This section holds the video library. It consists of educational videos highlighting basic and, also, advanced cryptocurrency topics. Among others, we cover Bitcoin, Ethereum and smart contracts, blockchain, anonymity, wallets, how to buy and sell cryptocurrencies, wallets and address, security and vulnerabilities, exchanges, and DLT technologies.
How To Get Money Back on Your Nike Purchases – Crypto Edition
US footwear giant Nike has recently entered a new affiliate partnership that allows its customers to earn up to 3% from their online purchases with crypto.
The partnership with the London-based financial technology firm Plutus is now offering rewards through its debit card when its users shop Nike’s online store. When using this card, you can get 3% back in crypto and 9% cash reward from those purchases.
Who can use this card
In order to receive these rewards, customers must be using the Plutus Visa Card while doing their online shopping. As Plutus currently operates only within the United Kingdom and the European Economic Area, only people from these regions would be able to get the card.
The rewards on your purchases are generated in Plutus’s native token called Pluton. At the moment, this token is trading at $1.75, with a current market capitalization of around $1.5 million.
The future
By connecting with Nike to provide crypto rewards, Plutus is making yet another step towards bringing cryptocurrencies into everyday life. The team-up with Nike came months after Plutus introduced a similar feature for the major travel websites – Airbnb and Skyscanner. Unfortunately, the development had to be paused as the coronavirus spread intensified.
As time passes, more companies such as this one will bring crypto into everyday lives of people, making it more accessible and easy to use.
Almost one-third of the total Bitcoin supply is now secured with multi-signature wallets.
Multi-sig Wallets
Bitcoin is secured with a combination of a public and a private key. In order to transact by using the Bitcoin network, a user needs to sign each transaction with the aforementioned private key. While this works fine in most cases, there are situations where this arrangement is not ideal.
As an example, if a cryptocurrency exchange founder secures all of the firm’s assets with a private key, only they know, it might not be optimal. If it happens that the founder suddenly dies, gets hacked, or even decides to engage in an ‘exit scam’?
If any of these things were to happen, all the funds would have been lost forever.
In order to alleviate these issues, a Bitcoin soft fork was introduced in 2012. This form enabled the use of multi-signature wallets, which, as the name suggested, allowed Bitcoin to be secured with multiple signatures. In order to use the wallet, a transaction would need to be signed with each of the private keys provided.
To continue our example, the same exchange founder could secure all the firm’s assets with five signatures while requiring at least three signatures for a transaction. The signatures could belong to the company executives, or even trusted third parties.
Adoption
While multi-sig wallets existed since 2012, the feature didn’t get widely adopted since 2015. The reason for that is that most people and companies did not really care about it until Mt. Gox (read as mount gox) got hacked. After this hack, the community recognized the flaws of the decentralized one signature wallet system.
Bitcoin exchange-traded funds have faced unfair pushback from US regulators, said director and digital asset specialist of VanEck, Gabor Gurbacs.
He claims that there’s a constant double standard against Bitcoin and other digital assets.
SEC Bitcoin ETF denials
Law or auction gavel and bitcoins on a wooden desk, dark background
A Bitcoin ETF is a financial product that is officially traded on mainstream stock markets. The ETF shares are representing exposure to Bitcoin’s price, and they can be cash-backed or BTC-backed. Trading via ETFs basically allows for Bitcoin exposure through traditional market methods and brokers.
The US Securities and Exchange Commission has denied a massive number of Bitcoin ETFs over the past couple of years. VanEck submitted one of the most notable Bitcoin ETF proposals that ultimately got denied by the SEC after facing many delays.
For the Bitcoin ETF to be approved, regulators say that they need proof that Bitcoin has true price action and not action through market manipulation. However, when comparing Bitcoin’s situation to another available traditional market ETFs, the argument about true price action just doesn’t hold water.
Gurbacs defends Bitcoin price action
Bitcoin holds relatively efficient price discovery, which is even better than certain commodities already on the market, said Gurbacs. He also noted that he revealed proof of such data to the regulators. VanEck, together with its daughter company called MV Index Solutions, developed regulated indices in hopes of appealing to regulators.
Gurbacs added that, while he sees improvement in understanding this technology from the regulators, they have not come around yet. We have seen Wilshire Phoenix facing one of the most recent Bitcoin ETF denials from the regulators in February 2020.
China Embracing Blockchain – A City Launching Blockchain-Powered Notary Program
The city of Suzhou wants to implement a program that would use real-time notarial tracing functions, and that would be powered by blockchain. This pilot program would, as reported in the local news, provide a wide range of notary services in the city of Suzhou, China.
The authorities of Suzhou announced that this program will hopefully help millions of citizens with accessing legal and government offices via the internet. The announcement was made on June 5.
The pilot platform will cover personal freedom, health, life, property rights, and more.
All of the materials will be uploaded and available through the cloud. Both audio and video records will be distributed and shared among notaries involved for legal purposes, therefore facilitating the use of real-time tracing functions.
This network will be called “Suzhou Notary Chain,” and it will allow the administrative law enforcement unit to use this system for online notarization as well as for carrying out the entire process through shared files stationed on the cloud platform.
Unlike the highly-conventional method of storing audio and video files only within a law enforcement database, this blockchain-based notary services platform will be used to process everything from recording to distribution. in theory. This should guarantee “easy data storage, non-tampering, high security, as well as traceability.”
China’s blockchain adoption
China continues to take bold steps towards blockchain technology adoption. It is slowly starting to implement related systems within different sectors of the economy, making it one of the leading countries in the sector. However, China’s stance on cryptocurrency is still not as open as people would like.
Swiss Regulators Allow Crypto Transactions to a Local Bank – Major News
InCore bank became the first Swiss b2b bank that was approved by the financial regulators to operate with cryptocurrencies.
The Swiss Financial Market Supervisory Authority has authorized InCore bank to transact digital assets, therefore allowing customers worldwide to access as well as transact within the bank. The firm now has the ability to allow institutional clients to trade, transfer, and hold digital assets. Regulators have also allowed the bank to develop its own tokenization capabilities.
InCore announces partnership with IT crypto-asset consulting firm
Mark Dambacher, the CEO of InCore Bank, praised the decision that the regulators have made and commented:
“Our customers benefit greatly from the expansion to the new asset class without ever having to invest in infrastructure or new processes themselves. And all this while maintaining the usual security standards.”
The bank has already partnered up with Inacta AG, an independent Swiss-based consulting firm, in order to provide more information as well as crypto-asset management to its customers.
Boosting blockchain adoption within the banking sector
InCore company executives said that the bank plans to expand its strategy regarding blockchain in the coming months. They also have plans to include brokerage, custody, as well as transfer services to security tokens.
This can be a great start to Switzerland’s further adoption of blockchain technology and cryptocurrencies.
A Malware team called NetWalker has launched a ransomware attack against Weiz, a village in Austria. The attack managed to affect the public service system and leak a part of the stolen data from Weiz’s building applications as well as inspections.
The hackers managed to penetrate into the village’s public network by using phishing emails related to the COVID-19 crisis.
COVID-19 used as bait to deploy the ransomware
The way that the NetWalker group was able to infect the servers was by sending emails with fake information about the coronavirus, which Weiz employees clicked and therefore triggered the ransomware.
Panda Security, a company dealing with this case, claims that the ransomware used in this attack is one of the newer versions of ransomware which spreads using VBScripts. If the infection succeeds, it spreads throughout the entire network to which the infected machine is connected.
Weiz isn’t just a random village
While Weiz is a small village, it is considered the economic center of the region. It is the place where several big companies, such as the automaker Magna, as well as construction companies Strobl Construction and Lieb-Bau-Weiz, are established. This may indicate that the attack wasn’t completely random but instead directed towards this village in order to complete a specific objective.
The CTO of Tether spoke about the popularity of its Ethereum-based asset and claimed that it was the reason why the company never burned a single USDT token.
The recent report that came from Flipside Crypto concluded that Tether never even tried to practice burning its tokens, additionally saying:
“We can also see that tokens never go to the “burn” category, which means that no USDT supply was destroyed throughout the course of April. Looking at the full USDT history on Ethereum, we found that tokens have never been burned.”
USDT’s side of the story
Paolo Ardoino, the CTO of both Tether and Bitfinex, explained that the company is mindful of how it works, and it does practice burning its tokens, but that it has so far done it only on the Omni and Tron networks. When it comes to the Ethereum network, Ardoino said that the company holds authorized but unissued and unbacked ERC20 tokens in their inventory.
He also stated that Ethereum had been the most popular blockchain in recent months, which caused the demand for ERC20-based USDT to rise exponentially.
Conclusion
While many condone this type of behavior and encourage burning and then reissuing new tokens, Ardoino said that the outcome is the same. However, many people who touched upon this topic believe that burning and reissuing USDT tokens could only help improve transparency and reduce skepticism, even if the outcome is the same in the end.
Grayscale Stocking up on Bitcoin Like Never Before
Independent researcher Kevin Rooke made an estimate that Grayscale Investments ramped up its Bitcoin accumulation to an immense rate. The Cryptocurrency fund manager seems to be accumulating Bitcoin at a rate equivalent to 150% of the newly-mined BTC since the halving.
Rooke’s research shows that Grayscale has added 18,910 Bitcoin to its Investment Trust since the halving. To compare, only 12,337 Bitcoins have been mined since the halving on May 11.
Binance CEO Changpeng Zhao reposted this info chart, saying that there isn’t enough new Bitcoin supply to go around, even just for one guy.
Grayscale is rapidly absorbing Bitcoin supply
Rooke’s research estimates that Grayscale bought Bitcoin at a rate equal to one-third of the new supply during Q1 of 2020, therefore accumulating 60,762 BTC over 100 days. As a result, Grayscale’s Q1 average weekly investment into its trust increased 800% year-over-year and reached $29.9 million.
After Grayscale founder Barry Silbert said, “just wait until you see Q2,” the investment fund is now purchasing nearly double the coins per day, while the supply got reduced by half. This brings Grayscale’s daily average to 1,112.35 Bitcoin per day, which represents almost 150% of the daily mined coins.
Grayscale vs. CBDC’s
A recent report published by Grayscale show’s company’s distaste for people comparing Bitcoin to central bank-issued digital currencies.
The report clearly stated that CBDC’s are not something that can be viewed as a replacement to cryptocurrencies such as Bitcoin, but rather as a representation of departure from the true intent of cryptocurrencies, which is decentralized protocols. While CBDC’s can upgrade the payment infrastructure, Bitcoin is trying to upgrade money itself.
