped believing in it, it would stop working right away. If people find new patterns they only start actually working once they get enough traction for other people to believe in them.
you've contradicted yourself. you say there's no proof that it works, then you assert that it works because it's a self-fulfilling prophecy. which one is it?
Regarding your first point: I don't think I have contradicted myself, I may just not have sufficiently explained what I mean: There is no scientific proof, that the underlying principles of TA work for any other reason than the widespread belief that it works, meaning that it is a self-fulfilling prophecy and similar patterns would not form if they were not believed in by a large group of people, making them completely independent of the underlying economics.
This is somewhat of a problem in traditional assets, but it is just a minor nuisance. The fundamental values of traditional assets always strike back, no matter what TA says. Found resistance? Doesn't matter if the underlying value shoots way up due to increasing sales, usage or whatever. Glad a value has some support? Doesn't matter if sales drop to near-zero, the price does not care about support.
At cryptocurrencies, however, those fundamental values don't work as there are rarely any.
At cryptocurrencies, however, those fundamental values don't work as there are rarely any.
there are also fundamentals underlying cryptocurrency that affect supply and demand to the spot market. if there's an existential protocol flaw or a significant network split, don't you think "support" might be broken too?
I absolutely think so. However, those fundamentals are time discrete. I cannot decide to do an analysis of the fundamentals right now, I can just analyze news coming out. That's opposed to traditional markets, where I can analyze fundamentals at any given time. i'm not saying this is bad, but it definitely powers volatility and TA.
Most companies behind cryptocurrencies either have no product that is close to justifying their volume and value. Some of them (Bitcoin amongst them) do not even want to have one. Therefore they are subject to constant influence by those religiously believing in TA, which makes them an object of pure speculation. The fundamental values are "news", no matter the level of reliance.
In my opinion, this holds cryptocurrencies from being a usable and reliable method for everyday transaction use.
In my opinion, this holds cryptocurrencies from being a usable and reliable method for everyday transaction use.
just because a market is speculative doesn't mean TA reigns supreme. what evidence do you have that TA is responsible for anything at all? this is a common assumption with no basis in fact.
traders (some of whom employ TA, some of whom employ FA, and some of whom are just randomly trading) are just supplying liquidity to the market. if anything, they make it less volatile (by adding liquidity) and therefore less speculative.
I have no evidence, hence the question in the thread title. For me, it is a question that I am asking myself and would like to get opinions - such as yours - on.
Regarding your last point I just wanted to throw in, that this exact same argument was the favorite argument of High Frequency Traders in traditional markets:
"We are not damaging the market, we are just supplying liquidity".
Turns out that was not the entire truth.
Yeah , sometimes I also wonder how can people predict the movement using the chart, and I come to the conclusion that it actually a psychology of how people will react when they analyse the chart,if a bunch of people stop believe in the chart then TA won't be useful, that is why chart sometimes could be deceiving
I have to say upfront that I'm no fan of technical analysis, even in traditional asset markets. There are 2 main reasons for this:
1) There is no scientific proof that technical analysis works at all. The only correlation between technical analysis and true market movements is that it is widely believed. And this leads to the next point
2) TA is a self-fulfilling prophecy. If people stopped believing in it, it would stop working right away. If people find new patterns they only start actually working once they get enough traction for other people to believe in them.
This is somewhat of a problem in traditional assets, but it is just a minor nuisance. The fundamental values of traditional assets always strike back, no matter what TA says. Found resistance? Doesn't matter if the underlying value shoots way up due to increasing sales, usage or whatever. Glad a value has some support? Doesn't matter if sales drop to near-zero, the price does not care about support.
At cryptocurrencies, however, those fundamental values don't work as there are rarely any. Most companies behind cryptocurrencies either have no product that is close to justifying their volume and value. Some of them (Bitcoin amongst them) do not even want to have one. Therefore they are subject to constant influence by those religiously believing in TA, which makes them an object of pure speculation. The fundamental values are "news", no matter the level of reliance.
In my opinion, this holds cryptocurrencies from being a usable and reliable method for everyday transaction use.
What is your view on this?
1) There is no scientific proof that technical analysis works at all. The only correlation between technical analysis and true market movements is that it is widely believed. And this leads to the next point
2) TA is a self-fulfilling prophecy. If people stopped believing in it, it would stop working right away. If people find new patterns they only start actually working once they get enough traction for other people to believe in them.
This is somewhat of a problem in traditional assets, but it is just a minor nuisance. The fundamental values of traditional assets always strike back, no matter what TA says. Found resistance? Doesn't matter if the underlying value shoots way up due to increasing sales, usage or whatever. Glad a value has some support? Doesn't matter if sales drop to near-zero, the price does not care about support.
