The importance of economic indicators in Bitcoin Cash (BCH)
Bitcoin Cash (BCH), the Peer-to-Peer digital currency, has gained significant attention and adoption over the past few years. As one of the largest altcoins on the market, traders and investors willingly understand their potential and way of effective trade. In this article, we will examine the importance of economic indicators in Bitcoin Cash (BCH) and provide insight into their use.
What are economic indicators?
Economic indicators are statistical values or data points that help forecast future market movements and trends. They are usually obtained from government reports, industrial activities and other sources providing information on the economy. By analyzing these indicators, traders can make conscious decisions regarding the purchase, sale or possession of a specific resource.
importance of economic indicators in trade bch
In the Bitcoin Cash (BCH) trade, economic indicators play a key role in determining market moods and affecting price movements. Here are some key factors to consider:
- Gross domestic product (GDP) : A strong GDP growth rate may indicate a healthy economy, which can lead to an increase in demand for BCH. And vice versa, a poor GDP growth rate can signal economic instability, potentially leading to a decrease in BCh prices.
- Inflation index : High inflation rate can erode BCH purchasing power, reducing its value over time. On the other hand, the low inflation rate may indicate that the price of BCh has appreciated too much and requires correction.
- unemployment rate : Low unemployment rate can signal economic growth and increased demand for BCH, while an increased unemployment rate can lead to a reduction in investors’ trust in the asset.
- interest rates : Changes in interest rates from central banks can significantly affect BCh prices. Higher interest rates can attract investors seeking safer assets, such as government bonds or CDS, potentially leading to a decrease in the price of BCh.
- Price of goods : prices of goods such as oil, gold and metals, can affect BCh prices. For example, an increase in oil prices can lead to greater demand for energy -consuming goods, increasing BCh prices.
Tools and techniques
To include economic indicators in trade strategies, traders use various tools and techniques, including:
- Chart patterns : Analysis of chart patterns such as Fibonacci slimming levels or creating reverse reptiles and shoulders can help identify potential price movements.
- Crossing strategy of the indicator : This strategy includes the purchase of BCH when the stubborn indicator (e.g. RSI) exceeds the bears indicator (e.g. stochastic oscillator) and BCH sales when it passes below the bears.
- The following trend : The following trends include the identification and driving of the asset trend, using economic indicators to determine the strength and direction of the trend.
Examples of a real world
- BCH/USD Trading : For example, in May 2018, BCH/USD traded around 600 USD, but after a strong GDP growth from China increased to the highest level of USD 850 in September 2018.
- Cointegration analysis : Cointegration analysis includes examination of the relationship between BCh and other assets to determine its price dynamics. For example, if BCH is integrated with gold prices, it can be more stable during periods of economic uncertainty.
Application
Economic indicators play a key role in Bitcoin Cash (BCH). Analyzing GDP growth rates, inflation rates, unemployment rates, interest rates and freight prices, traders can make informed decisions regarding the purchase or sale of BCH. The use of chart patterns, crossovers of indicators and trends in accordance with techniques can also be effective in identifying potential price movements.