Citizens of China Now Able to Inherit Cryptocurrency
The Thirteenth National People’s Congress and Chinese People’s Political Consultative Conference has ended on May 28, bringing cryptocurrency holders an interesting feature. On that day, the parliament passed a new civil code, which brings China a legislation package that includes protecting civil rights such as inheritance, property, marriage, personality, contract, and infringement. What’s important to crypto users and holders is how the code was worded and what was implemented into it.
The new code states that when a natural person dies, their legacy is the personal legal property left by them. A Renmin University professor, Lixin Yang, said that this could be translated into the words: “internet property and virtual currency will be inherited.”
Dovey Wan, Primitive Ventures founding partner, has recently made a tweet stating that Bitcoin users should pay more attention to their Bitcoin private keys, regardless of what the new law says.
The new inheritance law that allows citizens of China to pass on their cryptocurrency, as well as other virtual assets, to their heirs will become active on January 1, 2021. This is seemingly just the start of China’s efforts to regulate Bitcoin, as they clearly stated that cryptocurrencies should be something guided by the law.
The Satoshi Nakamoto Controversy: What Happened to his Crypto?
The past month has been very interesting in terms of Satoshi Nakamoto-related news, and it all started with someone mysteriously moving $1.6 million in Bitcoin from the address that could be one of Satoshi Nakamoto’s.
While most experts believe that the cryptocurrency transfer was done by one of the first-month Bitcoin miners rather than Satoshi themselves, others believe that there might be something else in play. However, this is not the complete story, as often-called Faketoshi Craig Wright came into the limelight and stirred up more uncertainty.
Wright vs. Kleiman
The case between Craig Wright and Ira Kleiman has been lasting for quite some time, with its final jury trial set for July 6. Craig Wright has announced that he is the real Satoshi Nakamoto, and claims that he has the private keys to the Bitcoin addresses that Satoshi should have access to. However, Kleiman’s side does not believe he is the real Satoshi Nakamoto, claiming that Wright might have access to these addresses, but that he cannot show the court that he has the access, as the addresses contain a proof of partnership between him and late Dave Kleiman.
The Encrypted File
Kleiman’s legal team said that Wright’s refusal to open the encrypted file suggests he knows that its contents will certainly include partnership records between Wright and Kleiman. The contents of the file will, as they said, show that 820,200 Bitcoins belong to the partnership rather than just to Craig Wright.
While this case unfolds, the public is waiting to see how everything resolves as they are looking for any clues on who Satoshi Nakamoto might be.
Reddit’s Co-Founder Says We Are In ‘Crypto Spring’
Alexis Ohanian, Reddit co-founder, has described the cryptocurrency ecosystem as a sector currently in the “crypto spring,” emphasizing the application of the technology as well as the talent working on it.
His interview with Yahoo Finance revealed his positive outlook on the cryptocurrency industry, especially in terms of top-tier engineers, designers, product developers, etc. that are building real solutions on top of this technology.
“We’re seeing top-tier talent building on this infrastructure, and that to me is the most interesting part,” he said.
Crypto won’t go away
Ohanian also stated that he had held a portion of his wealth in cryptocurrencies for quite some time now. When asked about the most recent price development, he said that he still feels pretty good about his holdings and that he doesn’t want to change much of it. He also described cryptocurrencies as a “prudent hedge.”
Reddit and Cryptocurrencies
Reddit has launched its cryptocurrency-based Community Points reward system on the Ethereum testnet called Rinkeby, with the intention to move to the mainnet by the end of 2020. Reddit is yet another company that is slowly but surely accepting cryptocurrencies as a concept rather than shying away from it due to the regulatory uncertainty.
Russian lawmakers have recently suggested punishments of up to 2 million rubles (around $27,800) as well as seven years in prison for illegal crypto or digital asset turnover. The law is not set in motion yet, but the government is considering it.
How bad are the fines?
The punishments suggested in the bill are on a sliding scale that starts from around $300 for using digital or cryptocurrencies for transacting goods and services, all the way up to 2 million rubles and seven years in prison for organizing illegal digital or cryptocurrency turnover.
They also proposed a penalty for buying digital assets for cash on Russian soil, as well as for transferring funds from cryptocurrency to any Russian bank accounts.
What will crypto companies do?
Yuri Pripachkin, president of the Russian Association of Crypto-economics and Blockchain, said that the new package of laws would act as a complete ban on cryptocurrency. By doing that, Russia will stop benefiting from this technology anymore. He believes that if the new rules were to be put in motion, many companies would simply move out of Russia and relocate to neighboring countries with a better approach towards cryptocurrencies.
While the companies have the opportunity to move from Russia to other countries that are more crypto-friendly, the Russian population that uses cryptocurrency will be cut off from the cryptocurrency world.
The 2020 Bitcoin Halving that happened in May did not go quite as well as some people expected. While most crypto enthusiasts were very optimistic about the aftermath of the halving event, things turned out to be far from good. A substantial number of miners stopped mining on their equipment as the halved reward made them unprofitable. As a consequence of fewer miners working, transaction fees became considerably higher, the hash rate managed to decrease by up to 40%, while the new blocks are generated at unimaginably low speed.
Hash rate
One of the most significant post-halving trends is the decreased hash rate, The mining profitability of the older generation mining units has dropped substantially (or even turned into negative) as the block rewards got halved. At the moment of writing, an Antminer S9, which is a previous generation mining unit, is estimated to generate a negative $2 per day.
Block time
With a third of the miners turning off their mining units, it was only to be expected that the block generation speed would drop. The Bitcoin daily block generation metric fluctuated between 100 and 120 blocks per day before dropping to only 95 blocks on May 17. This amount of blocks generated per day was last seen during the 2017 Bitcoin-lows.
Fees
While the hash rate and block generation time are very significant, the most significant metric out of these are the Bitcoin transaction fees, as they affect not only the BTC infrastructure but the consumers as well. While people who transact in Bitcoin won’t mind a bit slower transactions, they will most likely be frustrated by the increase in transaction fees.
Transaction fees went up by more than one-third just three days after the halving, resulting in an 800% monthly transaction fee increase.
How long will this last?
Everyone is asking if this change of circumstances will affect Bitcoin negatively in the long run. However, experts believe that the latest adjustments, though negative, were not big enough to make a long-term negative impact. Most of them believe that it might take three to four difficulty corrections before miners could return to their “business as usual.”
The situation seems to be coming back to normal as all the parameters are returning to their previous levels.
China Destroys 10% of the Global Bitcoin Mining Hashrate
epa06062677 (06/26) Tibetan Bitcoin mine manager Kun walks in between aisles of mining machines in a Bitcoin mine in Sichuan Province, China, 26 September 2016. Kun is the mine’s manager as well as one of its investors. He learned about Bitcoin through a friend and started investing in 2015. China, the world’s leader in Bitcoin mining, is dominating both the currency’s generation and the global trade in the currency. Sichuan has become known as ‘the capital of bitcoin mining’ as entrepreneurial Chinese set up ‘mines’ there due to its abundance of hydropower, perfect for the high electricity needs of the large number of computers required for Bitcoin mining. Bitcoin mines are buildings with warehouse-like structures equipped with massive numbers of microprocessors with which ‘miners’ solve complex math problems and are rewarded in the digital currency. The industry exists in a legal gray zone in China, and the miners in this story, concerned about attention from the government, asked not to have their full names or the names of the villages where their mines are located mentioned in this story. EPA/LIU XINGZHE/CHINAFILE ATTENTION: For the full PHOTO ESSAY text, please see Advisory Notice epa06062671
The Chinese provincial government of Sichuan has stamped out 10% of the global Bitcoin hashrate due to, as they announced, illicit cryptocurrency-related activities.
According to Cambridge University estimates, the province of Sichuan is responsible for almost 10% of the global Bitcoin hashrate. As a comparison, this single Chinese province has more mining power than then the entire United States or Russia. However, it is unsure what will now happen to the miners in this province.
What can we expect?
It’s not clear whether the recent issues will effectively destroy mining in Sichuan, as China’s crypto community was always strong, even despite governmental constraints. With that being said, many believe that, even though Chinese miners were never felt “comfortable” and “safe” when mining, this event has made the situation the worst it has been.
The question we have to ask is: Who will mine if the Chinese government shuts down Sechuan miners?
Philip Salter, Genesis Mining head of operations, said that the main advantage of mining in China is cheap production costs, but that it doesn’t come without disadvantages. The main disadvantage of mining in China would be that they use coal to create energy, which makes operating costs not so good.
People started speculating on who will pick up the slack: The big Sechuan miners by moving to other provinces or some other mining power that will come from the western part of the world. We have seen mining giants such as Bitmain creating facilities in western countries, so it might not be too far-fetched to believe that the era of China-dominated mining market might come to an end.
Hashrate Bitcoin Futures Introduced – Another Profit-Making Opportunity?
People interested in cryptocurrency and Bitcoin trading now have a brand new tool they can use to generate profit. FTX, a derivatives trading platform, announced the launch of a futures product that tracks not Bitcoin’s price, but rather Bitcoin’s hash rate.
What are Hashrate Futures?
Hashrate futures are contracts that track Bitcoin’s average mining difficulty each day from the start to the end of each quarter.
As measuring hash rate is virtually impossible, the tracking parameter used here is the mining difficulty. However, as difficulty adjustments attempt to maintain 10-minute block times, the average hash rate will be proportional to the average difficulty in the long run.
Hash rate is the computing power dedicated to the Bitcoin network. The more hash rate Bitcoin has, the more secure the network is. The mining difficulty, on the other hand, is the complexity of the equations which validate Bitcoin transactions.
Both the hash rate and the mining difficulty were hovering near the all-time highs, but the hash rate slowly tailed off after the halving.
How does this affect the market?
The introduction of a new crypto-related financial product is almost always a good thing, mostly because it attracts more investment. On top of that, crypto enthusiasts can use their knowledge to leverage one more thing and create a profit-making opportunity for themselves. However, whether this financial product will be net-positive, net-negative, or neutral for the crypto community, only time will tell.
Bitcoin CME Options Interest Skyrocketing Post Halving
Chicago Mercantile Exchange Bitcoin options increased in popularity by a great deal over the past few days. The interest grew so much that the volume managed to hit $142 million as of May 15. This number doesn’t mean anything until compared to the previous volume this market had, so let’s compare the current volume with the past month’s volume. Data published by Skew shows a gain of over 1000% at the end of April when the market’s open interest reached just $12 million.
