So, the only thing to do is to continue the research. However, sometimes it might be tricky to know where to start. For me it was weird when starting out with cryptos. Being familiar with stock research I thought I can do the same things with cryptos. Needless to say, that didn’t work. Looking through the sites used for analyzing stocks was useless and when finding the crypto sites, I had no idea what to look for, or if the sites were any good. That’s why I’ve gathered here the top 10 crypto research tools that have helped me along the way. I’m sure you’ll get a lot out of them too.

10. Glassnode

To start things off I wanted to go with Glassnode. Glassnode is an on-chain analytics tool and it’s one of my favorite places to visit when the markets turn red and I need to see the bigger picture to regain my confidence. Looking at active wallet addresses rising always helps me sleep at night. But that’s not all. Glassnode offers a variety of different metrics and they support many cryptos including big names Bitcoin, Ethereum, and Litecoin, as well as many DeFi tokens and ERC-20 tokens.  

Last time I gave you a few metrics to look for and those were total active address and NUPL (Net unrealized profits/losses). However, Glassnode offers a lot more. The problem is that if you don’t know what to look for, or how to interpret the metrics and charts, it’s kind of useless. That’s why I want to redirect you to Glassnodes weekly on-chain analysis. You can read through these yourself or watch via YouTube, and I highly recommend you to do that. Watching those have helped me a lot in understanding the benefits of on-chain analysis as well as how I can do that analysis on my own. They also give you a sense of where we are in the market cycle which is often times helpful when managing your portfolio. Another place to really learn about on-chain analysis is from the Glassnode academy.

Here’s a look at the metric introduced in the last CB top 10 research tools article. Image via Glassnode.

And do you know the best part of all of the learning opportunities at Glassnode? They’re both free. No need to pay for anything before you know how to use these metrics. Then when you have learnt everything and want to start doing your own research, I suggest you opt for the $29 a month plan. They do offer one higher plan too but that costs $799 a month so I don’t think it’s relevant to many of us.

9. CoinGecko

Doing any research is kind if pointless if you don’t have anywhere to check your prices. That’s where GoinGecko comes in, although they do offer lots of other useful stuff. CoinGecko is available both online and as a mobile application so you can use it anywhere. The most obvious thing to do here is simply create your own portfolio and track it from the app. That way you’re always on top of crypto price movements.

On top of that CoinGecko is the perfect place to start when researching a new crypto. When you click on a crypto, you’ll find it’s market cap, price, volume, supply, exchange listings and a description. All of this is good to know when making up your mind whether the crypto is a s*itcoin or not. If you don’t know how to spot this type of a crypto then Coin Bureau has the perfect video on that. A few additional statistics you can find on CoinGecko are some social statistic, developer statistic and even brief analysis by IntoTheBlock.

Sadly not a green day when I took the screenshot. Image via CoinGecko.

Also, if you’re looking for something besides specific cryptocurrencies, you’ll find it here. On CoinGecko you’ll find derivatives, exchanges, DeFi, NFTs, Yield Farming, podcasts, and they have even published a couple of books. So, if there’s anything you’re looking for then steering your ship towards CoinGecko will be helpful. Most of the things they offer are free but they do have two paid plans available. First is the premium plan for roughly $4 a month which gives you an ad free CoinGecko. Then they have the premium+ for roughly $8 which opens up a lot more including access to their books, research reports, chat with their research analysts, and a lot more.

Last time I wrote about this topic I told you guys about CoinMarketCap and now I’ll say it the other way around. CoinMarketCap is just as good as CoinGecko and using either one will get you what you need. It’s often just about personal preference.

8. Messari

This is without a doubt the place you turn when searching for hidden gems and huge gains. That’s because the Messari screener is the best place to filter through your searches when on the hunt (or at least the best one I’ve found so far). You can filter by market cap, volume, liquid supply, on-chain indicators like active addresses, reddit subscribers and a lot more. On top of that Messari offers quite good research articles which do come in handy.  

Now I know it can be exhausting to go through so many different cryptos you’ve never heard of, since to be real 90% of them are worthless. However, it would be nice if someone were to do that for you so that you know which ones to look at and which to ignore. That can be done at Messari in form of community created screeners. Here you can find loads of different categories ranging from certain types of projects to asset manager portfolios. Often, I like to look at what large funds have invested in and see if I can find any good projects I should be holding too. These screeners include funds from the likes of Coinbase and Alameda Research, so pretty reputable names to say the least. Also, if you’re looking at metaverse or gaming projects there are separate screeners for them too. These screeners can’t be modified but you can always copy them by the click of a button and then edit them to be more suitable for your purposes. 

A look at Alameda Research Portfolio screener, not bad one year performance (800%). Image via Messari.

When it comes to prices there are two options, $25 a month for the premium and then $625 a month for the enterprise plan. So, if you’re a retail user like I am then that $25 dollar a month plan should be enough.

7. CoinMarketCal

Have you ever felt like you can’t keep up with all the events and upgrades going on in crypto? Well, I have. Luckily there’s CoinMarketCal. Here you can find a full calendar with everything surrounding crypto.

What I usually do is check the events listed as significant and then look at those concerning the top 100 coins. Often times I find stuff the news sites have totally missed, which is why this tool comes in handy. Did you for example know that if you’re an XLM holder you can be qualified for an AQUA airdrop in December? Or did you know that Stacks is getting a significant upgrade? Like the XLM example, it’s good to also check out what’s going on with those cryptos you hold. You don’t want to miss out on an airdrop just because you didn’t have a clue that there even was something to miss. We all know how lucrative airdrops can be.

Here’s a look at Coinmarketcal. The airdrop news is trending so guess I’m the only one not aware of the news. Image via Coinmarketcal.

Then lastly for those who like to trade. Looking here for potential big events can provide some good trading opportunities. That’s because CoinMarketCal supports a large variety of coins including small caps which tend to be extremely volatile. However, when trading based on news and events remember the saying, “buy the rumor, sell the news”. On top of that there can also be some opportunities find in the ‘Coins with Potential’ by CoinMarketCal. Here are those coins that have many and/or major events coming.

All of the features on CoinMarketCal are free and what I like about the site is that it’s strongly community driven. Anyone can post events and they then get voted on whether they’re legit or not. This voting system also allows CoinMarketCal to sort the hot picks from others and it makes it easier for you to find interesting opportunities.

6. Coin Metrics

Here’s a tool that doesn’t run out of things to look at and use. Coin Metrics is best known for their accurate and up to date on-chain data with over 400 metrics and 100 supported cryptocurrencies. Now what I do have to say is that this tool feels kind of aimed at more experienced people. The site is stylish and simple but I get a sense that Coin Metrics aims more for institutional clients. That’s because they offer some paid plans which you can’t get access to online but have to contact them directly, and when you purchase these plans you gain an access key to an API through which you can get access to more tools and data. That’s why if you’re a retail user doing some on-chain analysis I would go with Glassnode since I find it easier to use, and cheaper besides.

Definitely worth checking out. Image via Coin Metrics.

