Understanding Data & Metrics: What Investors Should Really Track
Investing and trading require thorough research and dedicated time in order to produce consistent results. Sure, pretty much everyone is a genius in a bull market, but the majority of gains can just as easily be erased when the market reverses. This has always been the reason why altcoin holders have always looked to offload at cycle peaks. This may, however, be changing due to a possible shift in cycle patterns. It is still a bit early to say with absolute certainty, but it seems to be rather likely. One of the most trusted ways of analyzing the market is technical analysis. However, crypto offers an added benefit: on-chain analysis.
These are pretty effective ways to gain a handle on what’s going on in the market. They are, however, not a guarantee, and even the most skilled analysts get it wrong from time to time. Another important factor to always bear in mind is that manipulation is a very real threat. Whales are basically using emotional intelligence in their approaches because they are aware of how their actions will be interpreted. The movement of whales’ coins can ultimately adjust market sentiment. This is achieved not by adjusting any fundamentals, but by interpreting their movements.
Knowing how the market will eventually respond to certain dynamics is key to identifying trends and even long-term investment opportunities. This is why immersion in the space is so critical if you wish to stay abroad of developments and trends. Furthermore, you want to identify trends that are busy forming, much like a swell rising and about to form the perfect wave. When you apply emotional intelligence to technical and fundamental analysis, it becomes incredibly powerful.
Don’t Rely On Data Alone: Read The Signs Behind The Numbers
Some months ago, I published an article explaining how I came to discern that Solana would eventually become a prominent and successful blockchain. In this article, I explained the reasoning behind my very clear indication that Solana would ultimately rise in prominence.
During the early days of FTX, the project formed a strong relationship with Binance, which they later turned on. This was one of the most important signs for me, as most projects will seek to leverage the Binance name to gain traction and rise to prominence. The move by FTX showed that not only were they not that interested in riding the Binance wave, but they were actually challenging Binance for dominance. FTX was indeed aiming very high, and they were choosing to build their DEX on Solana. Sam would need to have a lot of confidence in Solana if he were using it as the base layer to Serum, as he challenged Binance for supremacy.
Understanding human behavior, and in particular the behavior of a person in Sam Bankman-Fried’s position, gave a clear indication that he knew something. Secondly, a man with such great ambition would not build the Serum DEX on just any blockchain. This is a fairly good example of how intelligence from outside traditional sources can be very helpful in identifying hidden gems.
You can imagine that achieving confluence by gathering additional data can be a very lucrative approach. When confluence extends beyond technical analysis, it becomes even more powerful and trustworthy.
Another Recent Example
We recently experienced monster moves in AVAX, LUNA, and other Layer1s. Something I noticed made me quite bullish on FTM. Fantom is a relatively high-quality Layer1 that somehow got ignored during this recent bull run. To me, this was an obvious opportunity. Surely, once the market realizes this, FTM will be next to experience some significant upside.
I posted a short post on Noise.cash approximately 10 days ago, informing my subs that I was now buying FTM at approximately $1.35. Today, as I am writing this article, FTM is trading at $3.10! To me, it was an obvious outcome that merely required time to be realized.
A Smarter Alternative To Traditional Financial Analysis
In this particular instance, relying on emotional intelligence as the main indicator worked out really well. This is a 130% rise in a little over a week, at a time when the market isn’t really doing much. Sometimes this approach can be quite intuitive and can uncover what traditional analysis cannot. I am a thinker, so I guess I am well-suited to this approach. However, it may be quite useful for those with significant knowledge of the crypto space, as they have a wealth of data to process.
Is Emotional Intelligence A Secret Market Edge?
As I mentioned, relying solely on emotional intelligence paid off. However, I wouldn’t consider it a practice to adopt. That being said, it is an important aspect to incorporate into your analysis, especially since financial markets can often be compared to a large chess game, where understanding your competitor’s motives and intent can be incredibly helpful in securing a win.
Yes, when you enter the market, you compete with other market participants. Many new investors fail to understand this dynamic, which is why most market participants consistently lose. Emotional intelligence can give your analysis and investment strategies a very powerful edge, provided they are accurate, of course. I have found it to be a very profitable practice to incorporate into my own strategies.
Final Thoughts
Confluence is a very important principle and practice in trading and investing. However, when it extends beyond conventional avenues and incorporates emotional intelligence, it becomes significantly more powerful. In fact, as I mentioned, emotional intelligence can sometimes even operate successfully in isolation from traditional metrics and analysis. However, it is best used as a supplementary tool alongside on-chain and technical analysis. Essentially, it works well as a supporting indicator. All the best! See you next time!