The reasoning behind the increase in interest
CME recorded an initial spike in options volume before Bitcoin halving, around May 5 and May 6. Both these days were close to $10 million by themselves. As we approached the halving, the volume died down as people didn’t know what to expect.
However, ever since the halving occurred, the volume skyrocketed, with days after the halving reaching $30 million and $40 million.
Institutional investor interest on the rise
Institutional investment in Bitcoin has continued to rise as we approached the halving, as well as after it. Companies such as Grayscale and Fidelity Digital both reported increased interest, while hedge fund manager Paul Tudor Jones claimed that almost 2% of his total equity is held in Bitcoin.
The bottom line
It looks like the Bitcoin halving is slowly starting to get attention from both institutions and retail investors. With the reduction of supply of Bitcoin as well as an increase in demand, we may look at Bitcoin’s price as possibly undervalued at the moment.
The U.S. is Printing Trillions of Dollars – Is Bitcoin the Key?
The United States Senate recently approved a $2 trillion stimulus package in late March as a response to the COVID-19 pandemic and rising unemployment. On top of that, the House of Representatives has accepted a House Democrats’ proposal for another $3 trillion. The Federal Reserve had to evaluate the steps it will take and start a wave of quantitative easing unparalleled in size so far in history.
The Fed’s use of quantitative easing is meant to bring liquidity back to the market by printing more money and injecting it into the financial system.
Comparison
NEW YORK – SEPTEMBER 16: Traders work on the floor of the New York Stock Exchange (NYSE) on September 16, 2008, in New York City. The Federal Open Market Committee (FOMC) met today and announced they will hold the federal funds rate at 2.0 percent, despite the recent turmoil among investment banks on Wall Street. U.S. stocks were mixed following yesterday’s Dow Jones Industrial Average plunge of 4.4% or 504 points, being the worst single-day loss since the terrorist attacks of September 2001. (Photo by Spencer Platt/Getty Images)
To understand the scale of this endeavor, we need to know a bit about the previous economic meltdown. The Recession of 2008 started when the Fed brought up more than $1.2 trillion worth of assets just so it would pump capital into the market. When compared to what it plans right now, the $1.2 trillion number sounds small and almost insignificant.
Over the past three months, the Fed purchased around $2.8 trillion worth of assets. However, unlike in 2008, it decided to buy riskier assets such as municipal and corporate bonds as well.
Where do Cryptocurrencies fit in?
The U.S. expects this bailout money to be spent on recovering the economy by preserving the financial health of public companies and not to be saved up, as the soon-to-be negative interest rates, as well as inflation, will eat it up in the long run. Since most Americans don’t own assets, the only actual result of the money “injection” will be a very short-term increase in purchasing power, followed by a long-term weakening of purchasing power.
Many analysts believe that this is a great opportunity for Bitcoin to establish itself as a store of value. Bitcoin, as well as the rest of the cryptocurrency market, could prove to be the key to people preserving their holdings amid the incoming inflation.
With US President Donald Trump announcing that he wants to implement negative interest rates, people are starting to think of how that will affect the economy.
A report published by Stack Funds shows that negative interest rates in the US will force market participants to seek alternatives to traditional assets they were investing in before. This could be a great opportunity for both Bitcoin and the cryptocurrency market, as institutions, as well as the retail sector, would have to turn to something more lucrative.
Negative interest rates
It is important to note that there is no single interest rate that is adjusted, but rather many interest rates. The interest rate Stack Funds is talking about is the Federal Funds Rate, an overnight rate at which depository institutions lend their funds to each other in the US.
A negative interest rate is used when a central bank has to boost a weakening economy. When the economy is weak, people (as well as businesses) keep their cash and save up instead of spending it. A negative interest rate is used to encourage spending money, as keeping it in the bank will make you lose it anyways.
Alternatives
When low or negative interest rates are introduced to the economy, it makes investing quite difficult as the yield on every single traditional asset will be drastically lower than before. For that reason, investment managers have to look for alternative investments in order to seek acceptable returns. Bitcoin is surely one of the assets that will pop into the mind of investment managers first.
Even now, the institutional interest in Bitcoin was rising, with many notable people in finance joining the crypto bandwagon.
Two years ago, CryptoKitties broke Ethereum by so many people playing this collection game. Two years later, the launch of a new CryptoKitties’ “Catterina” token has, once again, caused havoc. The net token launch overwhelmed the Winklevoss-backed NFT exchange Nifty.
The surprise CryptoKitties drop sold out in mere minutes
Nifty experienced service disruptions in the countdown to the tokens’ launch. The platform has posted that a massive number of users have joined their platform, which resulted in it being significantly slower. One Hundred “Catterina” tokens sold out just 3 minutes after launching.
Nifty couldn’t handle the traffic
Nifty’s service issues persisted, which was confirmed in their post: “Our systems have experienced unanticipated volume during this surprise drop, and some payment issues happened. Anyone who had their card charged but did not receive a kitty will be refunded automatically. Anyone who tried to pay with Ethereum but didn’t succeed will be refunded as well.”
Even Tyler Winklevoss tweeted about the CryptoKitties boom, saying: “Wowzers. That drop was intense.”
Right after the sale has ended, Nifty posted that one of the ‘Catterina’ NFTs managed to sell for $450 on a secondary market.
Why is this news important?
This news can be considered important because it implicates a couple of things. First off, it signifies how NFTs can revolutionize gaming through tokenizing items and allowing them to be privately owned and traded. There are several games that are embedding NFTs into their gaming experience already in development, which shows great promise towards progress in this direction.
The other important segment of this news is the conclusion retail investors can draw from this. As we mentioned in our previous videos, there are certain people that make a good amount of profit by just playing this game. Even while doing something people wouldn’t consider lucrative, they manage to earn a profit. This is just another indicator of the crypto sector growing and becoming a place where people can seek fun as well as profit.
So many traders struggle with making a profit in the volatile crypto market. They test several indicators by themselves or maybe even in a couple of indicators together, but with no success. Even if they found success during a bull market phase, they started losing money once the market changed directions.
Backtesting
Harry Nicholls backtested various crypto trading indicators in order to find the one that works best. He tested RSI, Stochastic, Bollinger Bands, MACD, Parabolic SAR, and Ichimoku Cloud.
All of the strategy parameters were kept to default. What he found out is that, at the time of the experiment, some indicators performed better than the other. While some netted over 20% gains overall, some lost over 15%.
If we take his research up to here, we can clearly see that the MACD is the clear winner among the indicators tested. However, is it? While the MACD was profitable and netted 22.51% after over three years of trading, the market itself went from $300 to, at one point, $19,900, which is far more than 22.51%.
The Buy and Hold method
After seeing that, he implemented the Buy and Hold method, which simply bought in the first time the indicator notified that it is a good time to buy, and held until the present. As the picture shows, the gains are immeasurable compared to the previous ones. The worst-performing indicator was Parabolic SAR, with the gains of 2,125.07%, just under 100 times the gains of MACD trading.
It is clear that the Buy and Hold method works so much better than trading based on one indicator, which is the whole point Nicholls was trying to make. Relying on just one trading indicator or tool is simply far too unpredictable for constant trading. Inexperienced traders do not have to dive into trading head-first and lose a lot of money in order to learn how to profitably trade. They can rather learn on the go while investing safely, as Bitcoin and the rest of the crypto market are already making amazing gains by themselves.
While most people are introduced to cryptocurrencies through Bitcoin investing and trading, the cryptocurrency market is much more than just Bitcoin. There are countless altcoins out there that compete with Bitcoin or try to solve some other problems existing in the world.
Whether traders support certain altcoins or not, the fact is that altcoins trading can be extremely profitable. However, not many people know how to properly trade altcoins as the profit has to be tracked both against the fiat currencies and against Bitcoin.
Altcoin Trading
Altcoin trading is not much different from Bitcoin trading in terms of indicators and tools traders use to trade it. It is just as volatile and just as predictable (or rather unpredictable) as Bitcoin is. However, one main difference is that it is highly correlated to Bitcoin and that altcoins traders need to take Bitcoin’s price movement into consideration when trading altcoins.
When Bitcoin moves in the same directions altcoins are moving, traders need to think of whether their money will grow more while sitting in Bitcoin or altcoins. When Bitcoin is about to move in the opposite direction to altcoins, traders have to think about whether altcoins will be “pulled” in Bitcoin’s direction, and how much. In a market where Bitcoin’s price is stable, altcoins trading certainly becomes superior to just holding Bitcoin as traders can make greater profits off of altcoins price fluctuations.
Altcoin traders need to watch the general trend of the specific altcoins as well as Bitcoin’s trend prior to engaging in trades.
Conclusion
This guide should be considered advice to all traders willing to go into altcoins trading. As with everything, with more risk comes more opportunity, and altcoins trading is no different. If you learn to incorporate and merge Bitcoin analysis with altcoins analysis, your altcoins trading will be far more profitable.
The Stock to Flow model is a way to measure the abundance of a certain resource. The Stock to Flow ratio would then be the amount of a resource that is held in reserves divided by the amount of the resource produced annually.
While the Stock to Flow model is generally applied to natural resources, it has seen some use when predicting the cryptocurrency prices as of lately.
What does Stock to Flow show?
The S2F essentially shows a product’s supply increase each year for a given resource relative to its total supply. The higher the Stock to Flow ratio is, the less new supply enters the resource market relative to the total supply. Assets with a higher Stock to Flow ratio should, theoretically, retain its value over the long-term better than those with a lower Stock to Flow ratio.
Stock to Flow and Bitcoin
When Bitcoin’s mining and production is taken into account, it’s not difficult to see why Stock to Flow ratio would be used on calculating and predicting Bitcoin’s price. The model treats Bitcoin comparably to commodities such as gold or silver. In theory, such commodities should retain their value much better than other assets over the long term due to their low flow and relative scarcity.
As of recently, Bitcoin is considered a very similar resource, as it is scarce, costly to produce and has a maximum supply. On top of that, its issuance is defined which makes the flow almost completely predictable, which can be extremely useful when calculating long-term price movements.
According to the “followers” of this model, the properties that Bitcoin has create a scarce resource that is expected to retain and increase its value in the long-term. The chart shows that the Stock to Flow ratio has been extremely accurate in the long-term as the price acted almost the same way after every Bitcoin halving (which reduced its daily supply by half).
