In the world of cryptocurrency analysis, it’s important to consider multiple parameters simultaneously to gain deeper insights into the market. While chart analysis is commonly discussed, few resources explore the relationship between on-chain behavior, liquidity, and price movements.
In this article, we will demonstrate how Moralis Money can help you analyze altcoins by examining the example of Refund Token and its unique features. By leveraging Moralis Money’s capabilities, you can gain a comprehensive understanding of liquidity changes and their impact on price fluctuations.
Understanding the Importance of Parameters:
When utilizing Moralis Money, you not only gain visibility into the current state of a coin but also access historical metrics across various parameters. This multi-dimensional approach provides valuable insights. Let’s focus on the one-hour candle chart from the 22nd until today and examine the relationship between liquidity and price.
Analyzing Liquidity and Price:
One might expect liquidity to increase as the number of buyers increases. However, this is not always the case. For example, looking at the chart from 12 hours ago, we observe that the price remained relatively stable, but liquidity actually decreased during that period. This discrepancy raises questions.
Exploring Buyers, Sellers, and Holders:
To understand this phenomenon, we need to analyze the behavior of buyers, sellers, and holders. In this case, there was an increase in buyers and a lower number of sellers, yet liquidity decreased. Additionally, the number of holders increased. This indicates that liquidity is being removed from the protocol by someone who owns it. This is a crucial observation to consider as it tightens the supply and increases volatility.
Impact on Price Movements:
The removal of liquidity leads to increased volatility in either direction. We can observe this in real-time as the price initially goes up due to the removal of liquidity but quickly experiences a decline, rebound, and subsequent decline, returning to the starting point. This price movement highlights the impact of liquidity changes on the market.
Examining an Asset with High Volume:
Let’s contrast the previous example by examining an asset that experienced a price spike and has high trading volume. By focusing on a specific time period, such as 7:45 am, and analyzing the corresponding metrics, we can observe expected results. Experienced buyers increase, experienced sellers decrease, holders increase, and liquidity also increases due to the price surge. The chart confirms this relationship between price and liquidity.
Applying the Knowledge:
The insights gained from analyzing liquidity changes compared to price fluctuations can be applied in various ways, depending on the coin you’re examining. The time frame and parameters you choose to focus on may differ. Remember, Moralis Money is a tool designed to enhance your understanding and profitability in the crypto market.
Moralis Money offers a comprehensive approach to altcoin analysis by considering parameters such as liquidity, price, buyers, sellers, and holders. By examining the relationship between liquidity changes and price movements, you can make more informed decisions. Remember to conduct further research and consider additional factors before making investment choices. Utilize Moralis Money as a valuable tool to navigate the crypto market and increase your chances of success. Good luck!
Article based on this Moralis Money video: