Since the invention of bitcoin, the first crypto, interest in this form of digital money has been on the rise. At some point, it is important to try and gauge interest in a particular market, before choosing to invest.
In the world of cryptocurrencies, crypto metrics are a way to do just this. Crypto metrics measure the total number of open trading positions from both bulls and bears at any particular time.
There is a vast number of crypto metrics including
- The stochastic oscillator
- The average directional index (ADX)
- Aroon indicator
- The bitcoin rainbow chart
- The fear and greed index
As well as many others.
What Are Some Of The Most Important Crypto Metrics You Should Be Aware Of?
Stablecoins are cryptocurrencies with a relatively fixed value. These coins have their value tethered or ‘pegged’ to another commodity such as fiat currencies and metals such as gold.
When traders and other investors decide to move their money out of the cryptocurrency market, they usually convert these assets into stablecoins to protect their value.
Stablecoin flows is a metric that determines the overall trend of stablecoin volume and activity. By analyzing this data, a trader or investor can determine what percentage of the market has moved their funds in or out, and potentially avoid market crashes.
Fear And Greed Index
This is another crypto metric that determines the emotions of investors, and therefore market behavior.
The fear and greed index measures investor sentiment every night, at Greenwich mean time. This provides an idea of where the market trend is headed. When the fear index is the highest, this indicates a possible market reversal to the upside. When the greed index is the highest, this indicates that traders have started to take profits on their holdings.
Average Directional Index (ADX)
The average directional index is a technical indicator, used to measure the strength of a trend. The trend may either be bullish or bearish. This is indicated on the ADX as either (+DI) or (-DI).
+DI indicates the presence of an uptrend, and -DI indicates the presence of a downtrend.
The ADX mostly shows a trader or investor whether buying or selling is a good or bad idea.
The Aroon indicator is more of a trend indicator. Like the ADX, is used to detect the strength of a trend. The Aroon indicator can also be used to detect trend changes.
The indicator comprises two lines known as the Aroon lines that move from 0 to 100. Values closer to 100 indicate a strong trend, while values closer to 0 indicate a weak trend.
Relative Strength Index (RSI)
The RSI is a technical indicator that identifies and calculates price fluctuations. It uses this data to determine whether that asset is overbought or oversold. Like the Aroon Indicator, the RSI ranges from 0 to 100. But while the Aroon’s 100 to 0 marks indicate strong and weak trends respectively, the RSI’s 0 and 100 marks indicate overbought and oversold conditions.
When the RSI line is closer to the 0 mark, it indicates oversold conditions and a possible reversal to the upside. When the RSI line is closer to the 100 mark, it indicates that the market is overbought and that a possible market reversal to the downside might occur.