Conclusion
The Stock to Flow model is a visual representation of the relationship between the available Bitcoin and its production rate. While it has so far been successful in predicting Bitcoin’s price movements, it may not be able to take into account all aspects of the Bitcoin valuation. Even so, Bitcoin’s Stock to Flow ratio is something that should be tracked and taken into account when looking for long-term trends and how Bitcoin might act in the future.
Traders all around the world are getting into cryptocurrency trading because of the volatility and profit potential it brings. However, the aforementioned volatility can also be the doom to traders if not taken seriously. Due to the high-risk nature of cryptocurrency trading, some traders are opting for longer-term trading.
Bitcoin Rainbow Chart
Bitcoin Rainbow Chart is a logarithmic chart that shows the evolution of the bitcoin (BTC) price, and was created so people can have a certain level of price expectation based on this model. It was created by Über Holger, the CEO of Holger.
This chart allows traders to observe price movements over the longer term while ignoring the disturbances generated by daily volatility. The rainbow chart divides the Bitcoin price into eight colored bands, namely: bubble zone, sell zone, FOMO, bubble formation zone, HODL zone, still cheap zone, accumulation zone, as well as buy and discounts zones.
The names of these bands, as well as the chart as a whole, are humorous and wasn’t created with the intention of providing real insight in future price movement. However, this graph has been quite successful in doing what it was not created for, which is prediction.
The curve of the eight bands was often described as “too perfect not to make sense”. All of the post-halving bubbles ended in the “bubble” zone, or even beyond it, while the three pre-halving low price levels have always been placed in the “discounts” zone. However, the have been some doubts as the chart failed to give accurate info in a few instances.
What does the Rainbow Chart say now?
An interesting thing about this chart is that the Bitcoin rainbow chart is now showing that Bitcoin’s price is in the buy zone. Along with the Bitcoin’s halving event, the price might actually see a price increase that this chart expects.
INTRO + Hello everybody, and thank you for joining us for the daily FX expiries briefing video for the 10 am New York cut today.
If it is your first time with us, the FX currency options market runs in tandem with the spot FX market, but where traders typically place Call and Put trades on the future value of a currency exchange rate and these futures contracts typically run from 1 day to weeks, or months.
Each day we bring you details of the notable FX option expiries where they have an accumulative value of a minimum of $100M + and where quite often these institutional size expiries can act as a magnet for price action in the Spot FX arena leading up to the 10 am cut.
We will also plot the levels on to the relevant charts at the various exchange rates where there are due to expire, and also identify the levels which are in play, and where we believe there is a greater chance of the expiry maturing based on technical analysis at the time of writing, we will label them as hot, warm or cold.
So today we have four Option Expires for the EUR/USD pair today ………………
Also, there are also 10 Options expiring for the USD/JPY pair…………………….
Also, there are also 5 Options expiring for GBPUSD…………………….
Also, there is also one Option expiring for AUDUSD…………………….
Of the notable option expiries which we brought you yesterday: price action hit the 108.65 level for EURUSD pair, which was an official strike at the 10 am cut. We listed this as Hot.
ERUGBP hit 0.8730 at the cut, which was only 30 pips from the 0.8700 option expiry. We listed this as Hot too.
GBPUSD had an expiry at 1.2425, and where we saw price action hit 124.47 at the cut, just 22 pips from the option expiry. We also listed this as Hot.
We suggest you take the levels and plot them onto your own trading charts and incorporate the information into your own trading methodology in order to use the information to your advantage.
Remember, the higher the amount, the larger the gravitational pull towards the exchange rate maturity at 10:00 am Eastern time.
For a detailed explanation of FX options and how they affect price action in the spot forex market, please follow the link to our educational video.
Cryptocurrency Trading Essentials – Know What to Look For
Some cryptocurrency enthusiasts are just not interested in buying and holding their cryptocurrencies. They would rather use some of that investment money a bit more active and start trading. However, the majority of the traders lose money as they get tangled in the complex indicators and strategies while forgetting the basics.
This guild will try to point out one of the most important things when it comes to maintaining profitability and being consistent – Recognising Market Trends.
Trading in different market conditions
While it is important to know how to utilize the intricate indicators, oscillators, and other tools in order to trade crypto well, something as basic and as simple as recognizing a major trend direction will certainly go a long way. It is a rule that traders should only trade WITH the trend, but traders rarely look at bigger time frames in order to recheck the trend direction. As an example, the same candlestick formation might be a good signal in a bull market, but wouldn’t count as a signal in a bear market.
All three market directions (bullish, bearish, and ranging) work differently, and different strategies work in different market conditions. It is advisable that traders create strategies for each market direction rather than to try to make a revolutionary strategy that always works. It is generally true that almost every strategy will work in a bull market to some extent, while only a few strategies will effectively work in a bear market. Ranging markets are easy to trade as they are bound by support and resistance levels, but are hard to recognize before it’s too late.
An important thing to note is also that each of the strategies created should be tested on the market as a whole as well as on separate time spans in which there was only one trend direction. That way, we can estimate how the strategy works both on the market as a whole and on each of the separate trends.
A fractal is a recurring pattern that occurs in larger price moves in technical analysis. In this case, it is a five candle trend reversal pattern, and there are bullish and bearish fractal versions. A bullish fractal reversal pattern has:
The third candle in a five-candle series has the lowest low
The first two candles have higher lows than the middle candle
The last two candles have higher lows than the middle candle
A bullish fractal reversal pattern signifies the end of a downtrend and the beginning of a new uptrend. Traders can use this pattern in two ways:
as a long entry signal or
as a signal to exit an existing short position
Many traders will use fractal signals alongside oscillators such as the stochastic or RSI for a confirmation of a bullish signal.
On the other hand, a bearish fractal reversal pattern has:
The third candle in a five-candle series has the highest high
The first two candles have lower highs than the middle candle
The last two candles have lower highs than the middle candle
A bearish fractal reversal pattern signifies the end of an uptrend and the beginning of a new downtrend. Traders use this pattern in two ways:
as a short entry signal or
as a signal to exit any existing long position
Fractals – multiple time frame analysis
Fractals are also very useful when it comes to multiple time frame analysis. Traders may use fractionalized times frames to create trading ideas.
As an example, a trader may use a daily or weekly time frame to get a better view of the overall market stance. However, they should decide their entry and exit points by looking at smaller time frames such as 1-hour or 15-minute charts.
A simple fractal trading strategy may look like this:
A trader identifies a major trend direction on a daily chart
They then use a 1-hour chart to identify their entry and exit points
Entry signals on the smaller time frame are considered only if they align with, the larger time frame trend
Signals against the larger trend are not considered trading signals but rather a suggestion to exit current positions
Conclusion
Using fractals as a trading tool can be beneficial in terms of analyzing daily randomness. Fractals can be used in many ways, so each trader needs to find the variation that suits them. While some traders may like using fractals, others may not. That being said, fractals are certainly a useful addition to any traders’ toolkit.
What are pivot points?
Pivot points are a pattern repetition indicator that is used to predict support and resistance levels. They can also help determine the overall market trends.
The most common way to use and calculate a pivot point is the so-called “five-point system.” This system comprises of an average of the numerical high, low as well as close of the previous trading period. These numbers are used to plot a course for five levels: two sets of resistance levels, two sets of supports, and a “pivot point.”
Calculating pivot points
The five-point system is one of the ways of calculating and identifying support and resistance levels. It is also one of the simplest, and is calculated like this:
Pivot Point (P) = (Previous Low + Previous High + Previous Close)/3
Resistance level 1 (R1) = (Pivot Point x 2) – Previous Low
Resistance level 2 (R2) = Pivot Point + (Previous High – Previous Low)
Support level 1 (S1) = (Pivot Point x 2) – Previous High
Support level 2 (S2) = Pivot Point – (Previous High – Previous Low)
The pivot point from our example is derived from the previous high, low, and close divided by 3. This allows traders to define an area where the price action seems most sensitive and likely to shift in sentiment.
Pivot point strategy – time frames
While it is possible to utilize pivot points on longer time frames, common practice looks at the smaller time frames such as 4-hour, 1-hour, 30, and 15-minute charts.
When used alongside other indicators such as the MACD and the RSI, traders can ensure the legitimacy and significance of their predictions.
Pivot point – example
An example shows the Bitcoin chart above with resistance levels marked as “R1” and “R2,” and support levels marked as “S1” and “S2.” The pivot point is marked as “P.”
Some traders end up using up to four resistance and support levels.
The first example shows that the pivot point acted as a threshold for prices to go bullish for continuation, therefore confirming the legitimacy of the move $6,285.
The RSI showed oversold conditions just before the breakout, and the MACD printed a bull cross, which added an additional layer of confirmation to this bullish move.
After a few unsuccessful attempts to surpass the R1 resistance level, Bitcoin plummeted on Sept. 14.
Finally, Bitcoin’s price went under the pivot, as well as both supports on Sept. 17.
Each of these moves had multiple indicators that confirmed the market sentiment moves as either a support and resistance test or a legit rally or breakdown.
Conclusion
Pivot points are certainly a useful addition to a trader’s technical toolbox that allows them to confirm the support and resistance levels, as well as to judge the strength of big price moves.
Scalping is a way of trading most often used by Forex traders. It involves seemingly low-risk profiles but requires a lot of discipline as well as intensive and quick trade processing.
Scalping is trading without holding positions overnight, but rather trading on extremely short time frames to utilize short-term emotion-drive price movements.
Two common approaches to scalping are arbitrage and spread scalping. While arbitrage finds a discrepancy between the bid and ask prices between two brokers and buys from one to sell to the other, spread scalping involves the price differences with the same broker.
Scalping in Crypto Trading
A scalper in the crypto market has to take advantage of small price discrepancies between exchanges or small price fluctuations on a single exchange to lock in small gains multiple times.
Big bull run fills the crypto market with optimism, and investing often turns to altcoins, which lead to choppy markets that can be utilized. While an investor might spot the upward trend in a given alt to make a profit, a scalper would have to spot the upward trend, long the Altcoin and short BTC to create a hedge, as well as to have an exit strategy of going back to Bitcoin as soon as the trade is made.
Scalp traders need to be quick on their feet and enter as well as close their positions in a timely manner. Discipline is key when performing these actions.
Is Scalping for You?
Even when run correctly, scalping is a strategy that is more time-consuming and much more intensive than other strategies. You will need to monitor the prices of many crypto assets if you want to use the strategy fully. On top of that, you need to execute trades quickly and to manage your bankroll well. As this requires much technical knowledge and a lot of multitasking, many scalp traders try to trade only one or a couple of pairs and look for their breakouts or retracements in order to make a profit.
