How to Predict Cryptocurrency Prices for 2024 & Beyond: 'Trade Facts, Not Wishes' (2024)

Predicting cryptocurrency prices is no easy feat. But what if we told you that there are ways to identify actionable insights to make informed decisions and find market opportunities early?

If you’re wondering how to predict cryptocurrency prices effectively, in our guide, you will learn the key factors affecting the prices to make your own forecasts about the best crypto to invest in and not miss out on the opportunities emerging in the booming crypto market.

What Affects Cryptocurrency Prices? 8 Key Factors to Consider

Understanding how market forces and external factors affect cryptocurrency prices is key to making cryptocurrency price predictions as accurate as possible. These factors can be crypto-native or macroeconomic in nature.

Let’s go through them one by one:

1. Tokenomics

Tokenomics is derived from the words “token” and “economics.” It is the study of the supply and demand of a cryptocurrency and their effects on cryptocurrency valuations.

Each cryptocurrency project designs its tokenomics to best suit its value proposition. For example, Bitcoin (BTC) has a capped supply and decreasing inflation rate, attracting demand from those who seek an inflation hedge and a store-of-value asset.

Meanwhile, Etherium’s (ETH) utility for gas fee payment, staking, loan collaterals, and other decentralized finance (DeFi) use cases support demand for the token.

Cryptocurrencies with superior tokenomics, like BTC and ETH, attract capital resulting in their price increase. Tokenomics is key in crypto fundamental analysis.

2. Value Proposition

What does a cryptocurrency project have to deserve your investment? Why is one crypto token a better investment than the other? The answer may lie in the cryptocurrency’s value proposition.

By definition, value proposition refers to the benefits that a company, product, or service delivers to its customers.

In the case of Bitcoin, its value proposition lies in its inflation hedge property, the high level of decentralization and security it offers to its users, and its peer-to-peer payment network.

Meanwhile, Ethereum’s value proposition lies in it being the most popular smart contract in the world and home to the hottest decentralized applications (dApps).

Meanwhile, L1 blockchains like Solana’s (SOL) value proposition lie in solving problems plaguing bigger rival Ethereum, such as high gas fees and low throughput.

Elsewhere, niche platforms like decentralized GPU computing marketplace Render (RNDR), decentralized exchange Uniswap (UNI), and data availability layer Celestia (TIA) focus on offering specialized products and services.

3. Token Vesting and Unlock Timelines

Cryptocurrency investors have to be aware of token vesting and unlock timelines. When a crypto project is formed, the development team, early investors, and founders typically get a significant share of the newly minted tokens as payment for their contributions.

Tokens allocated to project insiders are placed in a vesting smart contract that is automated to gradually release vested tokens at certain time intervals. Tokens are vested to limit their circulating supply, decrease selling pressure, and give it support to increase in value.

When vested tokens are unlocked, it releases a significant amount of tokens to its circulating supply. If project development team members, early investors, and founders sell their tokens in the open market, it can cause the price of the crypto to drop.

4. Market Sentiment

Market sentiment refers to the mood of investors as a whole. Financial markets are driven by human emotions of fear and greed. Oftentimes, these human emotions lead investors to make irrational decisions, resulting in explosive price rises and sudden market crashes.

In a bullish market, you will see cryptocurrency prices rise without a market catalyst. On the other hand, bearish markets often result in low investor interest and stagnant crypto prices.

Experienced investors tend to gain an intuition to read these market emotions, giving them the confidence to go against the herd and allowing them to profit from irrational investor behavior.

5. Market Listings

Crypto tokens have shown a tendency to surge in price before listing on popular centralized exchanges such as Binance and Coinbase.

Centralized exchanges have the power to bring in a flood of new investors and capital to unlisted cryptocurrencies. These platforms come with easy-to-use features that allow non-crypto-native users to buy crypto using their debit/credit cards and other traditional finance methods.

Token delistings tend to have negative effects on token prices. A crypto token can be delisted due to regulatory concerns and security flaws.

6. Endorsem*nts

Celebrity endorsem*nts and associations with famous personalities and brands tend to spotlight crypto tokens, leading to increased investor interest and price surges.

Dogecoin (DOGE) and Elon Musk are the best examples of how powerful celebrity endorsem*nt can be in the crypto world. In the crypto bull market of 2021, Musk played a pivotal role in spotlighting DOGE.

At the time of writing, DOGE was one of the most valuable cryptocurrencies in the world, boasting a multi-billion dollar market cap.

Similarly, brand associations help crypto projects gain credibility. In 2022, we saw Polygon (MATIC) emerge as a top-performing crypto after the blockchain network partnered with global brands, including Meta, Disney, and Adobe, among others.