That said, Coin Metrics is still a great site which is why I have listed it here although my personal preferences are for other sites. I’ve come across multiple news sites using Coin Metrics’ research as a reference and you too can get access to those. These are useful since they provide you with important data while teaching you how to do the analysis yourself next time. They usually sum up each quarter with different charts showing a variety of useful statistics. Here you’ll get a good sense of how everything has been going and where we might be heading. On top of that they also sum up each week in shorter reports which are worth checking out.

5. LunarCrush

Hopefully you read the piece on sentiment analysis on Coin Bureau a few weeks ago, if you did you should be familiar with LunarCrush. But of course, not all of you read the piece so here’s a short introduction to LunarCrush. LunarCrush is a sentiment analysis tool that gives you all the essential information when it comes to public perception of a crypto. LunarCrush has two custom scores called AltRank and Galaxy score. I’ll leave a picture below so that you can see what they are based on. However, you don’t have to rely on this and LunarCrush does give you the ability to analyse cryptos yourself too.

Images via LumarCrush.

LunarCrush gives you the ability to sort by different metrics like social volume, bullish/bearish sentiment, volume, market cap and a lot more. Then you can look at the statistics for yourself and make your own analysis. One thing I like to look at is the total social volume and how much of that is bullish versus bearish. Looking at this as well as seeing how they develop along with the price might help you determine where a crypto is going. One thing I found that could present trading opportunities was looking at the bullish sentiment alone. There were many places in the last 3 months when an uptick in bullish sentiment was followed by an uptick in the price. However, I did not find any definite correlation and you could just as well have lost money trading. But if someone else wants to dig deeper into this I think there might be some possibilities in this.

The problem with doing more thorough analysis with LunarCrush is that you need to pay for access to more data. Without paying you will get a maximum of 3 months charts and no charts for the Altrank or Galaxy Score, only the values. This makes it harder to analyze the long-term trends. When it comes to the cost you will need to purchase LunarCrush’s native token LUNR. There are three levels, tier 1 for free, tier 2 for 30 LUNR, and tier 3 for 100 LUNR. At the time of writing this LUNR is trading at roughly $1.45. The problem with this system is that the Lunr token has been in a constant downtrend in the last 3 months which means that if it continues you can get the levels a lot cheaper in the future. 3 months ago, level 3 would have cost you about €1500 and now it’s only €150.

YIKES! Image via CoinMarketCap

Despite the potential cost LunrCrush is a great tool but there’s a one other thing I want to warn you about. While this is a place where you could find tradable assets and maybe even hidden gems there are a lot of scams. You should be aware that many meme projects use lots of bots and money to grow the awareness around their project. That naturally pushes these coins up in LunarCrush since that’s what this tool is for. However, these projects can be complete garbage and simply buying them based on the values shown on LunarCrush isn’t good. For example, right now there’s a crypto called Tacocat in the top 10 by social volume. I have no idea what it is or what it does but the name itself should ring some warning bells that tell you to do additional research.

4. Santiment

If you didn’t like the fact that you only see 3 months’ worth of data on LunarCrush then maybe you should consider trying Santiment. Here you can do similar social analysis on over 1000 cryptos. You can also include data like market cap, volume and even some on-chain analysis. This is a great tool to study individual cryptos.

Sanbase Studio is what features all the charts. Image via Santiment.

On top of that they offer great market insights that again, like Glassnode, offer both valuable information as well as context around the metrics found on the site. What I found is that they are quite active and tend to cover trending cryptos. One of their recent analyses is on Basic Attention Token (December 2021) that you might have noticed has had a good run lately. I’m not going to tell you here what they said about BAT, so if you’re a holder I suggest you take a look. I found it quite interesting. On top of this, Santiment has its own academy where you can learn lots about Santiment and the markets in general.

Then, on top of these two tools Santiment offers a screener tool. Here you can try and find those hot picks that’ll take your portfolio to the moon. However, to be able to use the social metrics you’ll need to have the pro plan. The Pro plan will set you back $49 a month and if you really want access to everything you can purchase SanAPI and that’ll with set you back $160 a month. SanAPI is, however, meant for developers and not retail users. If you want a discount on the prices, you can get that buy owning SAN tokens, a 20% discount to be exact. Staking these tokens will also unveil more possibilities which of one is SanR.

Take a look at this. Image via Santiment SanR

This is a decentralized market of trading signals. Here anyone that stakes 50 SAN can upload signals on where a cryptos price is headed. These positions will close in two weeks and the top performances in percentage terms will be awarded. Currently there aren’t many users so if you want to try to win some SAN you have a great probability. You can win up to $36 each two weeks with current prices. Other use cases for SanR are to look at the consistent top performers and maybe follow what they do. It’s interesting to see how this develops. Santiment also has plans to make the ecosystem even larger and greater by incorporating the SAN tokens. And don’t worry, the performance of SAN is a lot rosier than Lunr, though it is down considerably over the past month, mostly due to broader market forces.

3. Coinglass (Former Bybt)

Most of you might know this by its former name Bybt. I know wasn’t aware of the rebranding. Coinglass is a derivatives data tool and regardless of the name offers some valuable insights. In order to benefit from this data, you don’t need to be a derivatives expert. Most of the data here is useful for getting a sense of the market sentiment. 

One thing I like to look at here is the long/short ratio. From here you get a good view of what the sentiment around a crypto is. Another thing here is that you can adjust the time frame to as narrow as 5 minutes and this might help you spot the local top. For example, as I’m writing this Bitcoin is +6% in the last 24 hours and now the short ratio is starting to rise which might signal that a top for this short bullish run might be here. (Looking back the next day I was right). Another thing I regularly check here is the Statistics surrounding Grayscale and also now the ETF. That’s because I’m interested in how institutions view cryptocurrencies and currently many of them rely on these products to gain exposure. Now whether you should be getting your Bitcoin exposure through these is another question and you can find the answer to that in this Coin Bureau article.

Here’s a look at Coinglass and the Longs Vs Shorts by 24 hours, quite consistent. Image via Coinglass.

Lastly a nice thing to also check on once in a while is how Bitcoin is performing relative to the stock-to-flow model. If you don’t know what the S2F model is then CB has got you covered again. Shortly, it’s a valuation model that has so far proven to be one of the most accurate in projecting Bitcoin’s price. All the things on Coinglass are free and although I only mentioned Bitcoin, they have statistics on a variety of altcoins.

2. Coin Dance

Are you a fan of Bitcoin? If yes then you’ll want to have a look at Coin Dance. Here you can find tons of useful statistics on volume, nodes, politics, and adoption. Even if you aren’t a fan of Bitcoin this site is worth checking out since as we all know Bitcoin largely influences the whole market.

Interesting things I like to look at are those statistic that tell me about the wider adoption. Two in particular that I like to look at is Bitcoin by gender and Bitcoin by age. Currently Bitcoin is highly dominated by men so for those men reading this article try to get your better half to join us. And on the age thing, you should really try to get those elderly in on this too. It’s never too late to join a revolutionizing industry. And hey, they’re going to need those gains in order to fully enjoy retirement. Jokes aside, in order for cryptos to go mainstream we need to educate those who have no way of knowing what this whole crypto thing is. Regardless of age and gender everyone is needed and each of you can start by introducing cryptos to family and friends. And importantly, don’t just talk about the huge gains try to explain all the benefits since just entering because of 100x gains isn’t the right reason.

