Top-down Analysis of Crypto Market --> Better Timing, Better Results

in #hive-1679224 months ago


I feel that I am gradually maturing when it comes to investing. I'm in no hurry, it hasn't even been a quarter of a century since I started making financial investments 😊 I aim to become a real investment guru in the next ten years.

The crypto world has its unique structure. The volatility is much higher compared to the stock market. It was once said that cryptocurrencies have no correlation with any financial asset. Nowadays, this situation is slowly changing.

Recently, the tightening moves of the FED have created anxiety in the crypto world as well as the stock market. Because crypto was getting its share from the abundant liquidity created by central banks.

When investing in a particular cryptocurrency, it is necessary to take into account the current world economy and the crypto market in general. Otherwise, no matter how bright the invested project is, the probability of making a profit decreases.

There is a trend towards raising interest rates due to high inflation around the world. This trend increases the likelihood that money will be withdrawn from risky assets and transferred to fixed-income assets. Since cryptocurrencies are considered risky assets, this situation has a negative effect on crypto prices. On the other hand, this of course does not prevent investing in cryptocurrencies.

Ups and downs in Bitcoin and Ethereum prices, which make up 57% of the crypto market, are decisive for the market in general. Therefore, before investing in any crypto, it is necessary to check the status of Bitcoin, the king of the crypto market, and Ethereum, the queen.

Bitcoin's epic comeback from 39,600 below 40,500 resistance last night, for example, created hope for the entire crypto market. This move, which took place with high volume, caused Bitcoin to rise to the level of 42,000 today. Similarly, Ethereum has rebounded from the 2930 level and rose to $3100.

Although all cryptocurrencies are in the category of risky assets, risk perceptions differ on the basis of coins. As the crypto market opens up like a fan, smaller-scale coins on the fringes travel greater distances. The nearest coin to stable coins which are located in the middle of the spectrum is Bitcoin. Bitcoin is followed by Ethereum and BNB. As the risk perception in the market increases, the spectrum is closing, while small-scale coins lose more value. In this context, it is obvious that where we are in the market cycle is also a factor in coin selection.

Another awareness I have gained recently is that the popular crypto categories change over time. For example, DEFI coins were popular in the first quarter of 2021. The second quarter of the year passed in a defensive mood. In the third quarter of the year, smart contract cryptocurrencies started to come to the fore. Cardano and Solana, followed by Avax, Polygon, and Cosmos drew attention to notable rises. In the fourth quarter of the year, NFT-related Metaverse and Play-to-Earn categories were popular. What happened in 2021 shows us that the category of cryptocurrencies is important. It seems that sectors in the stock market have been replaced by categories in crypto. Funds flow into another category after price saturation in one category.

Where does the Hive fit in the category equation I described above? Research firm Messari classifies Hive under the categories of “Content Creation and Distribution” and “Web3”. On the other hand, the success of Splinterlands shows that Hive is an important blockchain in terms of the Play-to-Earn category. A rally in any of these three categories in 2022 could positively affect the Hive price.

After the categories, it is finally time to evaluate individual coins. If we are considering investing in a particular cryptocurrency, we have a potential success story in mind. The problem is that it is possible to write a potential success story for each coin in the top hundred or even in the top five hundred. When we analyze which coin's story is stronger, taking into account the market values, the probability of investing in the right coin will increase. While we may not be able to capture the entire coin landscape (I don't think there is such a person in the world), having an idea of ​​the largest possible number of coins can help us predict the potential of a particular coin.

After reviewing all these items, we can finally review the technical indicators specific to the cryptocurrency we are considering investing in. Technical indicators such as support and resistance points, the status of oscillators such as MACD, RSI, and the price compared to 20,50, 200-day averages will guide us in this context.


In this part of the article, I would like to list the steps that I recommend to be taken about top-down analysis.

  • The macroeconomic situation in the world and its effects on the liquidity in the market
  • General situation of the crypto market (Bitcoin and Ethereum technical analysis)
  • Where you are in the market cycle (bull market, bear market, range market)
  • Which of the crypto categories is popular and which category can stand out in the following period
  • Technical analysis of the coin considered for purchase, its promises, and comparison of the strengths with others.

Thank you for reading.

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