HK

What is MACD in crypto market?

2025-08-11

In the cryptocurrency market, technical analysis is one of the essential tools for many investors to gauge market trends. The MACD (Moving Average Convergence Divergence) indicator, due to its intuitiveness and practicality, is widely used to capture price movement signals. This article will explain the basic principles of MACD and its application in the cryptocurrency market from a neutral and objective perspective.

I. Components and Calculation Logic of MACD

The MACD indicator consists of three parts, and its core logic is based on the dynamic relationship between price moving averages:

  1. MACD line: Derived from the short-term exponential moving average (EMA) minus the long-term EMA, it is used to reflect the difference between short-term and long-term price trends. Common parameters are set to 12 and 26 days, but users can adjust the parameters according to actual demand.
  2. Signal Line: The signal line smooths the MACD line to help identify trend changes.
  3. Histogram: Drawn by the difference between the MACD line and the Signal line, visually showing the strength of their relationship.

Note: Compared to the Simple Moving Average (SMA), the EMA places more emphasis on recent prices, allowing it to reflect market changes more quickly.

II. Application of MACD in the Cryptocurrency Market

Given the high volatility of the cryptocurrency market, MACD can help investors filter out short-term noise and focus on trend changes:

  1. Trend Direction JudgmentWhen the MACD line is above the zero line, it indicates that the short-term moving average is higher than the long-term moving average, suggesting a potential bullish trend.If the MACD line is below the zero line, it may indicate bearish dominance, and investors should be cautious of downside risks.
    1. When the MACD line is above the zero line, it indicates that the short-term moving average is higher than the long-term moving average, suggesting a potential bullish trend.
    2. If the MACD line is below the zero line, it may indicate bearish dominance, and investors should be cautious of downside risks.
  2. Crossover SignalsGolden Cross (MACD line crosses above the Signal line): Often considered a buy signal, but it should be combined with whether the price is at a key support level or accompanied by trading volume.Death Cross (MACD line crosses below the Signal line): May signal a trend reversal, but if the market is in a sideways trend, caution is advised.
    1. Golden Cross (MACD line crosses above the Signal line): Often considered a buy signal, but it should be combined with whether the price is at a key support level or accompanied by trading volume.
    2. Death Cross (MACD line crosses below the Signal line): May signal a trend reversal, but if the market is in a sideways trend, caution is advised.
  3. Histogram Strength ChangesWhen the histogram turns from negative to positive and gradually expands, it indicates increasing upward momentum; conversely, it may suggest weakening trends.
    1. When the histogram turns from negative to positive and gradually expands, it indicates increasing upward momentum; conversely, it may suggest weakening trends.

III. Precautions When Using MACD

  1. Avoid Over-Reliance on a Single Indicator: MACD performs well in trending markets, but the cryptocurrency market often experiences sharp fluctuations. It is recommended to combine it with other tools (e.g., RSI, Bollinger Bands) for comprehensive analysis.
  2. Beware of Lagging Signals: MACD is calculated based on historical prices and cannot predict sudden market events (e.g., policy changes or black swan events).
  3. Neutral Operation Principle: MACD is merely an analytical tool and should not be used to make subjective predictions about any token, platform, or market direction.

IV. Conclusion

MACD provides cryptocurrency investors with a reference framework for analyzing trends through the dynamic relationship between fast and slow moving averages. However, its effectiveness highly depends on market conditions and user experience. In practice, investors should remain rational, avoid overinterpreting single signals, and strictly adhere to risk management strategies.For further information on compliant trading tools and products, please refer to official channels.

Disclaimer:

This material is for general information purposes only. It does not constitute, nor should be interpreted as, any form of solicitation, offer or recommendation of any product or service. It does not constitute investment, tax or legal advice. In no event should any news release be considered as recommendation of a particular type of digital asset.

This material may include market data prepared by HashKey Exchange or data from third party sources. While HashKey Exchange makes reasonable efforts to ensure the reliability of such third-party information, such information may have not been verified. Graphics are for reference only. We make no representation or warranty, express or implied, to the timeliness, accuracy or completeness of the information in this material. Information may become outdated, including as a result of new plans, regulations or changes in the market. In making investment decisions, investors should not solely rely on the information contained in this material. The risk of loss in trading digital assets can be substantial and is not suitable for all investors.

Any forward-looking statements in this material is subject to several conditions, uncertainties and assumptions. We undertake no obligation to update or revise any forward-looking statements.

The English version shall prevail if there is any inconsistency between the English and Chinese versions.