Is technical analysis negatively affecting cryptocurrencies?

[Ranly123]

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?

I guess it only depends on how the analysis is done and how it will be shared to the public. I cannot tell whether it has a negative effect or it will give positive feedback to investors. I just presume that it only depends on how people understand the technical analysis that is done and shared.

[Fatunad]

Yes, it is affecting because; People believe technical analysis and they listen to analysis and when we can check youtube we will see there are more analysis for cryptocurrencies and people watch them if the analysis was negatively it is not good because investors will not invest to cryptocurrencies and it is bad for all market.

I dont know what kind of analysis is that for a Hero Member. Dude are you sure on the things that you have said? How come a technical analysis would able to
affect majority of people who do sees it? I dont know how its done but we do have our own analysis and stuff and if we decide to follow someone then
it wont really be the reason to affect the market majorly.

[figmentofmyass]

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.

there is no proof that TA is a self-fulfilling prophecy. people always say that, but we have no idea how many people are following TA (and remember, everyone's TA is different too). we really have zero clue whether TA could change the outcome of markets.

and these traders can't be independent of the underlying economics---they just add liquidity to existing supply and demand. they might alter supply and demand, but why would we assume they negate it entirely?

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.

this makes markets more speculative and volatile. but i see no reason why TA is "running the market" so to speak. TA is merely a method to analyze the underlying supply and demand. it's completely secondary to the actual economy.

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.

there's a difference between "liquidity" and "extremely leveraged liquidity". market depth is good because it dampens volatility and reduces slippage. but if the source of said market depth is massive leverage, that will enable black swan events that can cause cascading liquidations and extreme volatility.

it's not traders that are the root cause of this, but financialization.

[Quidat]

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?

I guess it only depends on how the analysis is done and how it will be shared to the public. I cannot tell whether it has a negative effect or it will give positive feedback to investors. I just presume that it only depends on how people understand the technical analysis that is done and shared.

If you could only understand what is technical analysis then you shouldn't worry that much on how it is being done. More people like traders does this all the time to predict their next move whether to buy or  sell. But acquiring such knowledge of TA is much more harder than i've expected, it does drain you sometimes and does makes you tired because of thinking everything.

[Bitfling]

I am believe not many people doing trade in cryptocurrency market because most people are long term investor. Not many people having trading skill knowledge and i think technical analysis just for trader not for long term investor

[Kiweikoo]

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?

If a lot of people believes in a particular prediction, they will all be pushed to invest their money and that will make the price of that asset to go high, due to there have been an increase in the rate of demand. I’m also not the type of person that believes in technical analysis, I’ve seen a lot of them ever since I stated and they are never correct. Many ojf them I’ve decided to follow all ended up as  being wrong. So none of them are accurate at all.

[Snake9999]

Yes, many people understand the way cryptocurrencies are formed but don't know the technical knowledge. Such problems can cause investors to lose confidence in coins.

[sana54210]

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.

Well, one way or the other, TA has been working over the years and it will still keep working and it is not Technical analysis that is the problem of this market or what bring about speculation. TA is just for someone trying to look for patterns and trade those patterns, even in life, there are patterns, so what makes it bad, when it comes to a market. Whatever that has cause, I do not know but I would not think TA has caused any issue in this market at all.

Speculation on the other hand, is just something that is basically on its own, and market, as long as people are bidding, will always have some speculative instances. It is just the level of speculation that matters here which we all know that as far as this market is concerned, where there is no real life usage yet; speculation is a norm of the day but would not be like that forever as the market gets matured and usable in the long run.

[syaripudin]

I myself have never found an accurate analysis that says crypto price movements, I think the decentralization system that is owned by crypto and bitcoin will definitely make crypto make a price adjustment individually.

[tegacoll86]

Looks like graphical analysis is not doing any good to the market. It's sure that the experts are trying hard but sometimes it may not just work.

Maybe yes it can effect negative. Since mostly analyze are against bitcoin. News and media make there own predict and stop people to use bitcoins. Fake news and impact market.

[Globalbitcoinl]

I think it has a positive effect on the contrary, because each time it creates the opposite dynamics to what was predicted by analysts

[cybernetik7]

Technical Analysis is making assumptions. You look past prices and try to predict the future. It is similar to looking back while walking. If you walk on poor or dangereous pavement which is a market opened manipulation, it is likely to fall. In such situations, fundemental analysis works better than technical analysis.You had better focus on news and developments.

[pavka]

Technical analysis can be applied to the field in which the processes obey a certain logic and laws of interaction. This is not typical for the cryptocurrency market. Thus, technical analysis is powerless here, and forecasts based on it are often untenable.

[CryptoAssasin]

I somehow agree to this and technical analysis might affecting a trader's decision and may also create a confusion where to sell or buy his / her chosen altcoin. Yes, Technical analysis is just another form of speculation where mathematical equation was used. What was predicted on their chart may or may not happen depending on the trader's approach with the market. I said "somehow agree to this" because technical analysis also helps us to make a proper decision or practice our patience. Taking a profit from trading still depends on your patience, observation, greediness and self discipline.

[Rejevunator]

Looks like graphical analysis is not doing any good to the market. It's sure that the experts are trying hard but sometimes it may not just work.

Whenever the false news or analysis appeared people start doing panic sells. Bitcoin and cryptocurrencies markets need more demands but false news decrease it which result market start loosing its price.

[Idrisu]

Technical analysis is not affecting the market negatively but the traders are misinterpret it to trade wrongly.  Many investors are not even following technical analysis and I mean the whales.  Technical indicators are just there for me and you to lose money.

[sinkfish]

no matter how many TA, the market is actually creating an illusion of control for you. market movement is just an reflection on majority decision, whatever you do, you cant control the market. just ride the wave.

[higgidave]

Yes, it is affecting because; People believe technical analysis and they listen to analysis and when we can check youtube we will see there are more analysis for cryptocurrencies and people watch them if the analysis was negatively it is not good because investors will not invest to cryptocurrencies and it is bad for all market.

Better to not to believe these Technical Analysis and make hold your coins for long term period. Sometime TA does not well work for bitcoin as bitcoin is more dependent on news.

[prtty2gal2]

I myself have never found an accurate analysis that says crypto price movements, I think the decentralization system that is owned by crypto and bitcoin will definitely make crypto make a price adjustment individually.

The issue here is that so many individual thinks technical analysis should just give them an accurate 100% prediction to the direction of the market. If it is like that, who is going to end up losing in the market? I hope you have forgotten that part of trading strategy involves stop loss as well, and if TAs is 100% accurate, no professional will be making use of stop loss even in more matured markets.

What we do here is a game of prediction, with TA there to guide us in the next step to possibly be taking, and you should never forget that it is just an analysis meant for directional and decisional purposes, and it is not meant to give you the right prediction all the time.

[barbara44]

I think it has a positive effect on the contrary, because each time it creates the opposite dynamics to what was predicted by analysts

As far as I am concerned, Technical analysis is just a part of the market, and there is nothing anyone can do about it. It certainly does not affect anything positively or negatively, they just seem like some trends or something, even though it is something that a lot of people have collectively placed there themselves, but in the real sense, it is just some normal thing to just trade the market.

Well, if we say TA sucks, maybe we should try not even using TA at all and see how that would turn out. The problem with the market entirely is that is more speculative in nature, but that has so many difference from TA on its own.