How to Forecast Cryptocurrency Prices for 2024: Guessing how much cryptocurrencies will cost is hard. But did you know there are methods to figure out useful information and make smart choices before others? If you want to know how to guess cryptocurrency prices well, our guide will teach you about the important things that affect prices.
This will help you make your own guesses about which cryptocurrency to invest in and not miss out on good chances in the growing cryptocurrency market.
Key Takeaways
Cryptocurrencies with strong token economics attract money. When a cryptocurrency gets listed on a major exchange, its price usually goes up. But when more of its tokens become available for sale, it can push the price down.
You can try to guess how cryptocurrency prices will change by using methods like looking at charts, studying how the market works, checking what’s happening with the cryptocurrency’s transactions, and seeing how people feel about it.
In cryptocurrency, technical analysis is popular because prices change a lot. It means using special tools and patterns to guess what prices will do. Fundamental analysis looks at big economic things like how strong the US dollar is, but also at unique things like how busy the cryptocurrency’s network is and what its token economics are like to decide how valuable a coin is.
Paying attention to what people are saying on social media and how they feel about a cryptocurrency can help you guess if its price is going to jump up because of the hype.
What Affects Cryptocurrency Prices? 8 Key Factors to Consider
Knowing how market influences and outside factors impact cryptocurrency prices is crucial for making accurate predictions about cryptocurrency prices. These factors can be specific to cryptocurrencies or related to the overall economy.
1. Tokenomics
Tokenomics is about studying how the supply and demand of a cryptocurrency affect its value. Each cryptocurrency project designs its tokenomics based on what it offers.
For instance, Bitcoin has a limited supply and its inflation decreases over time, making it attractive to people who want protection against inflation and a reliable asset to store value.
Etherium (ETH) is in demand because it’s useful for paying fees, staking, collateral for loans, and other DeFi purposes.
Cryptocurrencies like BTC and ETH, which have strong tokenomics, attract investment, and their prices go up. Understanding tokenomics is important for analyzing cryptocurrencies.
2. Value Proposition
What makes a cryptocurrency worth investing in? Why is one crypto coin better to invest in than another?
The answer might be found in what benefits the cryptocurrency offers. Value proposition means the good things that a company, product, or service gives to its customers.
Bitcoin is valuable because it helps protect against inflation, it’s very decentralized and secure, and it lets people make direct payments to each other without needing a middleman.
Ethereum is valuable because it’s the most popular platform for smart contracts and it has lots of cool apps.
Other blockchains like Solana are valuable because they fix issues that Ethereum has, like high fees and slow transactions. Some smaller platforms, like Render, Uniswap, and Celestia, focus on offering specific things to users.
3. Token Vesting and Unlock Timelines
Cryptocurrency investors need to know about token vesting and unlock schedules. When a new cryptocurrency project starts, the team, early backers, and founders usually receive a big portion of the newly created tokens as payment for their work.
These tokens are put into a smart contract that gradually releases them over time. This helps control the number of tokens available, reduces pressure to sell them, and supports the token’s value. When the vested tokens are unlocked, a large number of tokens become available for trading.
If the project team, early backers, or founders sell their tokens on the market, it can cause the cryptocurrency’s price to decrease.
4. Market Sentiment
Market sentiment means how investors feel overall. People’s feelings of fear and greed influence financial markets a lot. Sometimes, these feelings cause investors to make strange decisions, making prices shoot up or crash suddenly.
In a bullish market, cryptocurrency prices go up without any special reason. But in a bearish market, people aren’t very interested and crypto prices stay the same.
Experienced investors learn to understand these feelings and can make money by going against the crowd when others act irrationally.
5. Market Listings
Before being listed on big exchanges like Binance and Coinbase, crypto tokens often increase in price.
These exchanges can attract lots of new investors and money to cryptocurrencies that aren’t listed yet. They’re user-friendly, so people who aren’t familiar with crypto can easily buy it using their regular debit or credit cards.
When a token gets taken off an exchange, it usually makes the token’s price go down. This can happen because of rules from regulators or if there are problems with security.