While this strategy seems the most appealing, it is not for everyone. Only traders with high enough risk tolerance can utilize this strategy without it impacting them mentally.
If you, however, do decide to use this trading method, backtest your trading strategies, use keybinds to quickly enter and exit positions and calculate your trading fees beforehand to avoid any unnecessary losses.
How to read an Order Book – Cryptocurrency edition
An order book is a tool that visualizes the real-time list of orders for a particular asset, including buyers and sellers. By properly reading an order book, one has the option to assess the supply and demand.
While all order books have the same purpose, they can vary in appearance slightly from exchange to exchange. However, they all have the same features and functions.
Order Book – essentials
Every trader that strives to be profitable has to become comfortable with reading order books. In order to do that, they have to understand the concepts of bid, ask, price, and amount. This information is displayed for both the buy-side and the sell-side.
Price and Amount
Although the buy and sell sides display opposing information, the sheer concept of amount and price are relevant to both sides. The amount and price per order are displaying total units of a cryptocurrency at certain prices.
The example below shows an open buy order at the amount of 20.24 and a price of $8218.50.
Looking at the cumulative orders can improve trading, as you can see the total amount of cryptocurrency orders, as well as their prices.
The Buy-Side
The buy-side represents all open buy orders that are listed below the last traded price. The last traded price is also known as the “bid.” It shows the trader’s interest in a certain amount of cryptocurrency at a certain price.
Once the bid matches with an appropriate sell order, the trade happens.
When a high concentration of buy orders form at a specific price level, traders recognize it as the buy wall.
Buy walls affect the price of a cryptocurrency because the price cannot go lower due to the high demand at a higher price. Buy walls act as short-term support levels.
The Sell-Side
On the other side, we have the sell-side that contains all open sell orders that are above the last traded price. This price is also known as the “ask.” The sell wall is formed when there is a concentration of sell orders at a specific price level. The sell wall acts as a short-term resistance level.
Conclusion
The order book gives a trader a great opportunity of making more informed decisions that are based on the buy and sell interest for a particular cryptocurrency.
It provides a deep outlook into the live-action supply and demand, therefore revealing order imbalances, market manipulation as well as support/resistance zones.
Developing a profitable cryptocurrency trading strategy – guide
Trading and investing in cryptocurrencies are a bit different from investing in other classes of assets. Crypto trading extremely risky due to its high volatility, price fluctuations, and limited regulations surrounding it. However, trading cryptocurrencies can be extremely lucrative if a proper trading strategy is utilized. This guide will explain how to create a profitable cryptocurrency trading strategy.
Select a reliable exchange and a cryptocurrency
A cryptocurrency exchange is a platform where you can trade your cryptocurrencies, and choosing a reliable platform increases your profit potential. Choose a platform based on volume, trading fees, the safety of the platform, as well as its supported coins.
Do proper research
Doing proper research on the cryptocurrencies that you are thinking of trading is a no-brainer. You should trade cryptocurrencies that you believe in, but also those where you can get a quick profit by riding the hype train. The cryptocurrency market is different from other markets in the fact that its average investor is much more susceptible to the hype as well as fear, uncertainty, and doubt.
On top of that, doing proper research also translates to after you create the strategy you want to use. Each and every strategy needs to be backtested to see if it does well in bear, bull, or ranging markets. A strategy doesn’t have to be one-size-fits-all; you can rather have a separate strategy for different market movements.
Invest money that you can afford to lose
Crypto trading and gambling have a subtle similarity – they both warn the players about the limit that goes beyond the risk. In both cases, players (which are in this case traders) should only play up to the bankroll limit they are fine with losing.
Expect returns at regular intervals
It is common that the market sometimes doesn’t go your way, or that it goes better than expected. Traders should not be emotional when it comes to either gains or losses, but they should rather track their returns on a long-term basis in order to avoid the spread.
Only in the case that a strategy is unprofitable for a longer period should the trader reconsider changing it. Losses will always be a part of a trader’s life, even with the best strategy.
Utilize both fundamental and technical analysis
Traders should utilize every tool at their disposal in order to increase their profitability. Fundamental and technical analysis are two sides of the same coin, and they should both be taken extremely seriously.
While technical analysis may come as second nature to some traders, fundamental analysis of cryptocurrencies is usually not as easy. Since there are no clear ways of performing fundamental analysis with cryptocurrencies, one has to rely on knowing the coins they are trading inside-and-out from a tech standpoint, as well as to constantly track the investor sentiment in order to become a truly profitable trader.
Hello everybody and thank you for joining us for the daily FX expiries briefing video for the 10 am New York cut today. If it is your first time with us, the FX currency options market runs in tandem with the spot FX market, but where traders typically place Call and Put trades on the future value of a currency exchange rate and these futures contracts typically run from 1 day to weeks, or months.
Each day we bring you details of the notable FX option expiries where they have an accumulative value of a minimum of $100M + and where quite often these institutional size expiries can act as a magnet for price action in the Spot FX arena leading up to the 10 a.m. cut.
We will also plot the levels on to the relevant charts at the various exchange rates where there are due to expire, and also identify the levels which are in play, and where we believe there is a greater chance of the expiry maturing based on technical analysis at the time of writing, we will label them as hot, warm or cold.
So today, we have Option Expires for the EURUSD, one of which is considered Hot at 1.0865 in the amount of €1.1bn. This is very much in the money with price action currently very close to the strike rate.
We also have Warm strikes at 1.0815 for €531m and 1.0865 for €1.1bn
Also, there is also an Option expiring for the USDJPY pair at 107.30 for $555M, however, although this is currently cold, as price action on our one hour chart is gravitating to the downside currently.
Moving on to the GBPUSD, we have one notable strike, which is in the money and labeled Hot on our 1-hour chart at 1.2415 for £268M. Price has been very volatile for the pair but looks to be running out of steam to the upside at the time of writing.
Finally, we have two hot ones for you in EURGBP at 0.8675 for €526 M and 0.8700 in €600M. Price action is in a downward channel on our one hour chart.
We suggest you take the levels and plot them onto your own trading charts and incorporate the information into your own trading methodology in order to use the information to your advantage.
Remember, the higher the amount, the larger the gravitational pull towards the exchange rate maturity at 10:00 AM Eastern time.
For a detailed explanation of FX options and how they affect price action in the spot forex market, please follow the link to our educational video.
The era of the internet and the constant growth of consumerism made gift cards an extremely popular payment method. You can buy a gift card at almost any store and then trade it for Bitcoin at your desired exchange. Platforms such as Paxful and Localbitcoins offer to exchange ANY gift card for Bitcoin.
Choosing A P2P Platform
The first step to exchanging gift cards for Bitcoin is choosing the right platform for you. As we mentioned before, this guide will cover Paxful and Localbitcoins.
Paxful
Paxful is the most well-known gift card-to-Bitcoin trading platform. This company offers over 300 payment methods, with gift cards being their primary trading methods. Besides their great customer service with 24/7 availability, they also post in-depth tutorials on how the platform works and how to make your trades as smooth as possible.
The main advantage of this platform, besides the array of gift cards you can choose from, is that the gift card-to-Bitcoin is their main method of transacting. This means that you will have no trouble with exchanging your gift cards due to the lack of buyers.
Localbitcoins
Localbitcoins is one of the older and more reputable peer-to-peer platforms. The company established itself by providing almost every payment method people would ever want to use. Localbitcoins is quite a fast and intuitive platform.
One downside to this platform is that Localbitcoins is a bit slow to react when something bad happens. The advantage of Localbitcoins is their availability, as they are working in every single country in the world. However, this platform is not a good place to trade lesser-known gift cards, as they have less demand and may have a lot worse exchange rates.
Conclusion
While both Paxful and Localbitcoin are quite reputable and well-known peer-to-peer platforms, Paxful has a slight edge as it specializes in gift card trading, while Localbitcoins only has gift-card trading as one part of the platform.
No matter which platform you choose, it can be highly profitable if you have the proper knowledge. Some people have even turned selling and buying Bitcoin for gift cards into a business due to the rate difference. However, be mindful of scammers and low-rating users, as these platforms have no real way to stop people from abusing the system.
This part of the cryptocurrency passive income guide will talk about earning passive income by using security tokens.
Security Tokens
Security tokens, as a concept of yield-generating crypto-assets, is the closest thing we have in the cryptocurrency industry to the off-chain traditional markets. A security token represents an asset or a claim for profit. This type of tokens pays out dividends, which are, just like with traditional markets, returns on this asset or profits generated by it. The payouts are, again, just like with the traditional assets, paid according to a certain time schedule. Security tokens are highly regulated and typically issued via an STO (short for Security Token Offering). The core infrastructure, as well as regulations to acquire and trade security tokens, are still in development. However, them being “unfinished” as a concept should not be a discouraging thing, as the world is moving in the direction of making Security tokens a reality.
Security Tokens and Passive Income
When it comes to earning passive income by utilizing security tokens, there are not many options at the moment. However, the situation is changing every single day, and the day that security tokens become a viable passive income stream is rapidly getting closer. We are covering the topic of security tokens right now, so you would be prepared to take action when the time is right.
Depending on the underlying asset as well as its performance, the passive income of security tokens can vary greatly. The current lack of infrastructure makes it quite hard to estimate the market volume of security tokens. However, when the regulations on these assets become clear, the potential market size of the tokenizing assets can far exceed our expectations and even reach trillions. This is because, potentially, assets such as stocks, derivatives, bonds, and real estate can all be tokenised.
The current examples of dividend-yielding security tokens are Kucoin Shares, tZero, Neufund, and Nexo.
This part of the cryptocurrency passive income guide will talk about earning passive income by using lending platforms.
Lending platforms
There has been a big expansion in the industry of lending platforms that allow you to leverage your cryptocurrencies and make a passive income.
There are two types of lending platforms, custodial and decentralized ones.
Custodial services are the beginner-friendly way of doing the lending, as they take your money and lend it out to borrowers. They automatically pay you the interest, but you lose control of your assets.
The other side of the coin is the fully decentralized services, where you never give away the custody of your funds. Your funds are stored in smart contracts and accessible at any time. Borrowers can get your loan only when they put up to 150% of the borrowed amount as collateral. This incentivizes them to pay you back, while the interest rate incentivizes you to loan them the crypto in the first place.
Both of the lending platform types offer attractive interest rates for the lenders.
