Three Breadth Charts To Explain Crypto Markets

Market breadth has to be the handiest tool in our technical analysis kit.

Sure, we love ripping through thousands of charts to gauge broad market trends. But breadth indicators are a cheat code. Putting in the work, we can easily quantify and, more importantly, visualize how well a market is being supported by its constituents.

Because remember, it will always be a market of stocks, not a stock market. Or, in this case, a market of cryptocurrencies.

There are numerous ways to optimize this data output; we can use this breadth data as the basis of a systematic approach.

Your trading system is only as good as your understanding of how well your system operates in different market environments.

If you understand that particular systems and strategies work better in trending environments but are terrible in rangebound markets, you can optimize your trading performance by leaning on different approaches depending on the market environment.

This is where quantifying breadth can have a lot of edge for a trader because it helps them objectively recognize the current market environment and, subsequently, which strategies they should lean toward.

A more subjective view of breadth indicators is that they can help confirm any directional biases.

Little to no trading opportunities exist when Bitcoin is under pressure, so these indicators can be best used when Bitcoin enters into a positive regime.

In this sense, it’s not supposed to be predictive (like in traditional markets) but merely confirms the systems he’s built.

So, with the stage set, let's walk through three simple breadth charts and our read on each one.