Often, when investing in a particular asset, the market can temporarily play against investors, with sudden declines that characterize the world of cryptocurrencies. Anyone who has been a crypto-friend for a long time knows that intra-day movements can be misleading and that if you observe higher time-frames (zoom out) the situation appears clearer. The ability to zoom out isn't for everyone, but you can learn how to do it.
The basic idea is very simple and is divided into a few points:
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Look at the charts from a more detached point of view, with weekly or monthly candles. The daily observation, in fact, does not show well supports or resistances, present instead in the weekly one. The same is true for liquidity pools that form below or above certain price zones. If we consider the BTC/USDT chart, for example, in the weekly trend (better on a logarithmic scale) it is very clear how the asset has risen sharply against the dollar over the months.
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Observe the trend of the total market cap (TOTAL) and of the dominance (BTC.D). The first highlights the incoming or outgoing capital from cryptocurrencies in general, while the second shows how much of that capital is shared on Bitcoin and how much on the altcoins. If the marketcap marks new highs as in this period and the dominance shows signs of recovery, we are facing a good sign.
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Do an on-chain analysis to see the trend of money flows. "Follow the money" is a mantra that should be universally repeated among investors. Its meaning is to be able to verify where liquidity is allocated, which protocols are used the most and why. Furthermore, the on-chain analysis also highlights the inflows and outflows from the exchanges, which is an anticipatory signal of the market trend.
These simple and quick steps can be done automatically one after the other and help not to fall into those phenomena that lead to sensational errors such as panic sell (FUD) or FOMO. The first, in particular, is certainly the most important because it allows you to see the charts from a different point of view. As BlockFi suggests in its tweet, doubt characterizes investors but all that needs to be done is to pause and reflect. The ability to zoom out is always useful in investing, but in the world of cryptocurrencies it is indispensable.
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