Those are two blue dominated pies to say the least. Image via Coin Dance.

Then back to Coin Dance for one last thing. Look at the adoption by country. This is an interesting statistic and you’ll see that countries with a weak currency are likely to adopt Bitcoin, look at Venezuela. Also, it’s interesting to see each country’s view on crypto and CoinDance have even listed which parties support Bitcoin in certain countries.

1. CryptoQuant

Again, a site filled with extremely important metrics. CryptoQuant offers data on Bitcoin, Ethereum, Stablecoins, and then generally on Altcoins. This data consists of market data, on-chain data, and exchange flows.

Getting right into certain picks here, one metric suited for the current situation is all exchanges estimated leverage. In the recent crash (December 2021) that took Bitcoin all the way down to $42k we saw the leverage drop significantly due to liquidations. Now, the price has started to rebound while the leverage has stayed relatively low. I would argue that this is extremely bullish since the leverage was rising constantly for a longer time and now we’ve shaken out a lot of over leveraged people, the rise in prices is on more sustainable ground I would say.

Please people, be careful using leverage. Image via CryptoQuant.

Another thing to look at is all exchanges reserves. You’ve probably heard Guy on Coin Bureau mention that we’ll see high volatility in the markets due to low liquidity on exchanges and this is true. However, now you don’t have to wait for Guy to say this since you can check this yourself on CryptoQuant. If you don’t now have the time to check I can quickly tell you that it’s extremely low, so, expect volatility.

Lastly, if you’re wondering on the cost, I’ll be happy to tell you that to access those statistics I mentioned plus lots more it’s completely free. You just have to create an account. If you need more, then they have an advanced plan for $39 a month (if billed monthly) that includes more accurate on-chain indicators. On top of that there’s the professional plan for $109 a month and a premium plan for $799 a month. I would argue that the best way to go is starting free and then if you feel that it’s necessary upgrade to the advanced plan. Those other two might be a bit too expensive, especially if you want to get some other tools on this list.

Conclusion

As I mentioned with LunarCrush you shouldn’t be relaying on just one of these tools and not even only those mentioned in these lists. There’re tons more useful tools and doing research also includes looking at the project site, including reading the complete whitepaper. These tools are just meant to enhance the analysis and using them in combination which each other makes them more powerful. Naturally, you have a higher chance of picking the right investment if five sites give you a buy impression rather than just one giving that. Also, these sites listed here are in no particular order since all of them are good with different use cases. But, enough said, take the things you learned here and head on out to do your own research.

The post Top 10 Crypto Research Tools: Where To Do Your Own Research? appeared first on Coin Bureau.

In this article, I’ll go through some basic things about building a solid portfolio and some more in-depth suggestions (not financial advice, though). Of course, no one portfolio structure is suitable for all of us, but avoiding stupid mistakes will save you a lot of money and hopefully also make you a lot of money later in the future. So, let’s start.

Why Will There Be a Bear Market?

First, explaining how the crypto market cycles work to those just starting with crypto is essential. The crypto market has so far moved in 4-year cycles mainly because of Bitcoin and Bitcoin’s block halving’s. We’ve always seen a huge run-up in prices towards the end of the cycle, followed by at least an 80% crash. In every cycle, we’ve seen higher highs and lows that confirm cryptos’ long-term outlook. However, many projects have disappeared during the years, and often people forget to talk about those projects that went to 0. Instead, we talk about the astonishing performance of both Bitcoin and Ethereum. That’s why you need to realize that buying just any crypto won’t guarantee your success. Or yes, at the peak of the bull market, everything tends to go up, but not all cryptos recover from a bear market.

Here’s a look at how correlated many cryptos are to Bitcoin. Image via Cryptowatch

Some say this could be a super cycle, meaning that we won’t see a hard bear market; it’s still good to prepare. We’re already on the edge of a bear market, at least by looking at the timeframe from earlier cycles. And if we want to be correct, a bear market is defined by a 20% in prices which we already saw in Bitcoin dropping from $69k to a low of about $53k. However, for it to be a true bear market, the downturn should be more sustainable, and it might be that we can still go on with the bull market for a while since retail FOMO hasn’t struck yet.

Usually, just before the end of a sharp rise, retail investors with little to no knowledge tend to flood the market, which initially catapults the prices, but eventually, smart money (those familiar with Bitcoin) and big money (institutions) tend to dump on the newbies. This leads to a drop in prices further fueled by panic by those who entered last and now want to get out. This is why I believe that a bear market is unavoidable until we have good enough education about Bitcoin and cryptocurrencies. Those newbies will always rush in at any price because of FOMO, which pushes the price up too fast and too much, and that’s an irresistible selling opportunity for others. Just look at the price of Bitcoin and other cryptos. If something starts rising, leaving the chart to look like a hockey stick, it’s bound to come down at some point when those sitting on astronomical gains want to cash out.

A great place to follow the retail buzz around Crypto and Bitcoin is Google Trends. Image via Google Trends

Now ignoring the possibility of a supercycle, there’s still one question to be asked, what leads to the bear market? To find out the answer to this, I suggest you watch Guys YouTube video on Coin Bureau about how to prepare for a bear market. There he goes through different scenarios on what might lead to a bear market. This is important because some cryptos might benefit depending on the cause. For example, blockchain games and metaverse projects might benefit from a depression or a lockdown due to a certain pandemic. Guy points this out in the video, backed by statistics of previous cases. The reason for a bear market will also determine how much we drop and how fast we’ll recover, so watching that video I linked to isn’t a bad idea.

Risk/Reward

Again, as you’ll see many times in this article, I borrow some of Coin Bureau’s and Guy’s hard work. This time I suggest you watch Guy’s video on Crypto Portfolio 101. There he goes through different risk/reward combinations and gives a good view of which cryptos go into these different categorize.

 Much of it is basic logic, like taking, for example, Bitcoin. When compared with other cryptos, it’s undeniably a low-risk crypto, it’s been here the longest, and it has a good user base, along with a use case. On the flip side, though, because of its massive market cap of over one trillion dollars, it kind of limits its upside potential. Yes, over the long run, we could see another 10x, maybe even more, but from what I understand, that’s pretty much it. However, take a small-cap altcoin, market cap under $100 million, and it could “easily” 100x even in the short term. It goes without saying that the project needs many things to succeed, and the process is, in reality, far from easy. But for you as a holder, you just wait a year and maybe have 100x more in your portfolio. Unfortunately, there’s just that little thing called risk. Buying a small-cap coin also comes with the possibility that when you look at your portfolio in one year, the value is 0.

There are still these great 100x projects out there, and by all means, you should go for them if you believe in something. To find them, you simply have to do a lot of research. Not to disappoint you but, although the project you choose can be great, it might not thrive if you buy it before a bear market. The market might cool off, and your project might be forgotten about, and in the next bull market, there may be others that are even better that gain the attention. Also, while it’s true that crypto is still in its early stages, it’s far from what it was a few years ago and finding the next Bitcoin, Ethereum, and Solana seems to get harder and harder. Plus, as Guy points out in the video, some cryptos simply carry an unproportionable high amount of risk compared to their reward potential. Nevertheless, you can still get significant gains with relatively low-risk holdings; just look at the price action of Solana this year.