7. Macroeconomic Forces

Cryptocurrency markets are no longer isolated from macroeconomic forces. Over the last decade, cryptocurrencies have grown to become a multi-trillion-dollar industry. The crypto market is no longer exclusive to tech enthusiasts, cyberpunks, dark web users, and individual traders.

As more financial institutions, global corporations, hedge funds and other institutional investors invest their money into digital tokens, the crypto market becomes more sensitive to macroeconomic forces such as inflation and interest rate changes.

In 2022, Bitcoin and altcoins saw their valuations fall to multi-year lows as risk asset markets crashed after US and European central banks began raising interest rates from near-zero rates in a bid to quell raging inflation.

The inception of the spot bitcoin ETF in January 2024 and the subsequent inflow of institutional capital will make crypto markets more sensitive to macroeconomic forces than ever.

8. Future Outlook

Financial markets are forward-looking. Investors put their capital in assets with the expectation of handsome returns in the foreseeable future. Therefore, promising projects that have the potential to disrupt industries or change more lives attract extra capital and trade at a higher premium than the rest.

For example, Ethereum, a blockchain platform that has the potential to disrupt the traditional finance industry, demands a price premium compared to NFT-focused blockchain Flow.

The popular market narrative at any given moment also plays an influential role in the market perception of a crypto project’s outlook.

For example, the hype surrounding artificial intelligence (AI) in 2023 helped AI-related crypto projects post outsized gains for their perceived positive outlook.

How to Predict the Price of Crypto? Top 5 Crypto Analysis Methods to Use

Crypto Technical Analysis: Indicators and Patterns

Technical analysis involves studying past market data, primarily price and volume, to forecast future price movements. Technical analysts make the assumption that all known information is already reflected in the price, which moves in trends that are likely to persist (until they don’t).

The core principle behind technical analysis is that historical price action is the best guide to likely future moves. The main crypto analysis tools used in technical analysis are price and volume charts, such as bar charts, line charts, or Japanese candlestick charts.

Technical analysis seems to be particularly poignant for crypto price prediction for several reasons:

• High Volatility: Crypto markets are notoriously volatile, with prices swinging dramatically in short periods. This volatility can create clear price patterns and trends that technical analysts can exploit.
• Less Institutional Influence: Compared to traditional markets, there are fewer institutional traders in crypto, which means price movements can be less predictable and more prone to emotional trading – an environment where technical analysis can thrive.
• Speculative Nature: The valuation of cryptocurrencies doesn’t rely on conventional metrics like company earnings or P/E ratios, making technical analysis a more favorable tool for speculation.

Analysts use various technical indicators and chart patterns to predict future price movements.

For instance, moving averages, relative strength index (RSI), and moving average convergence divergence (MACD) can help identify crypto trends and momentum.

Chart patterns, such as double tops and bottoms, triangles, head and shoulders, and flags, can also provide insight into possible continuations or reversals of the current price direction.

Technical Analysis of Bitcoin (BTC/USD)

As an example of how to apply technical analysis in cryptocurrency markets, we can use the Bitcoin price from its last peak in 2021 to March 2024, when it hit a new all-time high (ATH).

The above chart uses a logarithmic scale, meaning it represents price changes in percentage terms rather than absolute values, which helps to compare relative movements over different time periods more effectively.

Crypto Fundamental Analysis: Macro Trends and Crypto Specificity

Fundamental analysis in cryptocurrency involves evaluating a coin or token’s underlying value through economic, financial, and other qualitative and quantitative factors.

You’re basically asking the question, “What is this crypto really worth?” and following it up with, “Does the current price per token reflect this?”

Unlike its application in stock markets, where you might analyze company earnings, dividends, or industry conditions, crypto fundamentals tend to rely on two different sets of indicators.

Macro Influences

These are the same types of datasets, spreads, and intermarket factors interpreted by macro fundamental analysts in bond markets or forex markets.

• US Dollar Strength: The value of cryptocurrencies often inversely correlates with the US dollar. A weaker dollar can make cryptocurrencies more attractive as a store of value.
• Global Inflation Rates: Inflation rates can impact crypto prices because higher inflation rates tend to devalue fiat currencies, making hard digital assets like Bitcoin more appealing.
• Liquidity: There is a hot debate among economists as to how to define ‘liquidity‘ as it pertains to financial conditions. The general idea goes that ‘high liquidity’ means easy access to investment funds and greater risk-taking, which leads to more interest in high-risk assets like cryptocurrencies. Vice versa for low liquidity conditions.