At cryptocurrencies, however, those fundamental values don't work as there are rarely any. Most companies behind cryptocurrencies either have no product that is close to justifying their volume and value. Some of them (Bitcoin amongst them) do not even want to have one. Therefore they are subject to constant influence by those religiously believing in TA, which makes them an object of pure speculation. The fundamental values are "news", no matter the level of reliance.
In my opinion, this holds cryptocurrencies from being a usable and reliable method for everyday transaction use.
What is your view on this?
You're absolutely spot on this one. Even a TA expert I respect so much once told me there are times TA don't work in crypto, and I've seen it happen several times, especially for low priced coins. For me, I believe the fundamentals (news, updates, partnerships, etc.) play a major role in crypto and determines to a very large extent the price movements of individual crypto assets.
I have to say upfront that I'm no fan of technical analysis, even in traditional asset markets. There are 2 main reasons for this:
1) There is no scientific proof that technical analysis works at all. The only correlation between technical analysis and true market movements is that it is widely believed. And this leads to the next point
2) TA is a self-fulfilling prophecy. If people stopped believing in it, it would stop working right away. If people find new patterns they only start actually working once they get enough traction for other people to believe in them.
1) There is no scientific proof that technical analysis works at all. The only correlation between technical analysis and true market movements is that it is widely believed. And this leads to the next point
2) TA is a self-fulfilling prophecy. If people stopped believing in it, it would stop working right away. If people find new patterns they only start actually working once they get enough traction for other people to believe in them.
you've contradicted yourself. you say there's no proof that it works, then you assert that it works because it's a self-fulfilling prophecy. which one is it?
This is somewhat of a problem in traditional assets, but it is just a minor nuisance. The fundamental values of traditional assets always strike back, no matter what TA says. Found resistance? Doesn't matter if the underlying value shoots way up due to increasing sales, usage or whatever. Glad a value has some support? Doesn't matter if sales drop to near-zero, the price does not care about support.
At cryptocurrencies, however, those fundamental values don't work as there are rarely any.
At cryptocurrencies, however, those fundamental values don't work as there are rarely any.
there are also fundamentals underlying cryptocurrency that affect supply and demand to the spot market. if there's an existential protocol flaw or a significant network split, don't you think "support" might be broken too?
Most companies behind cryptocurrencies either have no product that is close to justifying their volume and value. Some of them (Bitcoin amongst them) do not even want to have one. Therefore they are subject to constant influence by those religiously believing in TA, which makes them an object of pure speculation. The fundamental values are "news", no matter the level of reliance.
In my opinion, this holds cryptocurrencies from being a usable and reliable method for everyday transaction use.
In my opinion, this holds cryptocurrencies from being a usable and reliable method for everyday transaction use.
just because a market is speculative doesn't mean TA reigns supreme. what evidence do you have that TA is responsible for anything at all? this is a common assumption with no basis in fact.
traders (some of whom employ TA, some of whom employ FA, and some of whom are just randomly trading) are just supplying liquidity to the market. if anything, they make it less volatile (by adding liquidity) and therefore less speculative.
TA is not affecting markets in any way, most of the market participants are not aware of TA and are not using it.
But most of regular traders are thinking of entries and and exit points , and support zones which are rational and logical and that works, it is not a matter of belief.
Also some patterns are solid with high accuracy, others are less accurate .
When people publish a thread with their TA, people usually respond with positive messages like 'great information', 'useful analysis' etc. People do believe in it and that surely can lead to it becoming our reality, since traders and investors act accordingly. If it is so, however, it makes TA useful for traders, just like bad news on respected news portals mean that a trader should sell the coins rightaway. Not because the news is really important and terrible, but because people will think that others will start panic selling and start it themselves, thus causing negative price predictions to become true. It could certainly help the market if more people made positively oriented TA and people believed in it, thus making it closer to us, even if the methods themselves are useless. But most of regular traders are thinking of entries and and exit points , and support zones which are rational and logical and that works, it is not a matter of belief.
Also some patterns are solid with high accuracy, others are less accurate .
TA is not affecting markets in any way, most of the market participants are not aware of TA and are not using it.
But most of regular traders are thinking of entries and and exit points , and support zones which are rational and logical and that works, it is not a matter of belief.
Also some patterns are solid with high accuracy, others are less accurate .
But most of regular traders are thinking of entries and and exit points , and support zones which are rational and logical and that works, it is not a matter of belief.
Also some patterns are solid with high accuracy, others are less accurate .
Well, it seems TAs are not working even anymore. Even CZ, binance CEO saud it after thia recent usdt FUD pump. He said months of good news and insights into the cryptospace couldn't trigger an uptrend and just a alse news triggered it. Seems market is moving away from predictions and we can all testify to that because this year, many predictions never worked. Some analysts even ended up reducing the target prices.
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