Finding the perfect balance is highly dependent on your life situation so make sure to put some time into thinking about risk/reward.

The key is to find a balance in your portfolio’s risk/reward. Of course, this highly depends on your age, finances, other investments, mental risk tolerance, family, job, and much more. But since I here didn’t cover the risk/reward ratio more in-depth, I urge you to check out the video I linked to earlier. It’s genuinely excellent, and it helps you gather a mental image of what might suit you. Next up, let’s start looking at what your portfolio needs to come back from a bear market.

Diversification

I don’t think it comes as a surprise to anyone that to have a solid portfolio, you need diversification. But, it doesn’t matter how positive and bullish you are on one project; it still can’t be your only bet. There are always factors you can’t foresee, and they might be the most unlikely things ever, something that’s a one in a million thing. But, the sad truth is that no matter how unlikely it is, if it happens and your holding goes to zero, the only thing you’re going to get is a conciliation hug from a few friends or family.

Although it did turn out good, one example is the Dogecoin millionaire ProTheDoge. He put all his life savings ($250K) into Dogecoin, and even though he had over 3 million at the top, I would still argue it was the stupidest thing ever. Playing around with your life savings like that isn’t responsible. What If it goes to zero? What then? Depression, at least, and that’s for sure. And I want to emphasize that I’m not just saying it because he put everything into a memecoin like Doge. I just don’t think it’s a good idea to have all your eggs in one basket. I don’t even think it’s responsible for Michael Saylor, the CEO of MicroStrategy, just to buy Bitcoin for the company. However, that decision is more motivated due to the lower risk on Bitcoin and the multimillion-dollar software business MicroStrategy would have, even if Bitcoin were to go to zero.

Not one basket but MANY baskets.

So, now that we’ve concluded that we won’t put all eggs in one basket, how do we diversify in crypto? Well, when looking into this, it turns out that it wasn’t as straightforward as I would have thought. Naturally, diversification means that you’ll pick a few coins from different categories; however, defining different categories makes it hard. That’s because there are different ways of dividing cryptos. You can do it by consensus mechanism, use case, what’s it built on, and a lot more. Guy has a relatively good video on categories, but that also lacks a few that I think deserve a separate mention like NFT focused ones and metaverse ones. So, I would approach this issue by simply picking some that clearly have different use cases and approaches. Here are some which I would consider separate categories and one example (thank you, Guy, for your YouTube video, it helped a lot).

• Smart contract – Ethereum
• Store of value – Bitcoin
• Oracles – ChainLink
• Payments – Bitcoin Cash
• Exchanges – Crypto.com Coin
• Metaverse – Decentraland
• DeFi – Aave
• Blockchain Gaming (kind of flows into metaverse too) – Axie Infinity
• NFTs – Rarible
• Supply Chain – Vechain

There were a few ideas, and if you filter by categories on CoinMarketCap, you’ll find plenty of different use cases for cryptos. However, there’s also another problem with diversifying in crypto: the dominance of the first two categories. Bitcoin plus smart contract cryptos dominate the market with probably over 70%. These are seen as the fundamentals of crypto, and naturally, that’s why they deserve a more considerable portion in the portfolio. If you disagree with me, here are a few reasons these categorize should make up the majority of your portfolio.

Bitcoin and Ethereum dominate the market even alone (over 60% market share). Image via CoinMarketCap

Store of value obviously because of Bitcoin. Not only is the underlying thesis of Bitcoin excellent, but it also has the biggest market cap and the advantage of being first. Bitcoin is something that I would say at least 90% of the crypto community believe in, and it’s also the first choice for new players, including institutions. Cryptocurrency without Bitcoin isn’t something that’s going to happen.

Then smart contracts because that’s where the innovation lies. Many of the categories I listed, like metaverse and NFTs, are just subcategories for smart contract cryptos. Smart contract cryptocurrencies power almost every use case you can find. They power entire sectors of the market, and if you don’t believe in these or own these, then it’s implied that you don’t believe in anything built on them either, which of course is the opinion of some of us, and that’s fine. I just think that smart contracts and the blockchains powering these are the sources to most use cases of cryptocurrencies just think of NFTs.

Plus, there are still so many things we haven’t even started exploring with smart contracts. It’s not a coincidence that some talk about the flipping (when Ethereum overtakes Bitcoin as the biggest crypto by market cap). So, in conclusion, buying smart contract platforms is in itself diversification since you’re relying on many different categories building on top of that. Then if those built on top takeoff, you will also benefit from that. You can simply look at the success of Ethereum. You didn’t have to buy an NFT or invest in DeFi to benefit from their success; you can simply see it in the demand and price action of Ethereum, on top of which many of these are built.

Which Cryptos Should You Pick?

Naturally, the only thing I can say is to do your own research. However, I can give you some advice based on my research. I can first say to trust those with a proven track record, namely Bitcoin and Ethereum. Bitcoin has been around since 2009, and it’s also the biggest cryptocurrency by market cap (by far). I think that pretty much explains why I believe that this is a crypto that’ll survive a bear market. Ethereum is also quite the OG crypto or, more accurately, OG smart contract crypto, the second biggest market cap, and the leading smart contract protocol with high institutional demand. Therefore, I think it’s safe to assume that Ethereum too will bounce back and be higher in 5 years than it is now.

Then next, although I previously talked about diversification into different categorize, I would add some competitors for Ethereum. That’s because many high-profile crypto people have said that they believe in a more extensive ecosystem not only ruled by one protocol. Most recently, I believe Solana Labs co-founder Raj Gokal said that he doesn’t view Solana as an Ethereum killer and that he believes they can co-exist with potentially different use cases.

Then looking at where institutions are parking their money, we have the highest year-to-date inflows in Solana, followed by Cardano and Polkadot. The percentage allocation you decide to put into each is up to you, but I just want to point out that Ethereum has the best track record. When you look at the price action of Ethereum, it’s more mature and isn’t likely to fall as much as the others in a bear market. However, in a bull market, we can assume some smaller market cap coins might outperform Ethereum as Solana has.

Then lastly, on these two categories, I want to mention Litecoin since I know there are many fans out there. However, I’m not a fan of it, and that’s purely because of price action. Looking back, we see that in this bull market, Litecoin barely broke its all-time high compared that to Bitcoin, which more than tripled its price since the 2017 ATH. Therefore, I don’t believe any crypto can compete with Bitcoin in the store-of-value category.

Here’s the proof. Image via CoinMarketCap

Other individual picks to add to your portfolio that have gained much attention in recent months are metaverse projects, The Sandbox and Decentraland, maybe even Enjin or Axie Infinity. These would be a great diversification, and as I mentioned in the beginning, they could even thrive in some bear market scenarios. They also have a great deal of momentum behind them, which was shown in the recent dip when they too initially plunged, but before anyone else, they bounced back to hit ATHs. (See the picture down below). Although now, they’ve cooled off a bit too. However, I have to say that the valuations are quite high. If you consider this a metaverse bubble, then it’s very likely that these projects fall even more than the broader market when a bear market strikes and the hype winds down, so be careful and do your own research.