Specific Crypto Fundamentals

What is crypto analysis without the use of some types of data that only pertain to crypto prediction? These will be new to traders from other financial markets and will require some extra study.

• Adoption: Indicators of broader adoption, such as partnerships with established companies or integration into payment systems, can signal increasing utility and value. This is arguably the biggest single determinant for the medium-to-long-term trend in crypto markets.
• Network Activity: This can include transaction volumes, active addresses, and network fees. High network activity can indicate a robust and utilized blockchain, potentially leading to higher demand for its native currency.
• Hash Rate: The total computational power used to mine and process transactions can signal the network’s security and potential growth, influencing investor confidence.
• Tokenomics: The supply mechanics (like max supply or burning mechanisms) can profoundly impact a cryptocurrency’s value. Limited supply with increasing demand can lead to price appreciation.
• Development Activity: The commitment and progress demonstrated by a project’s development team can be a crucial indicator of its long-term viability and success.

AI Price Prediction Models Now Available for Retail Traders

The use of AI-based crypto price prediction models is growing due to the complexities involved in making accurate crypto predictions. These new-age price prediction models train natural language processing (NLP) and machine learning (ML) systems using an expansive set of data that include historical crypto prices, real-time news events, social references, and on-chain insights.

Today, rigorously-tested AI-based price prediction models are used to power market trading strategies that generate predictive yield and adjust to users’ preferred risk appetites.

Furthermore, the lack of cognitive bias and emotion-free processes are seen as notable advantages of AI-powered trading strategies and price prediction models.

What’s interesting is that the global and open-source nature of the blockchain industry has enabled retail investors to easily analyze and invest in cryptocurrencies using AI-powered prediction models, which were only available to institutional investors before.

On-Chain Analysis to React to Market Events in Real Time

Public blockchains like Bitcoin and Ethereum are transparent in nature, allowing anyone and everyone to view and verify the history of transactions in real time.

The transparent nature of blockchain has allowed analysts and investors to examine market trades, investor behavior, and peer-to-peer interactions like never before. These extra insights ultimately lead to a stronger cryptocurrency price prediction model.

It has to be said that deciphering raw blockchain data can be a difficult task for most crypto investors.

Luckily, there are platforms and tools that simplify the process and convert the raw data into understandable insights.

Sentiment Analysis to Navigate Between Fear and Greed

Sentiment analysis refers to the study of investor emotions and opinions for a specific cryptocurrency or the whole crypto market as a whole.

The fear-and-greed index is a great place to start sentiment analysis of the broader crypto market. This index is a useful crypto prediction tool as it aims to measure whether assets are fairly priced at a given time.

The logic of the index is that extreme fear tends to lower asset prices, while extreme greed leads to high market prices.

A deeper social sentiment analysis calls for investors to study social media platforms like X to identify specific crypto tokens that can benefit from growing popularity.

Therefore, investors interested in meme coins should not skip sentiment analysis.

Meme coins are a social movement that does not rely on fundamentals and utility to drive demand. Certain meme coins go viral due to humor, satire, and relatability.

Investors can evaluate the “potential virality” of a meme coin by its follower strength, social media mentions, and brand associations.

Analysts’ Advice on How to Predict Cryptocurrency Prices

Mads Eberhardt, Senior Cryptocurrency Analyst at Steno Research, emphasized to Techopedia the massive driving force of ‘liquidity,’ i.e., how much money there is in the financial system. He said:

“Liquidity in the economy is everything for crypto assets, as it fuels a speculative environment that is largely still needed for cryptocurrencies to thrive. The liquidity has been increasing since October last year, and it does not look like it will end anytime soon.”

Ipek Ozkardeskaya, Senior Analyst at Swissquote Bank and MarketTalk host, keeps it real about the importance of speculation in what is still a very young asset class among investors.

“Cryptocurrency prices don’t necessarily react to fundamental news/events unless the news is fundamentally game-changer like halving and spot ETFs. You can try to explain some moves by demand and supply dynamics, organic demand growth, adoption etc, but speculation remains the major driver – by far – of the price trends. That’s what makes them so unpredictable and so volatile.”

Vladimir Ribakov, Chief Trader at Home Trader Club (Former Traders Academy Club), takes a more philosophical line on his advice to Techopedia with three amazing pearls of wisdom.

The Bottom Line

Technical and fundamental analyses are pivotal in cryptocurrency price prediction, with the former analyzing past market trends and the latter assessing economic and blockchain-specific metrics.

AI price prediction models, on-chain analysis, and sentiment analysis are emerging tools that enhance understanding and predicting crypto market movements, offering deeper insights into the cryptocurrency valuation process.

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