6. Endorsements
When famous people or well-known brands support and promote certain cryptocurrencies, it gets a lot of attention.
This makes more people interested in investing in those cryptocurrencies, which can make their prices go up a lot. For example, Dogecoin and Elon Musk show how influential celebrity support can be in the cryptocurrency world. In 2021, during a time when cryptocurrency prices were rising a lot, Musk played a big role in making Dogecoin popular.
Right now, Dogecoin is one of the most valuable cryptocurrencies globally, worth billions of dollars. Also, when cryptocurrencies team up with big brands, it helps them seem more trustworthy.
In 2022, Polygon became a top-performing cryptocurrency after teaming up with global brands like Meta, Disney, and Adobe.
7. Macroeconomic Forces
Cryptocurrency markets now get influenced by big economic trends. In the past ten years, cryptocurrencies have become a huge industry worth trillions of dollars. It’s not just tech fans, cyberpunks, or individual traders who are involved anymore.
When big banks, big companies, and other large investors put their money into digital money like Bitcoin, the market for these digital coins gets affected more by big economic changes like inflation and interest rates.
In 2022, the value of Bitcoin and other digital coins dropped a lot because other risky investments also went down after banks in the US and Europe started raising interest rates to control high prices.
Now, in January 2024, with a new type of investment fund for Bitcoin starting and a lot of big money coming in, the crypto market will be even more affected by big economic changes.
8. Future Outlook
Financial markets look ahead. Investors invest money in things they think will make a lot of money in the future. So, projects that seem really promising and could change things a lot get more money from investors and are worth more.
For instance, Ethereum, a technology that could change how money works, is worth more than Flow, which focuses on a different kind of technology.
The stories people believe about the market can really affect how they see a cryptocurrency project.
Like in 2023, when everyone was excited about artificial intelligence, crypto projects linked to AI did really well because people thought they were going to be successful.
Crypto Technical Analysis: Indicators and Patterns
Technical analysis means looking at past information about markets, especially prices and how much is traded, to guess what might happen in the future with prices. People who do technical analysis believe that everything we know about a market is already shown in its price, which goes up or down in patterns that usually keep going (until they change).
The main idea of technical analysis is that looking at how prices behaved in the past is the best way to guess what might happen next. The main tools for studying cryptocurrencies with technical analysis are charts showing prices and trading volumes, like bar charts, line charts, or Japanese candlestick charts.
Using technical analysis to predict cryptocurrency prices seems especially important for a few reasons.
Cryptocurrency markets can change a lot in a short time, making prices go up and down quickly. This can help technical analysts find predictable patterns in prices.
Unlike regular markets, there aren’t as many big institutional traders in cryptocurrency, so prices can be harder to predict and influenced more by emotions.
This creates a good environment for technical analysis. Also, cryptocurrency values aren’t based on things like company profits, so technical analysis is a popular way to guess what prices might do next.
Analysts use different signs and pictures on charts to guess where prices might go in the future.
For example, things like moving averages, relative strength index (RSI), and moving average convergence divergence (MACD) can show trends and how strong they are in cryptocurrencies.
There are also shapes on charts, like double tops and bottoms, triangles, heads and shoulders, and flags, which can give clues about whether prices might keep going the same way or change direction.
Technical Analysis of Bitcoin (BTC/USD)
For instance, let’s look at how we analyze cryptocurrency markets using technical methods, using Bitcoin’s price from its highest point in 2021 to March 2024, when it reached a new record high.
The chart we’re referring to here shows price changes in percentages rather than exact amounts, making it easier to compare how prices move over different time frames.
- The highest price reached before acted like a barrier around $60,000 in 2021 when tested again, making a pattern called a double top.
- After successfully holding once, the support of about $30,000 was broken.
- The price reached its lowest point in late 2022 after showing a bullish sign in the RSI indicator.
The price went up about half from its lowest point before staying around $30,000, which used to be support but now acts as resistance. - The price first tested, then broke, and tested again at a certain level determined by the Fibonacci sequence, which is a way to predict market movements, and also reached a level in the RSI indicator indicating the market was overbought.
- The price went up to reach a new high point, retracing all of its previous decline.
