An In-Depth Guide to Understanding Bitcoin Price Charts
If you’re interested in Bitcoin, the first thing you’ll probably want to know is how much 1 bitcoin is worth in U.S. dollars or whatever currency you use. But beyond knowing the value of Bitcoin, you’ll also need to know if it’s a good time to buy or sell. Bitcoin price charts are an important tool speculators use to make their trading decisions.
Price charts aren’t exactly the most intuitive tool in the world, and you shouldn’t worry if you’ve looked at one and felt lost. That’s natural, as it takes some time to understand them. By the end of this guide, you’ll have a much better idea of how to use Bitcoin price charts to your advantage.
Finding the Current Price of Bitcoin
Before delving into price charts, let’s start with finding out what Bitcoin’s current price is. If you’ve already chosen a Bitcoin exchange, then you should use that exchange to check Bitcoin’s price.
Although there may be a little variation from exchange to exchange, all the best Bitcoin exchanges will have fairly similar prices.
It simply makes sense to check the price on the exchange you’re using, since that would be the price you’re buying bitcoins at.
Predicting Bitcoin Price Trends
Knowing the current Bitcoin price is obviously only the tip of the iceberg. What people really want to know is the direction the price will move.
It’s important to note that no matter how much information you have, you can never be 100-percent sure where the price of Bitcoin or any other asset will go. Doing research will help you make better predictions, but you could always get it wrong.
There are two strategies people use in their price predictions with Bitcoin and other assets, such as securities.
The first is fundamental analysis, which involves examining the underlying asset and basing predictions on the quality of the asset. Warren Buffett is well-known for investing this way and only choosing companies he believes will be successful over the long haul.
The second strategy is technical analysis. This method involves using historical data and the information on price charts to predict where prices will go and when it’s good to buy or sell.
When experts say they’re bullish on Bitcoin and expect it to jump to over $10,000 soon, they are often basing this on technical analysis. This is what you’ll be doing if you decide to analyze Bitcoin price charts.
Choosing a Bitcoin Price Chart
There are many Bitcoin price charts out there, but for in-depth analysis, you’ll need one that’s both detailed and very readable. The Coindesk Bitcoin Price Chart is one popular option. You can also try using a chart on your Bitcoin exchange.
Now that you know where to find a Bitcoin price chart, let’s go over how to read one.
The Basic Bitcoin Price Chart
The most basic form of price chart will have a line tracing the price movements of Bitcoin, taking you through all the ups and downs over the period of time you’ve chosen.
You could choose to see Bitcoin prices over the previous hour, day, month, year or all-time, to give just a few examples.
You can get an idea for how Bitcoin’s price has been moving with this type of chart, but you’ll need more information for legitimate technical analysis.
Tracking Price with a Candlestick Chart
One type of chart reigns supreme for technical analysis, and that’s the candlestick chart. It gets its name from the indicators showing how prices moved within a specific time period, because they look similar to candlesticks.
With each of these candlesticks, you can see where Bitcoin’s opening price was at that time, its highest and lowest prices within that time period, and its closing price at the end of that time.
Candlesticks are usually color-coded, with one color signifying that the price went up from open to close and the other signifying that the price went down.
The candlestick chart is far from the only chart option available, and there are many more charts within the same family of open high, low close (OHLC) price charts. Some people like a different type of chart, called the non-time based (NTB) range chart, which is worth checking out, although others find it to be less user-friendly.
While you can check out different types of charts to see what you like, you really can’t go wrong with the candlestick chart. It lets you get a good feel for what has been going on with prices, seeing if they’ve been on the upswing, going down or holding steady lately.
Some of the sites that have candlestick charts for Bitcoin include Bitcoin Wisdom, Bitcoinity, TradeBlock and Zeroblock.
What to Do Now
Where you go with this knowledge of price charts is up to you. Maybe you decide that you’re actually not interested in analyzing technical indicators and prefer fundamental analysis.
In that case, you would need to research Bitcoin and decide if you think it’s a sound investment for the future.
If you want to dive into technical analysis with a Bitcoin price chart, your best bet is to choose a candlestick chart you like and give it a look every day.
See if you can spot any trends, and start making your own predictions on what will happen. Once you’re feeling good about your analysis abilities, you can make a move and see how it works.