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5 Reasons Why You Should Make Market Analysis Before Investing

CryptoCurrency Trading Idea

24th June 20202:09 pm

Look before you leap. Not just in life. In cryptocurrency trading too. As cliche as it sounds, the saying will save you a lot of money and nerves. Let’s see why so.

Bitcoin trading is not a game of luck. It takes skills, experience, and a lot of knowledge to cut it in this incredibly competitive industry. And the best way to get knowledge about trading cryptocurrencies is through a thorough analysis of the market.

Before delving into the intricacies of why a market analysis is important in crypto trading, here is a brief definition of market analysis in cryptocurrency trading.

What is Market Analysis in Cryptocurrency Trading?

Market analysis in trading is the use of the current economic and social pointers to have an idea of what the market is like before making trading decisions. The analysis helps the trader to understand the intrinsic worth of trade even before committing financially. There are very many crypto trading resources which traders can use to equip themselves with the current state of the market and that knowledge will be a game-changer.

If you are a crypto trader or have plans of getting into the murky waters of trading, here are 3 reasons why you should make market analysis before investing.

5 Reasons Why You Should Make Market Analysis Before Investing

1 You Don’t Want to Swim in Dark Murky Waters, Do You?

Investing in cryptocurrency trading without conducting extensive research is like swimming in dark murky waters with no knowledge of what is lurking underneath. You risk losing your limbs to the unforgiving jaws of the water vertebrates that thrive in the dark waters.

Conducting extensive research and market analysis will give you an idea of what you are getting yourself into. You will have a headlight strapped onto your head as you swim in the murky waters and you can see what is around you. Although this doesn’t eliminate the possibility of encountering a crocodile (making losses in this context), it will reduce your chances of losing a limb or your life (your entire investment).

As any wise tradesman will tell you, anything that improves your chances of survival is always welcome. Market analysis definitely improves your survival chances.

2 Cryptocurrency Trading is Very Dynamic

Show me a market more volatile than the cryptocurrency industry. There is none. Cryptocurrencies are highly volatile. Things change in a matter of seconds in this industry.

This simply means that what was profitable yesterday can be a nightmare today. This dynamism calls for traders to always be in the loop. The best way to remain in the know is by conducting extensive market analysis every single day and keep your ear and eye open to the happenings in the world.

From BTC halving,  legislation changes, political animosity,  to the death of prominent individuals, anything can trigger a price change in the cryptocurrency world. As a committed trader, you should make sure you are always ahead of the game and ready to capitalize on these price changes.

3 You Will Make Better Predictions

The more you study the market, the easier it is to see its trends. Once you have mastered the art of reading the daily charts of crypto performances in trades, you will start making your own charts in your head. These invisible maps, coupled with your intuition, will increase your chances of making better predictions.

At the end of the day, cryptocurrency is more or less a prediction game. Nobody really knows what will happen tomorrow, you can only use market analysis to increase your chances of making a more accurate prediction. An informed prediction is often more accurate than a wild guess made in a whim.

4. It Is Not Rocket Science

Thanks to technology and the philanthropic nature of humans on the internet, there are very many open-source resources that you can use to conduct market analysis. These resources are accessible to everyone and you can use them to increase your awareness before making trading decisions.

Using the available tools and resources is not difficult. A lot of the resources are straightforward and if not, they often come with a tutorial on how to use them. In contrary to popular belief, these analyses are not a preserve for the nerds. Anyone with a good internet connection and can access these resources and put them to good use.

5. Increase Your ROI

The reduced risk will increase the chances of getting a better return on your investment. As mentioned earlier, market analysis is all about identifying the intrinsic worth of the risk you are about to take. This will help you to make better decisions on which risks are worth it and which ones to leave out.

There are a lot of daredevils who trade on instincts and lose millions in the process. While some instincts can lead you in the right direction sometimes, they more often than not will destroy your trading. This is why seasoned professionals advocate for research instead of instincts in making trades.

Unless you have a lot of finances that you don’t mind losing at your disposal, you have no excuse for avoiding crypto trading market analysis a go to see its effect on your trading. It might just be the missing piece of the jigsaw that you have been looking for.


Cryptocurrencies promise to take over the world of trading in a few years. It is up to us to adapt it today or to be left behind by the rest of the trading world. There is a lot of money to be made in cryptocurrencies and it is a wise decision to become proficient in market analysis is a step in the right direction.



Mary Callahan
Mary Callahan