Bitcoin is a versatile asset: here it is the best store of value you could have ever wanted, on par with gold (or maybe even ahead of gold), there it is being adopted as a legal tender and going neck-to-neck with fiat currencies. Regardless of whether it’s a bull or bear market, Bitcoin is quite likely an evergreen asset that will go on accumulating value. But the investor in you still questions, “if I’m trading in the UK crypto space, which crypto indicators should I use to best gauge Bitcoin’s performance and get the maximised profits?”
Bitcoin prices in the past year
Bitcoin has been having a good year in 2023, more or less, after the crypto bear run of 2022. As the chart above would show you, it has been to the highest of around $32000 levels this year. As August nears its end, Bitcoin hovers around $26,000. Now, as experts predict, Bitcoin might get to $31,000 around levels by the end of 2023, or we might witness a lower setback before the next potential bull run around Bitcoin’s 2024 halving event.
Which technical indicators can help you predict where Bitcoin is going next, and plan out your entry and exit points accordingly? In picking the best Bitcoin indicators in 2023, we’re here to help you out!
But before you find out about the top Bitcoin indicators, what are crypto trading indicators anyway?
Top Bitcoin Indicators: What are Crypto Indicators?
Technical indicators are used for, well, technical analysis crypto. That means you get to analyse past price actions and trading volumes and more technical data using crypto indicators and root out any trends that may help you predict where the market is heading next for your favourite crypto.
This is the basis of technical analysis crypto: history repeats itself in crypto trading, so market patterns are sure to be repeated once similar conditions are created. That is how crypto experts predict the Bitcoin bull runs around halving events too: historically Bitcoin has witnessed bull runs around all previous halving events, so it is likely that another Bitcoin rally will be seen in 2024.
Bitcoin indicators, or crypto trading indicators in general, help you make these deductions using market data. There are many popular technical indicators used by novices and experts alike to predict the future of various cryptocurrencies, such as RSI (Relative Strength Index (RSI), Moving Averages (MA), and MACD (Moving Average Convergence Divergence).
Now, how to pick the best crypto indicators in 2023? By first knowing the many types of them, of course.
Bitcoin Indicators: Types of Crypto Trading Indicators
Are you looking for the best Bitcoin indicators free? Many websites online would allow you to use crypto indicators like RSI, moving averages, and more for free! But to use them, you first need to understand the various types of crypto technical indicators available!
Purpose of Technical Indicators
You can easily differentiate the types of technical indicators once you know which purposes they serve. The best crypto indicators are tools that traders and analysts use to interpret and analyse historical price and trading volume data of crypto. The purpose of these technical indicators are many: to provide insights into potential price movements and trends, to help traders make informed decisions about buying, selling, or holding cryptocurrencies, to root out potential entry and exit points for traders, and more!
The Best Bitcoin Indicators: Types of Crypto Technical Indicators
Crypto indicators are based on mathematical calculations and patterns derived from the historical data on price charts, as we know. Now, there are various types of crypto indicators, each serving a different purpose and each offering unique perspectives on crypto market trends. Here are the common categories:
Trend Crypto Indicators:
These crypto indicators help identify the direction of the prevailing market trend. They can be used to determine whether the market is in an uptrend, downtrend, or sideways trend.
Examples: Moving Averages, Moving Average Convergence Divergence (MACD), Average Directional Index (ADX), Parabolic SAR.
Momentum Crypto Indicators:
These technical indicators calculate the strength and speed of crypto price movements. They can tell you all about potential trend reversals and overbought/oversold conditions.
Examples: Relative Strength Index (RSI), Stochastic Oscillator.
Volume indicators, of course, analyse crypto trading volume alongside price movements. They allow you to determine the strength of price trends and potential market reversals.
Examples: On-Balance Volume (OBV), Volume Weighted Average Price (VWAP).
Volatility indicators, as the name suggests, measure the extent of price fluctuations for crypto. So they help you identify potential breakouts or periods of price consolidation for a certain crypto.
