Blockchain and Cryptocurrency Beginner - Price Forecasting - Some of the Methods Used for Price Forecasting

When it comes to price forecasting, there are various methods used to try to get as close as possible when predicting the future prices of any cryptocurrency asset. Yes, even though perfect price prediction might not be achieved due to different external factors, however, it can be as close as possible if done properly and can get a general sense of which direction the price of an asset could go in the future. Some of the methods used for price forecasting are fundamental analysis, technical analysis and sentimental analysis. These three methods are the most popular methods used for price forecasting.

Fundamental analysis
This type of analysis has proven to be one of the core strategies for investments. Fundamental analysis is basically when an investor pays close attention to the project, does background checks and goes deep into the project before making any investment decisions... These checks can be what the project is all about, the project mission, what the project is trying to solve, the number of top exchanges the project is listed on, the size of the community, the team behind the project, partnerships, asset statistics like market capitalization, circulating supply, total and max supply of the coin or token, number of holders of the coin or token, project competitors and more before jumping in to invest in the project. All these help to get a rough estimate on how well a project can perform in the future. This method of analysis is more common for investors when making investments decisions.

Technical analysis
As the name says, it starts to go technical when using technical analysis for price forecasting. Technical analysis is one of the core methods of price forecasting, it involves the use of various tools, technical data, indicators, signals, looking at charts, price history, to predict the future price movements of a cryptocurrency asset. When using technical analysis, we look at things like uptrend or downtrend to determine the direction an asset is more likely to go, we also look at resistance, support, breakouts, so as to help have a general knowledge of which direction an asset is more likely to go in the future. This method of analysis is common for traders when making trading decisions.

Sentimental analysis
Like the name says, this method of analysis is based on sentiments around the project or asset. In the cryptocurrency space, sentiments around a project or an asset play a key role in the direction the price of an asset will go. We have seen prices of assets skyrocket because of a tweet by a top personality, also what the community thinks about a project can heavily influence the price of an asset… when there is a buzz going on around a project, there is a high chance that the price will move in an upward direction. Social media have been a huge platform and source of sentiments in the crypto space, social media sites like Twitter, Reddit, youtube, blogs etc all play a huge role in how people perceive a project and the influence it has in making investment/trading decisions.

The tools I used to analyze the charts is trading view and price chart on coinmarketcap. I looked at the overall price chart and the price history on coinmarketcap. On tradingview site, I used a couple of indicators to help me in my prediction.

Final Thought

Understanding the various methods of price forecasting is a great way to make better decisions when investing or trading cryptocurrency assets. All the methods I have discussed above all play a key role in forecasting the future prices of cryptocurrency asset. Looking at the current price of DOT, the price history, charts, and the data from the various indicators, I think it is a good time to buy DOT and I can predict that DOT price could go within the ranges of $33 - $35 in the next few weeks.