At the most basic level, a bitcoin price chart is a line graph on two axes illustrating price history for bitcoin trades conducted between a specific pair of currencies. Bitcoin’s price is always relative to another specific currency, known simply as a Trading Pair.
Trading pairs are offered against base currencies – currencies which are the most liquid. Given there are thousands of cryptocurrencies, enabling trading pairs between all of them and all FIAT currencies would be impractical, Instead exchanges offer trading against base currencies which are generally:
- Major Fiat currencies
- Bitcoin
- Ethereum
- Major Stablecoins
A stablecoin is a cryptocurrency that provides the stability of an existing fiat currency against which it is pegged using one of several approaches. We explore Stablecoins here.
Here some examples of each
- EUR/BTC – Euro to bitcoin trade
- USD/BTC – US Dollar to bitcoin trade
- BTC/EUR – Bitcoin to Euro trade
- BTC/LTC – Bitcoin to Litecoin trade
- USDT/BTC – Tether to bitcoin trade (Tether is a stablecoin)
The trading chart will provide a legend telling what the price is at that given moment for the chosen Pair, and as you watch it will change, turning green as it goes up and red as it goes down.
Here is the chart for Bitcoin from Bitstamp’s Tradeview from March 16th, 2021. It’s important to understand that the chart is relative to the context of the specific Trading Pair – USD/BTC
The key elements of a bitcoin price chart
- The currency pair it relates to – in this case USD/BTC
- The x-axis is a time scale – this chart is set to show the price for last 24 hours
- The y-axis is a linear value scale e.g USD – you can change this to a log scale
- Price plots are generated over time producing a line chart & spot price – $55,423.06
The movement depicted in the chart is specific to this currency pair. BTC may be declining against USD but if ETH is declining faster against USD then BTC is increasing when paired with ETH.
A simple line price chart gives the most basic indication of sentiment. As you can see from Bitcoin’s full price history, the peaks and troughs are associated with key events, as well key trends. At this scale, the chart is more relevant to Fundamental Analysis and Investing, remembering the distinction provided.
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