There is another (additional) way of earning interest by lending your cryptocurrencies, which is custodial by nature but safer than most custodial platforms, and that would be lending your money via cryptocurrency exchanges. Most cryptocurrency exchanges offer some form of a service where users themselves can lend the cryptocurrencies to other users for the purposes of increasing trading leverage.
Projects you can check out
The most popular custodian lending platforms include BlockFi, Celsius, Nexo, Cred, Crypto.com, and more.
When it comes to exchange platforms, you can check out Bitrue, Bitfinex, Poloniex, Binance Lending, and Coinbase.
Non-custodial decentralized lending platforms include names such as Nuo, Dharma, Lendf.me, Compound, dYdX, and fulcrum.
Check out our cryptocurrency lending videos to learn more about various lending platforms, as well as their pros and cons.
Conclusion
Many crypto enthusiasts use the HODL method and keep their cryptocurrencies in their wallets for long periods of time, without their funds ever moving. By utilizing their funds in some way, they can create a passive income stream for themselves. Lending is certainly one great option, but you have to do your research and pick the right exchange and the right type of platform for you.
This part of the cryptocurrency passive income guide will talk about earning passive income by providing market liquidity.
Market Making Liquidity
Providing liquidity to certain markets was always an important part of trading. The cryptocurrency market, just like traditional markets, requires liquidity in order to run smoothly.
If the liquidity was low, traders would experience “slippage,” an event where the expected prices differ from the executed prices though to sharp turns in the market.
Market-making algorithms, as well as liquidity pools, are another in the line of crypto passive income-generating opportunities. The main concept of this method is that the users act as market makers, therefore providing liquidity to the market. In return, they get rewarded based on the trading volume. This way of generating passive income is greatly dependant on the price volatility.
While market making is not as stable as staking or lending, their returns are often much greater. The returns on this way of generating passive income fluctuate around the 10% mark. The higher return is, of course, an incentive for taking a bigger risk.
This method is of generating passive income is still both underrated and underdeveloped. Somewhere in the ballpark of $40 million in assets act as productive market-making capital in the crypto market. When compared to some more developed methods such as staking, market making is still quite small.
While the incentive for market making is profit, one should distinguish between profit and benefits. Exchanges often provide benefits for market makers in terms of trading fee discounts. However, these are not exactly profits.
Projects such as Uniswap and Kyber Network reward market makers in the true sense of the word, so anyone remotely interested in this way of creating passive income should take a look at these two projects.
Check out our next cryptocurrency passive income guide to learn more ways of creating passive income by leveraging your cryptocurrencies.
The sixth part of the cryptocurrency passive income guide will talk about Masternodes and Work Tokens as a way of providing passive income.
Masternodes
Our previous videos have talked about Proof of Stake as a method of earning passive income. Masternodes work in a similar fashion, though they are not the same.
A masternode is a form of a node that is well-connected. It is mandatory that this node has a set minimum amount of collateral in coins that is usually quite large. These coins must be staked in order to become a Masternode. Masternode staking is often paired with regular consensus algorithms such as Proof of Stake or Proof of Work. There quite a few masternode hosting as well as shared masternode services such as Gentarium and Gin.
One thing to note is that you have to be cautious with masternodes because coins that use these kinds of nodes often have extremely high inflation. This is because the earnings of a masternode are usually instantly sold off for quick profits, as masternode investors put so much in being eligible to become a masternode that they want the returns ASAP.
There are quite a few websites that track masternodes, their profitability, and volume. The most well-known examples of masternode cryptocurrencies are DASH, PIVX, Horizen, Zcoin, and Waltonchain.
Work Tokens and Resource Provision
Work tokens are, just as masternodes, a form of staking. They represent a combination of staking alongside the ability to perform various tasks or provide certain resources to the network. The aforementioned work or resources include storage, transcoding, data, and computational resources provision. A provider of such work or resource earns fees in the form of rewards or fees.
Work tokens create a blockchain-powered marketplace that connects supply (which includes the aforementioned storage, transcoding, data extraction, computation) with the demand.
Most of these cryptocurrencies have relatively high inflation rates as an incentive to bring resources and work supply to the network as well as to accommodate future scaling.
The most well-known examples of masternode cryptocurrencies are Storj, Livepeer, Chainlink, Golem, Augur, and Wagerr.
Check out our next cryptocurrency passive income guide to learn more ways of creating passive income by leveraging your cryptocurrencies.
This part of the Cryptocurrency Passive Income guide will talk about Lightning Network nodes, one of the ways that will become important in the future, even though they aren’t as profitable at the moment.
The Lightning Network
In order to be able to scale and handle mainstream adoption, Bitcoin has launched the lightning network, a side-layer solution that enables users to send cheap and fast payments and even make money. To be quite frank, the amount you can earn from running a lightning node at the moment is low. However, there is a possibility that this will be more lucrative in the future, which is why we are covering it.
Today’s average lightning network (LN for short) fee stands at about one satoshi, which is worth just a fraction of a cent. Though the profits are not what you are looking for from a passive income source at the moment, they could show how the network will develop as time passes.
Problems with the Lightning network
In order to run a lightning node, one would have to download Bitcoin’s entire transaction history, which is over 200GB of data. On top of that, you would then have to download the lightning software on top of that. However, 200 to 300 GB of storage might not pose a problem to some.
There are currently over 12,000 lightning network nodes, with the cumulative capacity of around 1 Bitcoin.
Fees on the LN will keep existing
While it is impossible to know how the market will adapt and evolve at this point, many developers believe that there are several beneficial reasons for allowing fees on the network, the main one being that people won’t “become” nodes out of the kindness of their heart, but rather because of financial incentive. If this is true, then the fees will match the requirements of the miners in terms of profits versus obligations towards the network.
Conclusion
While turning your device into a lightning network node is not profitable at the moment, it may become at some point. It is important to know many ways to earn passive income, but also to know what will be profitable in advance.
Check out our future parts of Cryptocurrency Passive Income to learn more ways of earning passive income with crypto.
This part of the Cryptocurrency Passive Income guide will talk about one of the most known ways of creating passive income with cryptos, mining. This is also one of the first, if not the first, method of earning a passive income with cryptocurrencies, as this was the only way you could passively earn money when there was only one cryptocurrency, Bitcoin.
Mining – history
In the early days of Bitcoin, anyone could mind from almost any device. Mining Bitcoin on an everyday PC Central Processing Unit (CPU for short) was a completely viable solution. However, as Bitcoin gained traction, mining on regular CPU’s became harder. As the competition increased, so did the mining difficulty, and most miners swapped to mining with their Graphics Processing Units (GPU s for short). However, the competition kept increasing, and certain companies started developing specialized miners that were used exclusively for mining. These miners were called Application-Specific Integrated Circuits (ASICs). They are tailor-made for one specific purpose – mining – and are extremely effective at it.
Mining – overview
As miners mine cryptocurrencies almost exclusively on specific mining hardware, the entry fee for this way of earning a passive income has increased. Besides the initial hardware costs, which often go above $1000 per unit, a miner would have to pay for the electricity that the hardware uses. This is why it is extremely important to check the electricity prices in your country before starting to mine.
Bitcoin mining has mostly become a business ran by corporations rather than a way of earning passive income for regular individuals.
However, Bitcoin is not the only minable cryptocurrency. Mining lower hash rate coins that use the Proof of Work algorithm can still be a great source of passive income. On these smaller networks, using GPUs is still somewhat viable. Mining lesser-known coins are quite risky and speculative, but also potentially highly rewarding in the long run. These coins might be worth something one day, and completely worthless the other. However, they can also get adopted by the community and exponentially rise in price and value.
Conclusion
Mining is certainly one of the ways to earn passive income with cryptocurrencies, but it is far from the safest, easiest, or the most profitable one. It requires some technical knowledge, initial investment, profitability calculations as well as picking the proper coin. Though it can be highly profitable, it is not something crypto beginners should do.
This part of the Cryptocurrency Passive Income guide will talk about one often forgotten way of earning money, which is at the right place in the right time. The focus of this part of the guide will be Airdrops, Forks, Burns, and Buybacks.
Right-time Right-place
While most passive income strategies recover preparation, work, skill, and taking risk, this one does not. All it takes is to either be lucky or bring yourself to the right place at the right time in order to collect the reward.
Airdrops
Airdrops are events when certain exchanges (or projects directly) send certain cryptocurrencies directly to your wallet. The amount sent varies based on your contribution to the project in terms of sharing, liking, etc.
Looking for airdrops in order to earn an income is quite a viable way, even though it is inconsistent. You never know how many projects will do the airdrop, nor do you know when that will happen too much ahead. This moves the long-term planning out of the game. Not many people consistently utilize airdrops as a way of getting additional income while they could. Ultimately, this is “free money” and should be taken seriously.
Forks
Forks are when a cryptocurrency splits into two versions of “itself” due to an update, upgrade, or disagreement between developers or the community. If you own the original cryptocurrency at the time of the form, you will receive the holdings on the new blockchain as well. The prime example of this was when Bitcoin forked into Bitcoin Cash.
Using forks as a way to generate passive income is as easy as holding a certain cryptocurrency at a certain time. There is no skill or risk involved. The main thing to care about when being involved in a form is deciding what to do with the then-received cryptocurrency. While it is sometimes better to hold both cryptocurrencies, you will most likely sell the cryptocurrency that has less community support.
Burns and buybacks
Burns and buybacks are quite rare but could be a good addition to the options you have when it comes to earning passive income with cryptocurrencies. Burns and buybacks are, as the name says when the cryptocurrency creators buy back the cryptocurrency from the current owners and then burn the supply.
The prime example of a buyback and burn is the Bitfinex exchange and its LEO token.
Bonus: Collectibles
There are certain blockchains that have created certain “games” through which you can earn a lot of money. One such “game” is Cryptokitties. This “game” has a supply of collectibles that “live” on the Ethereum blockchain. They can be collected, breed as well as sold.
Make sure to watch the rest of the Crypto Passive Income series, where we will talk about other ways of earning a passive income through cryptocurrencies.
This part of the Cryptocurrency Passive Income guide will talk about crypto trading bots and how they work, as well as if they can be profitable.
What are crypto trading bots?
As the name suggests, they are automatic robot trading algorithms that trade for you. All you need to do is give them 24/7 internet access and a trading strategy, and they will do the work for you.
There are several types of bots available on the market, depending on what you want to do. They include regular trading bots that trade on the desired exchange as well as arbitrage bots, which make a profit off of the price difference between exchanges.
Are crypto trading bots profitable?