This is by no means guaranteed and a 5% dip isn’t the same as a bear market. Still, it’s interesting to see. Image via TradingView

Other good projects for good diversification could be some DeFi projects or even something completely different from the previously mentioned categories. For DeFi projects, the safest might be to go with big names like Aave or Uniswap. However, as many of you know, due to many factors, DeFi hasn’t been the hottest sector out there. That’s why addressing the risks of DeFi is up to you, but if I were to give my opinion, I don’t think DeFi is going away; it’s a key part of cryptocurrencies. The question is that at what scale we’ll see it in the future, and will it be new protocols or the existing ones that dominate the market. There’s lots of innovation in the space, which brings additional risk, and the thesis about going with projects with proven track records can be broken.

Then for a project not so strongly related to anything brought up here could be Helium. I took a sneak peek into Guy’s portfolio (which can be found in the CB weekly newsletter), and his content which led me to the conclusion that a project like Helium with demand from big-name companies could be a good bet since the users of a protocol like this won’t stop just because of a bear market. And for those of you who don’t know, Helium is a decentralized blockchain-powered network used by, for example, Salesforce. There are naturally other projects with similar advantages, but I trust Guy to guide me through the crypto markets.

Then, of course, not maybe the most responsible thing to say, remember to pick the risky projects you love. I know many, if not to some degree, all of us, are in cryptocurrency for the significant gains. However, making astronomical gains with something as big as Bitcoin just isn’t going to happen. That’s why if you’re looking for those 100x gains, you got to go for the smaller market cap coins, as previously stated. I believe these should be in our portfolios because it keeps our inner gambler in control and makes it more fun.

Naturally, most of your portfolio should consist of safer and more well-established bets but having these risky projects take a small chunk of your portfolio is completely fine. They can be good if they manage to explode since that will offset much of what you might lose with the others in case of a bear market. BUT, with risky projects, I do not, I repeat, I do not mean meme coins. Yes, they can make you filthy rich, but that’s 100% speculation. Instead, pick a project you’ve thoroughly researched with a good use case, strong team, high demand, and hopefully some good partnerships. Even with the riskiest projects, you can somewhat minimize the risk by doing a good job researching before investing.

We all dream of hitting that one in a million project that takes us To The Moon.

Then as the last pick from me, NFTs. Yes, they are not cryptocurrencies, but they can be found in the same wallet with your cryptos (not all wallets). Picking up a piece from the most well-known and well-established projects like Cryptopunks and Bored Ape Yacht Club can be a good bet (also Mutant Ape Yacht Club). With these price levels and even some bubble signs, I would stay with these big projects since picking riskier assets amid a potential bubble might turn out bad, just look at the ICO craze back in 2017. NFTs being still this early, I think the risk is high enough even with these big-name projects. However, I know the prices are incredibly high, and not all of us have the means to purchase even a mutant ape. Therefore, I think NFTs should be the last part of your portfolio, and you should only invest in them with sums that you are absolutely okay losing. So, get an ape if you can, but ensure that your portfolio can handle the allocation.

Conclusion

I know this article didn’t maybe provide you with the in-depth tricks on how to avoid a bear market; that’s just because it isn’t possible. Neither is it possible to give a list of specific cryptocurrencies that are guaranteed to be higher five years from now. The only way to minimize the risk while maximizing the gains is to ensure that your portfolio is built on solid foundations. Again, I will borrow Guy to explain this further. Look at his portfolio. Over 50 % allocated to big names Bitcoin and Ethereum then add to that the next two names Solana and Polkadot, and that’s already 76% of his portfolio. Those are big names with plenty of upside but a limited downside. That’s the recipe for surviving a bear market. According to the book of diversification, it’s not correct, but then as I said, pay the closest attention to store of value and smart contracts because they are the most well established with proven track records. Then, of course, Guy too has a variety of Altcoins which easily might explode to become key holdings in his portfolio which would be great for him. But they might go to zero too, but that won’t matter since he still has his solid foundation.

A strong foundation surrounded by diversified altcoins and some risky bets sprinkled on top will get you out of a bear market. And, from what cryptos have shown us so far, that portfolio will also thrive in a bull market. So, yes, you might not make gains like ProTheDoge, but at least you can sleep at night knowing your portfolio is a safe as it can be. Plus, you can always use your gains to play some lottery if you really want to chase those out of this world gains.

The post How To Create a Crypto Portfolio That Can Survive a Bear Market appeared first on Coin Bureau.

Now because we truly are this predictable it might result in opportunities if we can ourselves avoid these programmed solutions and also see when others are acting according to them. Often times people buy into some asset, whether it be cryptos or stocks, with hopes of becoming rich. We believe in this because others have made a fortune from doing so. We’re jealous of the person who bought $8000 worth of Shiba Inu a year ago and is now sitting on over $5 billion, we want that too. Then when we do get lucky and make some money, we feel a wave of happiness like never before. This makes us confident and we might purchase the next potential asset or maybe add some more of the previous one. However, when the price starts to plummet all the feelings of happiness are overtaken by fear and panic. Our brains tell us to sell and get the f*** out of there. So, we sell the holdings just to discover that we perfectly managed to buy at the top and sell at the bottom. Just like we planned it, right?

Are We Truly This Predictable? 

The introduction is a simplification of some aspects of human psychology but I think you’re lying if you say that the example above doesn’t sound familiar. I would be lying if I didn’t say that buying some Dogecoin, Shiba Inu, or even Floki Inu hasn’t crossed my mind. Although I know that all these meme coins are huge risks with no fundamental value, I’m still surprised by the urge to buy when reading about the previously mentioned billionaire Shiba investor. I know that buying those types of assets goes completely against my investing thesis but sometimes feelings can override that, and I also know is that I’m not alone in these feelings. Why I know others also feel the same way is because:

1. I’ve seen it first-hand. Friends buying into shit coins in hopes of becoming billionaires.
2. Look at what happened to many small meme coins when one of the big memes pumped. Loads of retail investors went looking for the next big thing. 
   
   

   Can’t keep count how many times I’ve heard people wanting to buy into these meme coins. And yes, that’s always after a 100x pump.

Another example where irrational thinking sometimes takes over is when positive news of a certain project comes out. Often times people flood the project and buy like crazy, especially if it includes some famous companies or people, until they take a second look and realize that either the project itself isn’t that good or maybe the news isn’t that great after all. If you haven’t felt these feelings I’m surprised.

However, by looking at the charts I can prove to you that many others do have these feelings. One notable example is from the price action of Flow. When Flow announced a partnership with Google (a big famous company) on 14th of September, 2021 the price rallied from roughly $20 to a high of 23.75$. However, the price after that started to gradually decline only to hit the same price where it started in a couple of days. The decline continued, and the price of Flow is currently at just under $14. I’m not saying that the recent price action is necessarily linked to the news announcement but at least the price action immediately after the top was caused by people who quickly realized that while Flow might do great things it certainly isn’t the greatest investment due to its aggressive vesting schedule. I do want to point out that I’m not saying that all news events are overreacted to, I’m just saying that you have to be careful not to let emotions take over.

Here you can see the price chart of Flow zoomed in on the above mentioned example. Image via CoinMarketCap.