Using a method called the Fibonacci extension, the next big target for the price in the long run is about $170,000.
Crypto Fundamental Analysis: Macro Trends and Crypto Specificity
In cryptocurrency, fundamental analysis means figuring out how much a coin or token is really worth.
This involves looking at its economic, financial, and other qualities. You ask yourself, “What’s the true value of this crypto?” and then see if its current price matches up with that.
In stocks, you might look at things like company profits or industry trends, but with crypto, you use different indicators.
Macro Influences
US Dollar Strength: Cryptocurrency values often move against the US dollar. When the dollar is weaker, people might find cryptocurrencies more attractive to keep their money safe.
Global Inflation Rates: When prices rise a lot around the world, it can affect how much people are willing to pay for cryptocurrencies. This is because when money loses value quickly, people might prefer to invest in things like Bitcoin, which aren’t affected by inflation as much.
Liquidity: Economists argue about what “liquidity” means in finance. Basically, when things are “highly liquid,” it means it’s easy to get money to invest, and people are more willing to take risks, like investing in cryptocurrencies. When things are “low liquidity,” it’s harder to get money to invest, so people might not be as interested in high-risk investments like cryptocurrencies.
Specific Crypto Fundamentals
Adoption: When big companies team up with or start using a cryptocurrency, or when it gets included in payment systems, it shows that more people find it useful and valuable. This is a big factor in deciding how the crypto market will do in the future.
Network Activity: This means how much the cryptocurrency network is being used, like how many transactions are happening, how many people are actively using it, and how much it costs to use it. If there’s a lot of activity on the network, it means the cryptocurrency is being used a lot, which could make its value go up because more people want it.
Hash Rate: This is about how much computing power is being used to make new units of the cryptocurrency and process transactions. A high hash rate means the network is secure and might grow more in the future, which can make investors feel more confident about it.
Tokenomics: This is about how the supply of the cryptocurrency works, like if there’s a maximum amount that can ever exist or if some are taken out of circulation. This can really affect how much the cryptocurrency is worth. If there’s not much of it available and more people want it, the price can go up.
Development Activity: This is about how much the team behind the cryptocurrency is working on it and making progress. If they’re committed and getting things done, it suggests the cryptocurrency might be successful in the long run.
AI Price Prediction Models Are Now Available for Retail Traders
More people are using AI programs to predict cryptocurrency prices because it’s hard to do accurately.
These new prediction models use a lot of data, like past prices, news, social media, and blockchain information, to teach computers how to predict prices. Nowadays, these AI models are well-tested and used for trading strategies to make money and match people’s risk preferences.
On-Chain Analysis to React to Market Events in Real Time
Public blockchains such as Bitcoin and Ethereum are open for everyone to see and check transactions as they happen.
This openness helps analysts and investors study market trades, investor actions, and direct interactions more closely. These insights improve cryptocurrency price predictions.
Sentiment Analysis to Navigate Between Fear and Greed
Sentiment analysis means looking at how people feel and what they think about a particular cryptocurrency or the entire crypto market.
The fear-and-greed index is a good way to begin analyzing how people feel about the overall crypto market. This index helps predict cryptographic trends by showing if assets are priced fairly or not at a certain time.
It works on the idea that when people are very scared, prices usually drop, and when they’re overly greedy, prices tend to rise.
To understand which crypto tokens might become more popular, investors need to look at social media, like Platform X.
This is especially important for meme coins, which gain attention for being funny or relatable rather than having strong reasons for people to use them.
Investors can gauge how likely a meme coin is to go viral by looking at how many followers it has, how often it’s mentioned on social media, and who’s associated with it.
So, if you’re into meme coins, don’t forget to check out what people are saying online before investing.
The Bottom Line
Analyzing past market trends and economic factors, along with looking at blockchain metrics, is important for predicting cryptocurrency prices.
New tools like AI models, on-chain analysis, and sentiment analysis help us understand and predict crypto market movements better, giving us more insight into how cryptocurrencies are valued.
Disclaimer: The information on this website isn’t meant to be taken as advice for investing money. Investing involves uncertainty, and there’s a chance you could lose your money when you invest.