In order to start profiting from bot trading, you will ideally need a healthy stack of crypto to start with. If you are running an arbitrage bot, you would need cryptocurrencies on multiple exchanges. ,
While some people have made a fortune passively through these bots, many have lost their crypto investments as well. It all depends on how you adapt the bot to the market. There are strategies that work well for bullish markets but do poorly in bearish markets, and vice versa. For this reason, you need to develop or copy strategies and then switch them out based on the major trend.
Which trading bot to pick?
Quite a few crypto trading bots have recently emerged on the market, claiming they can ensure massive profits. While there is no doubt that utilizing machine learning can make a profit if done well, we can conclude that bots only enable the possibility of passive income while creating it has to do with you creating your own strategy (or copying one).
A couple of most well-known cryptocurrency trading bots on the market are: Gunbot, which offers trading on eight different exchanges. It costs 0.02 BTC up to 0.15 BTC to buy it.
Haasbot is an automatic trading bot that comes with monthly subscriptions that start from 0.073 BTC.
Profit Trailer is a bot that specializes in average-down strategies. It starts at $35 per month.
Ultimately, you should pick your bot based on the exchange you want to use it on, the monthly fee as well as based on if the strategy you want to use is available on the particular bot.
Should you use a crypto trading bot?
The reality is that bots are here to work as tools rather than as fully independent entities that just earn massive profits. If that were the case, everyone would use them. Using trading bots can be extremely profitable, but only with the right strategies.
The best crypto trading bots that earn the best profits are certainly ones that you have never heard about, nor you will. Traders who use such bots have absolutely no incentive to share the information. However, there are many possibilities when it comes to earning a passive income through bots, and many strategies can be viable. Backtesting is a major key in finding the strategy that suits you and the market cycle at that particular moment.
Make sure to watch the rest of the Crypto Passive Income series, where we will talk about other ways of earning a passive income through cryptocurrencies.
People from all around the globe started investing in cryptocurrencies due to their great long-term potential in transforming the world both in terms of technology and wealth distribution. While most focus on instant big gains, some people would like to stay on the safer side and look for passive income in the crypto space.
There are many ways to earn a passive income with cryptos, and we will cover most of them in a series of videos. This video will show you how you can earn a passive income by utilizing the Proof of Stake consensus algorithm.
What is Proof of Stake?
Instead of investing the users’ computing power to process transactions, PoS transactions are validated by the nodes that stake their own coins as a form of insurance. Those that stake their coins are trusted because they have put their coins on the line, so they have no incentive to scam.
Everything is quite simple — just stake the coins by keeping them in your wallet, and you will receive rewards for this.
The process is, in terms of how you get passive income, very similar to the principle of bank deposits, which have a reward over the deposit time.
Choosing the right coin to stake
First off, the currency you want to select has to support the PoS. After you are sure that the particular crypto works on PoS, just hold that crypto in your wallet and give the wallet a 24/7 access to the internet. Being connected to the internet 24/7 is the only way for staking to work, as you need it both to validate transactions and receive rewards.
Pros of the PoS system
The key difference between Proof of Work and Proof of Stake is the formation of any block. While PoS has a random selection of block validators, PoW uses computing power, which chooses only the computers which solved the validation puzzle (the better gear you have, the more you will earn). This makes staking cheaper in terms of initial costs as well as the costs of running it.
Cons of the Proof of Stake system
When using staking for passive income, you should focus on two things:
Safety
Profit
There is a reason safety comes first. It doesn’t matter if the profit is big on paper if you lose it all in the end. You need to set your account up with 2-factor authentication, use only trusted software, and never disclose any personal info to third parties.
Besides safety risks, there are other risks, mainly regarding the price volatility. Since you get paid out in the staked coin, if it drops in value – you get less money.
Always take into consideration all forms of risks before stepping into any investment.
Which cryptocurrency should you stake?
There are many cryptocurrencies you can stake, but we will name a couple you could take into consideration.
Dash — one of the first large cryptocurrencies that introduced staking
Decred (DCR) — a cryptocurrency that uses a hybrid of PoW and Pos and considers decentralized management as its main priority
NEO – often called the Ethereum of China
Zcoin (ZCX) – works on user privacy and gives great returns (17% per annum)
Ethereum (ETH) — second-largest cryptocurrency in the world, that will soon switch to PoS.
Make sure to watch the rest of the Crypto Passive Income series, where we will talk about other ways of earning a passive income through cryptocurrencies.
The second part of the Elliot waves guide will talk about the use of Heikin Ashi candles, wave degrees as well as how to trade the Elliot wave in general.
Heikin Ashi and Elliot wave trading
If you seem to get confusing results from the chart, it’s most likely a miscalculation as far as following the rules of the Elliot wave go.
However, there is a way to track and read the chart better.
Heikin Ashi candles pair up extremely well with the Elliot wave pattern reading as they help recognize red or green candles that create a trend. This makes you respond to the market movement and distinguish trends easier.
Wave Degrees: The Waves Within Waves – explained
Each wave of the five Wave Elliott Principle consists of one larger timeframe wave. Each wave can consist of larger market cycles that even take decades to complete.
The degrees of the wave patterns have different names:
Subminuette: lasts minutes
Minuette: lasts hours
Minute: lasts days
Minor: lasts weeks
Intermediate: takes weeks to months
Primary: takes several months to a few years
Cycle: takes one to several years
Supercycle: takes multiple decades (40–70 years)
Grand Supercycle: takes multiple centuries
When it comes to cryptocurrencies, and knowing that it is a young market, large wave degrees do not exist yet. However, we have seen a pattern as big as Primary during the rise and fall of Bitcoin’s price in 2017 and 2018.
Trading the Elliot wave
Entries and Exit points
The best entry point would ideally be the start of the first wave. However, that is quite unrealistic as it can be hard to spot and recognize a wave so early. Most traders start at the bottom of the second or the start of the fourth wave. These waves are much easier to spot. As a word of caution, try not to ever buy near the top of the third wave or fifth wave.
The best exit point would be the end of the third corrective wave. However, timing this can be quite hard as these final waves might retrace to 100% of the initial pattern. For this reason, most traders choose a safer exit position, which is the place where consolidation breaks outside of the final corrective wave.
Conclusion
The Elliott Wave Principle is a highly useful chart pattern that is used by many veteran traders. It is mostly used to recognize the beginning and end of a certain trend.
Do your own research before attempting to buy and sell anything. Happy trading.
The theory behind the Elliott wave principle is based around the price movements, which typically do not move in a straight line, but rather in a series of waves. Every action has an equal and opposite reaction, which is the case both in life and in any financial market (including cryptocurrencies). When the price goes up, a contrary downward movement will follow eventually.
Price action in any financial marketplace is often divided into separate trends as well as corrections. Price going up or down will showcase the direction of a trend, while the corrections will move against the trend. Ralph Nelson Elliott was the man that first discovered the repeating patterns that are better-known as impulsive and corrective waves. He noticed that these trend-following impulsive waves tend to respond in five waves. Even on a smaller scale, these impulsive waves can continue to repeat themselves inside the larger Elliott wave. This “waves within waves” theory is labeled as “wave degrees.”
Elliot waves – explained
Human social nature shows repetitive patterns due to the manner of human psychology, which is completely predictive. As mentioned above, Elliot waves have two different phases: the trend and corrective phases. The first phase forms three advancing waves of 1, 3, and 5. The corrective waves are comprised of 2 and 4.
During the corrective phase, two receding ways labeled A and C will almost always be present, as well as a counter wave labeled B.
The rules behind the trend waves are:
Wave 2 will never move below the starting point of wave 1. Wave 3 is never the shortest wave
Waves 2 and 4 might sometimes alternate in form, meaning that they will sometimes be presenting themselves in a zigzag or flat motion.
One of the trend waves will be much longer than the other two waves. The third wave will almost always be the longest out of the three.
Rules for the corrective waves are:
Wave B ends at or below the starting point of Wave A. Wave C ends below Wave A
In the crypto market, corrective waves often claim more than 60% of the all-time high price (which is at the top of the 5th wave)
Once we know what Elliot waves are and how to read them, we can move to the trading strategies. Check out part 2 of our Elliot wave crypto trading guide to learn more.
We will take a look at a Heikin Ashi cryptocurrency high-low breakout trading strategy. We will need to go through several steps in order to fully execute the strategy.
Identifying three consecutive bullish candles without any lower wicks.
After switching to the Heikin Ashi candlestick chart on your preferred trading platform, you will need to identify three consecutive bullish candles. It is mandatory that all three candlesticks have no lower wicks.
This is because bullish candlesticks with no wicks indicate a strong trend to the upside and a further increase in price. Once that is done, we need to check the location of the candles.
There have to be less than five consecutive bearish candles before the three consecutive bullish candles.
Trading Heikin Ashi candlesticks are very trend-oriented, so each of the little bits of info the chart gives, we have to take.
We need the location of the pattern, meaning that we can’t count more than five consecutive bearish candles prior to the three bullish candles spotted in the first step.
Now that we established the trend direction as well as the position of the pattern, we can look for buy opportunities.
Making an entry position at the 4th candle opening
To initiate a position, make an entry at the 4th candle opening, right after the three consecutive bullish candles have finished forming.
Get ready to pull the trigger near the finish of the 3rd candle, so you can be ready for the 4th candle opening.
Placing your Stop-Loss below the most recent swing low
As with every trade you will take, there is a chance of it going the opposite direction to what you predicted. That’s why setting stop-losses is extremely important. The strategy behind setting stop-loss with Heikin-Ashi is quite simple.
The protective stop-loss should be placed just below the most recent swing low, or ultimately below the three bullish candlestick pattern. However, placing it below the three bullish candlestick patter might be risky as you can be taken out of the trade prematurely.
Taking Profit
Depending on how strong the trend is, you would want your take profit to be two or three times more than you stop-loss. By doing so, you are trying to maximize your reward to risk ration.
Conclusion
Using the Heikin Ashi candles to determine the trend direction and set up trades can be extremely lucrative. It is important to make sure the position of the pattern is correct before entering trades, so that should not be compromised. This guide has hopefully taught you a trading strategy you can add to your toolset and possibly use.
Cryptocurrencies have made many people millionaires, and they will yet again. One of the biggest and fastest wealth distribution events in modern history is exactly the creation of cryptocurrencies. Events that severely impact the supply or demand of an asset are rarely known in advance, which is not the case with Bitcoin. Bitcoin’s halving event is widely known, and that makes Bitcoin extremely unique.
