Introducing Oriole Insights

State of the Market

In its 2023 Digital Assets Outlook report, The Block’s team highlighted the dominating tendency of uncertainty in the market. They outlined key TradFi trends that influenced the cryptocurrency market: inflation, housing, unemployment, retail credit, and institutional credit. After reading the report, one feels that if he understands crypto world trends, he can easily predict the market. The fallacy of this view is that you only get this understanding while looking back on what has happened. When you try to predict the future, all this confidence fades away.

As long as trading exists, creating new ways to predict price changes has stayed the top priority for actors of all kinds. Major venture capital firms created strategies to diversify their assets, individual investors made up portfolios with gradual acquisitions to avoid colossal losses, and various exchange actors created tools such as bonds, futures, and indexes.

Different strategies to cope with volatility

1. Diversifying Portfolios: Diversification is a classic risk management strategy where investors spread their investments across various assets, sectors, and geographies to mitigate risks. While this approach helps reduce exposure to a single asset or market, it doesn’t eliminate the inherent uncertainty or provide specific insights into future trends and movements.
2. Fundamental Analysis: A cornerstone in finance, fundamental analysis involves evaluating an asset’s intrinsic value by examining related economic, financial, and other qualitative and quantitative factors. Investors analyze revenues, earnings, future growth, return on equity, profit margins, and other data to determine a company’s underlying value and potential for future growth. This approach, though robust, often overlooks the unpredictability of human behavior and external events impacting market dynamics.
3. Technical Analysis: Technical analysts base their predictions on past market performance and behavior. They use statistical trends from trading activity, such as price movement and volume, to identify patterns and insights that can indicate future activity. While this method is popular among traders for its applicability and ease of use, it is not foolproof. Market anomalies, sudden news, and unpredictable events can quickly overturn technical forecasts.

The Sentiment

However, people also realized that people’s expectations, beliefs, and ideas play a separate role in establishing market prices. Human actions can be ruled by rationale and emotions and are likely to result from their intermix. Experienced traders witnessed how the community hyped tokens, which finished with a scam scandal and experts’ disbelief and apathy toward future gems. That’s when people understood that measuring people’s sentiments can be fruitful for predicting price changes.

As with any tool, it needs a master to utilize it most efficiently. Existing metrics include the popular “fear and greed index” or sentiment changes. The fear and greed index vividly says which emotion dominates the market. Yet, it can give completely different insights for its audience. The risky buyers would buy when fear dominates, while the moderates would do the opposite. Thus, sentiment metric provides another dimension in a struggle against uncertainty. Everyone can find a solid insight and use it to the highest efficiency. Inexperienced buyers would utilize the wisdom of the masses to choose a secure asset, while short traders would play against the prevalent trend. With this in mind, we present you Oriole Insights.