Before the boom: the tell-tale signs a crypto is on the brink of a breakout
In crypto investing, success comes to those who spot the signs early on. If you can see things that others don’t and act at the opportune time, right before the project starts to take off, you can turn pennies into fortunes. The unexpected Bitcoin boom offers a perfect exemplification of this theory, as it made many people rich and left many others feeling confused and frustrated because they failed to notice Bitcoin’s appreciation potential and thus missed out on investing in an asset whose value appreciated so much over the years.
Bitcoin’s explosive growth may well be a once-in-a-lifetime event, since it’s highly unlikely that the conditions that fueled its rise will ever align in quite the same way again. However, based on the idea that history has a tendency to repeat itself and assuming that some of the things that happened in the past might happen in the future, even if it’s at a smaller scale, we can assume that there is a chance for other coins to follow a similar trajectory to that of the crypto leader. If that’s the case, all one has to do is keep their eyes and ears open and be ready for when the next big crypto arrives.
But how does one know when a digital currency is going to explode? There can be no certainty in this regard, since the market is extremely volatile and unpredictable, and a crypto price prediction, as thorough as it may be, offers nothing more than a probability, not a promise. And yet, there is a lesson to be learned from past crypto surges. If you know where to look, you might be able to recognize the markings of an upcoming breakout and tell when a digital coin is about to skyrocket, so let’s take a look at the most common telltale signs.
Intensified on-chain activity
As with all things crypto-related, it’s perfectly normal for on-chain activity to fluctuate over time, since there are many factors – ranging from market sentiment to macroeconomic forces – influencing this aspect and the evolution of blockchain platforms in general. So, not every shift in network activity has to mean something.
However, if a rise in on-chain activity is substantial and abrupt and doesn’t seem to be related to other developments and events, it might be more than a simple coincidence. Having more users engage and conduct transactions on the network all of a sudden could be an indication that interest and demand for the project are rising. Investors might pick up on the positive market sentiment deriving from this and increase their participation, ultimately leading to a price surge.
In 2017, the Ethereum network saw a notable increase in on-chain transactions, which was followed by a price spike shortly after. Since upticks in on-chain activity are often the bearers of good news, you might want to keep an eye out for this metric.
Trading volume spikes
Similarly, a swift increase in trading volume that is not backed by major news can indicate growing investor interest or insider accumulation. These spikes show that traders are going on a shopping spree, indicating a strong buying momentum. With more buyers entering the market and looking to purchase a specific crypto, the asset’s value is bound to rise.
However, keep in mind that not all spikes are of a bullish nature. When the trading volume goes up and is followed by a downward movement, it can point towards panic selling or distribution.
Positive news
In the crypto space, news can swing public opinion faster than you can say trade, and therefore influence the prices of digital currencies quite significantly. If the news is positive, it can increase confidence in a project, boost its utility, and lead to growing adoption.
These can be announcements about exchange listings, major partnerships, collaborations with well-known companies, integration into popular platforms, or regulatory clarity, and can be published by the project team, regulators, investors, or media outlets.
When a positive development hits the news, market sentiment often shifts from skepticism to optimism. Then the fear of missing out (FOMO) kicks in when the public sees the project is gaining mainstream attention. This prompts new buyers to enter, increasing demand and potentially driving the price higher.
Increased social media coverage
Social media is the place to go if you want to stay up to speed with the latest developments in the crypto space. It’s where crypto enthusiasts, investors, developers, and other industry insiders come to exchange ideas, share insights, discuss emerging projects, and debate the future of blockchain and digital assets.
So, if a project is getting mentioned frequently in conversations on platforms like Twitter, Reddit, or Telegram, it can hint at growing interest – a classic case of hype building before a potential price rally.
Whale accumulation
Whales are individuals or entities that own vast amounts of a particular digital asset, which makes them wield substantial influence over the crypto market. Therefore, monitoring whale activity can help you spot trends early on, including possible price booms.
For instance, on-chain data showing large wallets accumulating a certain token or moving the assets to cold storage can point to reduced sell pressure and long-term confidence in that particular crypto. Given their extensive resources, whales often have access to information and insight that average investors don’t, so following their lead can pay off.
Enhanced community engagement
The success of a crypto project depends in part on the strength and the engagement of the community built around it. A loyal and active community can drive awareness about the asset and support its development. Meme coins offer a great example in this respect as they largely rely on their passionate supporters to boost their value and maintain their relevance. When a large number of people come together to back a project, its chance of rising to the top increases considerably.
When a crypto is about to explode, there are always signs preceding the upsurge, whether they come in the form of social media buzz, increased trading activity, whale accumulation, or rising enthusiasm. Being able to spot these signs can help you jump in at the perfect moment and enjoy the rewards that follow.