Bitcoin Halving
The event called the halving makes the supply of new Bitcoin coming onto the market cut in half. This is by design and happens approximately every four years. Shrinking supply, when combined with growing demand, is a proven recipe for a price increase. The halving presents an opportunity for regular people to invest a small amount of money and walk away with hundreds or thousands of dollars.
We know the Bitcoin halving will happen in May, and that the supply of Bitcoin will shrink as miners will be rewarded 50% less than up until then. Each time the halving happened, the prices soared. The first halving in 2012 brought Bitcoin’s price up 2,135%. The second halving in 2016 managed to propel Bitcoin’s price 3,122% over the next 18 months.
While most investors know about the halving, they don’t look into its track record when it comes to massive gains. On top of that, even fewer people know that altcoins might be the assets they should be looking for as the Bitcoin halving approaches. After Bitcoin’s first halving, Litecoin (which is called “Silver to Bitcoin’s Gold” soared more than 7,000%. The second Bitcoin’s halving happened, and an altcoin called verge shot up an astonishing 1,362,400%.
Conclusion
While it is true that altcoins are separate projects and that each one of them has something unique, it is undeniable that they are connected and correlated to Bitcoin. Investing in altcoins with the most promising technology might be the way to go before the halving happens.
There are many effective strategies for trading cryptocurrencies, and each trader needs to find its own comfort zone when it comes to technical analysis and trading. For that reason, it is important to know as many available strategies so you can pick the one that suits you best. Heikin-Ashi technique is used to forecast the price of a cryptocurrency and is considered one of the most effective trading strategies when trading traditional assets.
The Heikin-Ashi strategy revolves around the Heikin-Ashi candles, which are another form of looking at the charts. They can be applied to any time frame without restrictions, so it can suit any trading style. While they were initially designed for trading commodities and stocks, Heikin-Ashi had great success in trading cryptos as well.
The Heikin–Ashi Charts
Heikin–Ashi can be translated from the Japanese language, and means “average bar.” These candlesticks are different than the typical Japanese candlesticks that traders mostly use, even though they look alike. The difference between the two is the formula used. While the regular candlestick uses a form of open-high-low-close (OHLC), Heikin-Ashi uses a modified version of close-open-high-low (COHL).
Once we know the way Heikin–Ashi candlesticks work, we can understand how to use this trading strategy. There are two primary signals that traders can identify through the Heikin-Ashi candlestick:
1. Bullish candlesticks that have no or very small wicks indicate a strong move to the upside and good buying opportunities.
2. Small candlesticks that have a small body and big upper and lower wicks show us a potential reversal.
When it comes to bearish signals, the same applies but in reverse:
1. Bearish candlesticks that have no or very small wicks indicate a strong move to the downside and good short-selling opportunities.
2. Small candlesticks that have a small body and big upper and lower wicks show us a potential reversal.
Now that we learned how Heikin-Ashi candlesticks work and how we can read them, we are ready to move on to trading strategies. Check out part 2 of our Heikin Ashi Crypto Trading to learn more about using this strategy for crypto trading.
The Morning Star pattern is a three-candle candlestick pattern that signals a bullish reversal and appears at the bottom of a downtrend. It signals a trend slowing down and a large bullish move laying the foundation for a new uptrend.
Identifying the Morning Star Pattern
Identifying the Morning Star on cryptocurrency charts requires more than just identifying the three main candles. It also requires knowledge of the previous price movement. The pattern should be identifiable if these five things occur:
The market should be posting lower highs and lower lows prior to the Morning Star formation.
The large bearish candle shows up as a result of large selling pressure as well as a continuation of the existing downtrend. Traders should be looking to take only short positions as there are no signs of a reversal yet.
The second candle is a small-bodied candle (sometimes even a Doji candle) is the first sign of market showing downtrend fatigue. This candle often gaps lower and makes a lower low. It does not matter whether the candle ends up being bearish or bullish, as it is only supposed to represent market uncertainty.
The first real sign of bullish pressure is this exact candle. It should be a big green candle followed by an increase in volume.
After a successful reversal, traders will start to enter long positions as the market posts higher highs and higher lows. However, make sure to manage the risk through the use of well-placed stops-losses.
Trading the Morning Star Pattern
The chart on the screen shows us the formation of a Morning Star pattern, where an established downtrend is leading up to the formation of the Morning Star reversal pattern.
Once the formation has completed, traders are looking for an entry point at the open of the next candle. If a trader is more conservative, they could delay their entry point until they are satisfied with how the pattern plays out.
Targets should be placed at previous resistance levels or previous areas of consolidation. Stops-losses should be placed right below the recent swing low. As there are no guarantees of this pattern playing out correctly, traders should always maintain a positive risk to reward ratio to avoid taking any substantial risk of ruining their portfolio.
Morning Star Pattern reliability
The Morning Star pattern, just like any other candlestick pattern, should be used alongside other trading tools available to the traders. Even though this pattern occurs frequently and has a fairly high chance of playing out correctly, one has to take all precautionary measures to protect oneself from the risk.
The Evening Star candlestick pattern is a three-candle bearish reversal formation that appears at the top of a bullish trend. It signals that the market is slowing down and that a bearish move is laying the foundation for a new trend.
Identifying an Evening Star
Evening Star pattern has been extremely popular in forex trading, but has increased in popularity in other markets, crypto included. Using this pattern when trading cryptocurrencies has proven to be extremely lucrative if done properly. Identifying the Evening Star on crypto charts involves more than just identifying the three main candles that constitute this pattern. While the Evening Star is just a three-candle pattern, one needs to understand the previous price action before trading it.
The market should be exhibiting higher highs as well as higher lows. The large bullish candle occurs as a result of large buying pressure as well as a continuation of the existing uptrend. Traders should be looking only for long trades at this point, as there is no evidence for any type of reversal yet.
The second candle is a small candle (sometimes even a Doji candle) that is the first sign of trend fatigue. This candle often gaps higher as it makes another higher high. It doesn’t matter if the candle ends up being bearish or bullish, as this candle only shows a lack of determination.
The first real sign of a trend reversal and big selling pressure is the big red candle.
After a successful reversal, we will be able to observe lower highs as well as lower lows.
Trading the Evening Star pattern
The chart shows an established uptrend that leads up to the formation of the Evening Star reversal pattern. Once the pattern formation has completed, traders are looking for an entry point at the open of the next candle. If traders are more conservative, they could delay their entry point to a slightly lower price.
Targets should be placed at previous support levels of consolidation levels. Stops, on the other hand, can be placed right above the recent swing high.
Evening Star pattern reliability
The Evening Star, like every other candlestick pattern, should be traded along with other trading tools available to the trader. While they are quite reliable, failed reversals can happen if a trader only uses the Evening Star pattern to trade.
While the previous part explained what price gaps in the Bitcoin futures market are, this part will show how to trade them and what to expect when doing so.
Why do price gaps fill?
There are a few explanations as to why most gaps fill. If the spike was too optimistic or too pessimistic, it might lead to a correction afterward. Another possible explanation might be that the price action was too sharp and did not form any support or resistance levels, making the correction more likely to occur.
Gaps and Bitcoin price
While there is no hard evidence of Bitcoin’s price being directly affected by the price gaps in the futures market, lots of people seem to believe so. In cases where the CME Bitcoin futures price flash crashes in just a few seconds, many people (analysts included) believe that manipulation is occurring.
Traders and Bitcoin price gaps
When looking at the price gaps in the Bitcoin futures market, one might conclude that a large majority of them get filled extremely fast. Some traders are even incorporating the futures chart as a necessary tool for their technical analysis. However, doing this could be quite dangerous if not executed properly.
When trading the traditional markets, using gaps as indicators is a lot more transparent. As an example, some traders use strategies such as buying stocks in the after-hours if the company releases an earnings report showing positive results. However, since Bitcoin never stops trading on other exchanges, using this strategy could be trickier than it initially seems.
That’s why we need to know a few rules to trade Bitcoin based on the futures market gaps.
When a significant gap appears, it usually removes the immediate support or resistance levels, meaning that the gap is more likely to get filled. Make sure to trade in the overall direction of the market on a higher timeframe.
The price usually retraces to the original resistance level. The gap will be filled, while the prior resistance will be turned support.
The risk management while trading should be symmetrical (1:1), as almost all gaps eventually close.
Conclusion
Trading Bitcoin while using the CME Bitcoin futures chart gaps as indicators of price direction may be a lucrative strategy. When paired up with good key level analysis, this way of trading might be one of the safer ones. However, one must set its goals (to the upside and downside) correctly to prevent any unnecessary losses.
Check out part 3 of Bitcoin gap trading to learn more about the types of gaps and what they represent.
While there are many similarities in cryptocurrency trading and traditional asset trading, there are just as many differences. That’s why we are covering regular market strategies, but appropriately adjust them according to the specifics of the cryptocurrency market. Price gaps are almost a regular occurrence within traditional markets. With the Bitcoin futures market, we can already see that they are becoming a factor in Bitcoin price analysis too.
What Are Price Gaps?
A gap is a part of the chart where an asset’s price rises or falls from the previous day’s closing price without any trading occurring in between.
While this cannot happen in crypto markets since they don’t stop trading on Friday and run 24/7, we can see these gaps in the crypto Futures markets.
Gaps in Bitcoin’s charts
Bitcoin reached nearly $20,000 in a major rally in 2017, which caught the attention of almost everyone in the world. This extended to major institutional players as well.
With such rising interest, two Chicago-based brokers launched Bitcoin futures trading, which allowed contracts to be cash-settled against the US Dollar. The first one was Chicago Mercantile Exchange (or CME), while the second one was the Chicago Board Options Exchange (or CBOE).
As CME and CBOE are regulated establishments, they have to operate and trade only between certain hours within the weekdays. While CBOE no longer offers Bitcoin futures, CME still does.
Even though the CME Bitcoin futures market closes every week on Friday, regular Bitcoin trading doesn’t stop. This can, among other things, create a big disparity in prices.
As we can see in the example, when a sharp move happens during the CME downtime, we can usually expect a gap on the next trading day.
Bitcoin price gap filling
While there are a few cases with gaps not being filled, almost every gap gets closed in a very short time (up to a week). Recent data shows that out of 100-weekend gaps, 95 got filled or closed. We can expect somewhere around 50% of the gaps to be closed on an opening day, while an additional 30% or so will be closed within the same week. On the daily chart, we can see several examples of price closing the previous gap.
Check out part 2 of the Bitcoin futures gap trading to learn more about how to trade these gaps and make a profit.
