Cryptocurrency markets have emerged as a highly dynamic, global financial market offering unparalleled opportunities for both active traders and investors alike. With the introduction of our CoinDesk Trend Indicator suite of signals, we hope to assist crypto investors in identifying new opportunities and managing risk in this emergent and volatile asset class.In this post, we'll delve into the reasons why price trends exist and tend to persist in digital asset markets.
On top of the human limitations of trading a market that never closes, many participants within the crypto markets are non-professional retail investors, who have a lot of other daily responsibilities besides crypto markets and newsflow. The net effect of these constraints on attention to the market creates opportunities for rules-based momentum traders to capitalize on the delayed reactions of market participants.
For example, Trader A might stubbornly hold the belief that the market is still in a bull market cycle while the price trends lower. Conversely, Trader B might insist they are in the midst of a Crypto Winter, even as ether and bitcoin rally. Does this sound like anyone’s experience between 2022 into 2023?
For the reasons listed above, we should expect trending prices to persist in digital asset markets, making momentum indicators a useful strategy tool for any manager of crypto assets.) released the Bitcoin white paper on Oct. 31, 2008.
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