So yes, I would say that we’re extremely predictable creatures. A further example of this is from technical analysis. Have you ever really thought about why technical analysis can work and what it’s based on? Well, many patterns are based on human behavior in certain situations, often caused by our emotions. We tend to respond certainly to different price actions and that’s the basis for many technical analysis indicators and patterns. I’m sure you’ve heard of FOMO (fear of missing out). This is something whales take advantage of when they want to sell. They push the price up to attract newcomers who are afraid of missing out on all the gains. Then once those newcomers enter the whales start dumping their holdings and before even realizing what has happened the retail investor has a return of negative 25% while the whales successfully dumped their holdings to these retail investors at the peak. This is partly what the Wyckoff method is about, and I suggest you watch Guy’s video on it or read this article about it.

How to Take Advantage of This

There’s a lot of ways to take advantage of sentiment analysis, both for long-term and short-term investors. We all know that cryptocurrencies have extremely strong cycles which can result in huge gains if you find a way to buy at the bottom and sell at the top. Even for long term hodlers it’s a good idea to do some analysis and sometimes trim your exposure to the markets in order to then buy the dip. To do this, to measure the interest/feelings towards cryptocurrencies, there are many tools.

Make profit of other people’s emotions.

First, we have the Fear & Greed Index which you can find from this link. As you can read from their own introduction it measures people’s emotions and sentiment. If you scroll further down the page and look at the 1-year chart you see how the numbers fluctuate. Then if we compare those to Bitcoin’s chart, we do see that longer periods of high values in the Fear & Greed Index tend to cause a correction. However, you might also be criticizing the indicator since it most definitely isn’t perfect, which is why you might want to combine it with other forms of sentiment analysis in order to get a more complete picture. I’m going to list a few methods and tools to use when doing sentiment analysis, both for long-term investors and short-term investors.

Google Trends

To continue with something for our long-term hodlers to spot the top with you can use Google trends. This service provides you the traffic to certain keywords, for example Bitcoin or Cryptocurrency. How you can use this to your advantage is by assessing when the traffic is starting to hit its peak. Guy on Coin Bureau’s YouTube channel often refers to this tactic as a good way to spot the top. He actually has a whole video on how to spot the top, check it out here. That’s because when the search volumes surge it often means retail investors are piling in due to FOMO. Perhaps they heard their friend bragging about gains made with Bitcoin and other cryptocurrencies, which causes them to buy regardless of the price, they just want to make money.

Here’s a look for the keyword cryptocurrency. As you can see we’re already quite high. Image via Google Trends.

Another way of “manually” doing this same thing is just by listening. I’m sure many of you have friends or family who are completely uninterested in cryptocurrencies. If these people start talking about cryptos and potentially buying into them, it might be time for you to sell your coins to them. Now you might be wondering why you should be exiting when masses are flooding into the market and that’s because those who enter are newbies while those who exit are often big whales and institutions. There’s a saying of this originating from the stock market and applied to Bitcoin it would go something like this, “When your cab driver starts talking about Bitcoin, it’s time to sell”.

Bitcoin Bull & Bear Index

A common way to measure sentiment around something in today’s digital world is by looking at social media sites, and that’s exactly what this indicator does. This indicator found on Augemento.ai gathers data from social media sites to form a score of 0 to 1 based on how positive the content out there is. This indicator includes data from Reddit, Twitter and the BitcoinTalk forum.

Looking at this too the sentiment seems to be quite high. Image via Augmento.io.

Now, looking at the picture above you can see that it’s not perfect by any means. However, as with every form of analysis you can’t rely on just one. It can’t be denied that this indicator does have a way of indicating certain price movements and when you take a closer look you might recognize that often the sentiment turns negative before the price starts falling. This can partly be explained by the previously mentioned newbies piling into the market at the top.

CryptoRadar

Another simple to use and easy to interpret sentiment analysis tool is CryptoRadar by Bison. This analyses Tweets on Bitcoin, Ethereum, Litecoin, Bitcoin Cash, Uniswap, and Chainlink. Again, this is a simple tool so don’t except too much of it. However, when you combine a few of these easy tools you’ll get a good overview of the mood surrounding the whole space.

Here’s a look at Cryptoradar. Image via Bison

How you interpret the radar is by looking at where the logo is situated. The more to the right the better, indicating more tweets about the project.

LunarCrush

The above-mentioned methods were heavily concentrated on Bitcoin and also quite simple. LunarCrush is a complete platform supporting sentiment analysis on a wide range of altcoins, over 2000 in fact. The way LunarCrush works is by analyzing activity on social media sites to then give them their custom scores, Galaxy Score and AltRank.

AltRank measures 4 different things:

1. Market volume – based on reputable exchanges 
2. Social volume – volume from unique sites 
3. Percent change versus Bitcoin – is it outperforming Bitcoin 
4. Social score – total social volume 

Based on these four criteria a crypto gets a ranking where 1 is the best. How you can use this data is by looking at coins with a gradually increasing ranking. Simply picking number 1 isn’t the best choice since the recent price action plays such a huge role, which means if a crypto spikes for a short while it will briefly also push up the AltRank, however, that doesn’t mean it’s sustainable.

Cryptos sorted by Alrank. Image via LunarCrush.

Galaxy Score is also derived from 4 different measures: 

1. Price score – calculated from a moving average
2. Social score – based on bullish and bearish social updates
3. Social impact – based on social volume/interaction/impact
4. Correlation rank – an algorithm determines how much the price correlates with social sentiment 

While the Galaxy Score also includes the price action it’s less impacted by that since it’s calculated using a moving average. Therefore, the Galaxy Score better measures the social sentiment which is why it’s something worth keeping an eye on. The Galaxy Score gives a value of 0 to 100 where 100 is the best.

Cryptos sorted by Galaxy Score. Image via Lunarcrush.

When using LunarCrush I would focus on the Galaxy Score since I think it gives a better opportunity to find good altcoins before they moon. Also, on top of both the AltRank and Galaxy Score LunarCrush offers more, such as the amount of social engagement, social media posts, influencer tracking, and much more. You can even earn LunarCrush’s native token LUNR for using the service. And hey, almost forgot, LunarCrush is completely free, you just have to make an account. However, to get access to more data you need to purchase LUNR tokens.

Santiment 

Just like LunarCrush Santiment is a complete platform with a wide range of different analytics and metrics. What differentiates these two is that Santiment doesn’t have any of their own proprietary scores or rankings, but rather they’re just a tool for “raw” data. This data includes social data, price data, and even on-chain data.

Take a look at Sanbase Studio, as you can see they offer much more than just sentiment analysis. Image via Santiment.

When using Santiment for research you’ll be using their Sanbase, that’s where you’ll find everything. On top of that they provide an API service for developers. What I like about Sanbase is their charting where you can compare price charts with social volume. On top of that you can do keyword scanning similar to what Google Trends allows you to do. When it comes to pricing, you’ll get everything for free except for the most recent data. Therefore, if you want to use it for short-term trading, you’re going to have to purchase the Pro plan for $49 a month.  

CryptoMood

This is another complete platform and there were a few reasons why I wanted to bring it up. However, first I have to say that while there is a free plan available, you’ll have to pay $4.50 a month if you truly want to get some advantages out of it. So, if you’re not looking to pay anything you can skip to the conclusion.