Examples: Bollinger Bands.
Support and Resistance Indicators:
These crypto indicators can identify key levels of support (where a crypto’s price tends to stop falling) and resistance (where a crypto’s price tends to stop rising).
Examples: Pivot Points, Fibonacci Retracement.
Pattern Recognition Indicators:
With the help of charts, these technical indicators can help traders identify specific patterns that suggest upcoming price movements, such as reversals or continuations.
Examples: Head and Shoulders, Double Tops and Bottoms, Triangles.
Now that you know the many types of Bitcoin indicators, it’s time to pick the best crypto indicators in 2023 for you!
How to Pick the Best Bitcoin Indicators for Yourself?
Pick the best Bitcoin indicators free
Looking for the best Bitcoin indicators free, you can not simply pick any you find going by the ‘free’ factor. Do remember that no single technical indicator can give you a comprehensive view of market conditions at a certain point in time for Bitcoin, and you actually need to use a combination of crypto indicators that cooperate well to present a complete picture to you.
Further considerations: crypto trading indicators are definitely not foolproof and can produce false signals on occasions, such as a volatile market. Therefore, three things are crucial when you use technical indicators to make crypto trading decisions:
- Proper interpretation,
- Understanding of market context,
- and risk management.
Keeping all that in mind, let’s look at a winning combination of the best Bitcoin indicators in 2023 for you!
The Best Bitcoin Indicators: Which Combination of Crypto Trading Indicators Works Best?
When you are choosing technical indicators to combine for a solid crypto trading strategy, you should never take too many indicators, since ‘the more, the merrier’ is not a proverb that is going to help you out with technical analysis crypto. Why?
When you have too many of the best crypto indicators employed, multiple of them might give you the same information, and you would end up putting too much weight on this particular piece of data and miss other significant factors.
So if you are using multiple trend crypto indicators, for example, you may end up believing a certain trend is going strong and miss out on other integral points your technical analysis charts might be showing you.
So, how do you combine the best Bitcoin indicators free? Choose a combination of the different types of crypto indicators given above, for starters, and don’t pick several from the same category.
Here’s an example for you of some of the best crypto indicators in 2023 in action:
Example: Combining the Best Bitcoin Indicators
Let’s take a combination of RSI (momentum crypto indicator) and Bollinger Bands (volatility technical indicator, can also be used as a trend indicator). Now let’s see how these two might complement each other and become the best Bitcoin indicators for you:
- The RSI brings momentum information, and it’s one of the best Bitcoin indicators free you can find. A low and falling RSI would showcase a downward momentum, an RSI value around 50 would show you neutral or lacking momentum, and a high and rising RSI would predict a rally.
- The Bollinger Bands can give you both trend and volatility information. The Bollinger Bands consist of three lines plotted on a price chart, a middle line representing a moving average, and an upper and lower band that are usually two standard deviations away from the moving average, and represent upper and lower limits of price volatility at a certain point in time. So for your technical analysis crypto, the prices between the middle and upper and lower Bands show a trending phase. Once the price breaks the middle Band, a potential reversal may be coming. However, when the prices don’t reach the outer Band, it may be predicting a fading trend support.
Choose Your Crypto Indicators Wisely
We hope this article has proven useful to you when it comes to selecting the best Bitcoin indicators in 2023. Remember that Bitcoin in particular is an asset that experiences volatility due to changing retail and institutional investor sentiments often. Therefore, it’s important to stay on top of your crypto trading game at all times with informed strategies and efficient execution. You can further give your crypto trading game a boost by keeping an eye on market news and also making considerations for notable socio political events slated to send the crypto markets into a period of high volatility, such as US CPI reports.
In the UK crypto space, Coinbrit can be your #1 partner when it comes to keeping you updated with the latest news in the crypto markets. Don’t forget to keep in touch, and give your crypto trading strategies a much-needed boost!