Maybe I should too download and try the app, the price isn’t that bad, and I like checking crypto stuff on the go whenever I have time. Image via CryptoMood

The reasons I wanted to bring up CryptoMood are their mobile app and their huge database. So, if you’re someone who prefers to do everything on their phone or likes to check cryptos and do some analysis whenever you have time then CryptoMood is for you. I haven’t myself used the application but from what I’ve read it seems like the real deal. They use a huge database looking at data from over 50,000 sources, and they even have a partnership with Santiment. On top of that, I see a great benefit in using their news aggregator to read yourself and determine the mood in recent news. And to make it easy for you, you don’t have to read whole articles since they provide summaries.

Conclusion

We are all influenced by emotions and that’s natural. It’s also something which is necessary to keep the markets going. Yes, sometimes emotions cause extreme market moves which might seem intimidating. However, as Guy likes to point out, you need to look at the bigger picture, both when the price goes up and especially when the price goes down.

You need to analyze whether price movements truly are reasonable or is it just some FOMO or FUD. When you see that big drop, you don’t have to think it’s the end of the world. Look at the long-term sentiment around the project or market, what has happened. Is it a short drop from which we’ll likely keep going up? Did we really see the top? Simply find the answers and then make sound decisions on whether it is an overreaction and a great time to buy the dip. And the same goes the other way around. When you see a big pump on some positive news take some time to truly analyze what happened and see if it could really start a greater trend shift or is it just people not knowing what they’re doing and buying out of FOMO. You don’t want to be the guy buying at the top and selling at the bottom.

And hopefully after reading this guide you won’t be that guy.

The post Sentiment Analysis for Crypto: Featuring FEAR and GREED! appeared first on Coin Bureau.

You see, not only is it a crypto trading terminal, it’s also partially a social network. And because it makes sense to combine the two it’s also partially a social trading platform, which is how it bills itself. And finally it’s also a trade automation terminal. Yeah, there’s a lot going on at Aluna Social.

At its heart however, it’s a social trading platform that’s focused on crypto and looking to offer crypto traders a new trading experience. Like many decentralized exchanges it is completely transparent, although it isn’t truly decentralized. But the founders of the platform hope that by keeping it transparent the users of the platform, that is the traders, can make better decisions that lead to improved performance.

Another aspect of the platform that definitely needs to be mentioned is the FUN. Aluna Social makes use of gamification in trading through their native ALN token, making trading even more fun and exciting.

Let’s have a look at all the features and the inner workings to give you a better idea of what Aluna Social is, and how it functions.

How Aluna Social Works

One of the core designs of Aluna is to simplify crypto trading. One way it does this is through it’s social trading mechanisms that allow traders to “put their money where their mouth is.” One of the problems with crypto up until now has been the presence of shills who can recommend buying or selling specific coins without actually buying or selling themselves.

Aluna’s social platform does away with the shill by publishing every users transaction history. But they remain private by keeping wallet balances hidden. This means traders are able to verify that anything being promoted by another user on the platform is also being traded by that user. This is one part of the transparency that allows users to make better decisions.

Build the ultimate trader profile. Image via Aluna.Social

In addition to providing unprecedented transparency, Aluna also innovates with its multi-exchange trading terminal, allowing its users to trade across any of the supported cryptocurrency exchanges while still maintaining full control over their crypto holdings. In short, Aluna combines an innovative transparency with complete user control over their own funds.

Aluna Social Features

Let’s have a deeper look into all the social features traders can take advantage of when using Aluna Social.

Multi-exchange Trading Terminal

One of the most frustrating aspects of cryptocurrency trading is the need to maintain numerous accounts across a variety of exchanges in order to have access to all the different coins, tokens, and trading pairs. With Aluna Social that frustration is a thing of the past. Aluna allows users to connect to their various exchange accounts via an API key, and then manage all the various accounts from one dedicated trading terminal.

A far easier way to manage your portfolio. Image via Aluna.Social

In addition to allowing trades on any connected exchange Aluna also pulls in all the performance data, allowing traders to track their entire portfolio’s performance across multiple exchanges.

Trader Social Network

The social network for crypto traders is one of the most innovative features included with Aluna. The biggest difference seen in Aluna versus traditional social networks like Facebook is that with Aluna not only can users post their opinions, but the platform tracks all users’ trading activity and makes it publicly available.

Social trading at its best. Image via Aluna.Social

In this way anyone in the social network  can compare the words of other users with their actions. Those who are promoting a coin, but not trading that coin themselves, probably shouldn’t be listened to very closely. Aluna calls this mechanism a proof of performance.

Automated Copy Trading

There are two primary ways to automate trading when using the Aluna terminal.

1. The social network created on the Aluna platform makes copy trading and counter-trading very easy to undertake. Any trader on Aluna is able to designate a specific amount of cryptocurrency to automatically copy the trades of any other trader on the platform. Or they can choose to take the opposite position from any other trader on the platform.
2. For those traders with more experience and technical know-how it’s also possible to automate trading using algorithmic strategies, or custom made trading bots. These algorithmic trading bots can also be copied by other traders. Future plans of Aluna include the creation of a platform where users are able to create their own trading strategies and bots.

Monthly Trading Competitions

Who doesn’t love a little bit of competition? Aluna has created a mechanism they call ROI (Return on Investment) Farming, in which the top traders on the platform are rewarded for their skill with ALN tokens. This is made possible by the cross-exchange leader board on the platform, which ranks every Aluna trader based on their ROI and performance in trading.

Get to the top of Aluna’s Leader Board for ALN rewards. Image via Aluna.Social

On a monthly and annual basis the top traders on the leader board are rewarded for their performance with ALN tokens. This effectively works as a performance incentive for traders. It is also a great mechanism to induce traders to share their trades on the social network.

Profit Sharing

Aluna plans on adding a PRO subscription to the platform that will deliver enhanced benefits to those traders willing to pay a monthly fee to access such features. Aluna plans on transferring up to 50% of these monthly fees to a Performance Pool, which will then also be used to reward the top traders on the leader board each month.

Prediction Games

Gamification is an important concept at Aluna, and one which the platform plans on using extensively. Currently there are plans in the works for three different prediction games on the Aluna platform.

Adding gamification makes Aluna more attractive. Image via Aluna.Social

Binary Outcome – These will be games that involve a question that has two mutually exclusive answers. An example of this would be the question “Will Bitcoin trade above $65,000 before the end of the year?” Traders can put up a specific amount of crypto and answer either ‘Yes’ or ‘No’. Those with a correct answer will receive a payout, while those who are wrong will lose the coins that were put up in the contest.

Social Trading – These games allow traders to make prediction bets without fully exposing themselves to a negative outcome. This mechanism will allow traders to wager on the outcome of the trades of others without fully copying the trades, thus lowering the risk exposure.

Leaderboard Games – These will involve betting on the traders that will appear at the top of the leader board each week or month. This allows users to give feedback on results such as performance (overall percentage gain), risk (drawdown, risk-to-reward ratio) and consistency (percentage of profitable days over the period). Displaying the winners and losers, including the most and least wagered profiles, will paint a useful picture of the community by using the leader board as a filter that sorts through traders’ ideas, styles and risk management.

The Aluna Team

The Aluna team remains quite small, and as of July 2021 they listed 12 full-time employees: 7 developers, 3 designers, and 2 marketing and business development experts.

All of this was originally conceived of by two co-founders: Alvin Lee and Henrique Matias.

The team behind Aluna. Image via Aluna whitepaper

Alvin Lee – Alvin is a tech visionary and has been trading crypto since 2013. He is a KOL in the community with a decade of digital marketing experience. He remains as the CEO of Aluna.

Henrique Matias – Henrique started writing algorithms for crypto trading in 2014, participated in the first Solidity workshops, and was one of the first developers to work on Ethfinex (now DeversiFi). He remains with Aluna as the COO.

Anderson Arboelya – Anderson is a self-taught full stack developer with over 15 years of experience architecting high-performance applications and making code flow with the rhythm. He is also the CTO of Aluna.

ALN Tokenomics

Many of the features on the Aluna platform are tied tightly to its native ALN token. This token is an ERC-20 token built on Ethereum, and it was created with a capped total supply of 100 million tokens, which have all been minted at the token generation event.

The ALN token was conceived to provide utility to the platform in four ways:

1. Protocol Mining: The active participants on the platform, and all liquidity mining is rewarded with the ALN tokens that were allocated to the Ecosystem Fund.
2. Staking: Like many other protocols, Aluna has created a staking mechanism for the ALN tokens. Users who stake ALN will be eligible to receive a range of benefits, which will be determined by the amount staked. The staking rewards could include the obvious token rewards, but also reductions in fees, or other premium features.
3. Payments: When paying in ALN users will be able to take advantage of discounted prices for upgraded platform features.
4. Governance: The ALN token is featured in governance participation, which will be discussed in greater detail in the following section of this review.

It’s like a galaxy of uses for ALN. Image vis Aluna.Social

The 100 million token supply was distributed as follows:

• 49% is kept in the project’s governable treasury.
• 15% is set aside for the project team and advisors.
• 15% was crowd-sold during a public token sale.
• 21% was allocated Ecosystem Fund that’s used for airdrops and rewards.

There is also a burn mechanism built into the protocol that will reduce the total supply of ALN over time. This should support the price and make the token more attractive to investors.

The ALN Token Performance

In March 2021 Aluna conducted a crowd sale of its ALN token, selling tokens for just $0.10 each. Immediately following the token sale the price of ALN shot up, hitting an all-time high of $1.84 on March 17, 2021. Hopefully those early investors got out then, because that level didn’t last long, and by June 11, 2021 the price of 1 ALN token was below $0.10.

The token price continued declining, nearly hitting $0.04 in mid-July 2021. Since then price has come back and as of early September 2021 ALN is trading at $0.1194, putting those early investors back in profits.

ALN’s price performance. Image via  Coinmarketcap

Those interested in purchasing some ALN tokens have limited choices. The token is currently listed on Gate.io, Uniswap v2, SushiSwap, and Quikswap. Gate.io has USDT and ETH pairs , while Sushiswap has a WETH pairing, and Uniswap has both WETH and USDT pairs.

Aluna Governance

The Aluna project is currently still being run in a centralized manner, like a traditional startup, but once the platform gains enough traction there are plans to transition to a fully decentralized platform. This will be achieved through the creation of a decentralized autonomous organization (DAO), which will be known as the Aluna DAO. The whitepaper lays out the transition to the DAO, which is expected to take place gradually over the course of three years.

Eventually Aluna DAO will grant full decentralization.

The first version of the DAO will allow users to stake ALN in order to submit governance proposals, as well as allowing others to stake their ALN to vote on those proposals. This will allow the platform users to be an integral part of the platform development almost from the beginning.

In July 2021 Aluna held its first Discord meeting of token holders to vote on a proposal in connection with abuses encountered during an airdrop event. As a result, the project held its first governance vote on Snapshot.

Current Status and Roadmap

Here is the platform’s vision, as stated on their roadmap: 

“Our vision is to improve transparency between traders, establish a trading community incentivized to share data, to create an environment where traders can leverage positive social feedback loops and improve their overall performance.”

Currently, Aluna has already implemented in beta the multi-exchange trading terminal and copy trading functionalities. It has on-boarded five major cryptocurrency exchanges: Bitfinex, Binance, Bitmex, Bittrex and Poloniex.

There are a number of items highlighted for a 2021 implementation that remain to be addressed. These include the creation of the Aluna DAO, the creation of PRO Plans, and distribution of PRO subscription proceeds to top traders, as well as staking and holding benefits, and the creation of the Performance and Rewards pools.

Aluna’s roadmap going forward is quite exciting. Image via Aluna.Social

The roadmap for 2022 is even more exciting and includes all the following new features:

• Platform Improvements
• Automation via TradingView
• Strategy Backtester
• Telegram Trading
• Market Screener
• Advanced Trading Tools
• Token Implementations
• DeFi Social Trading
• Web3 Prediction Games

Conclusion

The one-stop shop type solution being provided by Aluna Social to its users is an excellent innovation for the widely diverse crypto ecosystem. Aluna helps simplify the trader’s life by aggregating a variety of exchanges, and hopefully in the future the platform can also include other DeFi protocols, thus making a true one-stop shop for crypto trading and investment.

Additionally, the social aspect of the platform makes it an excellent choice for retail traders who can benefit greatly from the combined and crowd sourced knowledge of the entire community. Professional traders aren’t left out either. They can enjoy a seamless trading experience that spans several major exchanges, plus earn ALN tokens for using the platform and for providing others with their knowledge and strong trading performance.

If you haven’t been over to have a look at Aluna.Social and give it a try yet we would definitely recommend that you do. We think you’ll really enjoy the innovative trading experience being provided.

If you’re interested in learning more about Aluna.Social you can have a look at their whitepaper here.

Warning : Trading Bots and/or Copy Trading do NOT guarantee profit. Always exercise risk management

The post Aluna Social Review: The ULTIMATE Social Trading Terminal? appeared first on Coin Bureau.

You might think that trading only includes the most common type, which is day trading. However, it includes a lot more. Trading includes a large number of things and depending on who you ask, can include trading by the second all the way to investing for life. That’s why there are numerous different strategies on how frequently, and based on which metrics, you buy and sell assets. Although having a strategy when investing in any form is necessary I would argue that when dealing with cryptocurrencies it’s even more vital to have one. This is because cryptocurrencies are known for their extreme volatility and for many people this can cause tremendous amounts of stress unless you’re completely aware of how you’re going to act in different market conditions and manage your risk.

Risk Management

Before getting into these various strategies it’s good to touch down on a vital piece of every strategy, risk management. Without having the proper risk/reward ratio there’s no point in trading. You might initially make good gains, but inevitably you’ll end up blowing your account. This is especially important for those who trade shorter time frames since you’ll conduct a lot of trades and almost certainly not win all of them. However, with the right risk/reward ratio, it’ll be enough to win only a share of your trades.

Let’s say you make 100 trades in a certain period. For those trades, you always bet the same amount and always have the same risk-reward setup. In this example, we’ll say that every time you win you’ll make $50 and every time you lose you’ll lose $25. Now, after making these 100 trades you end up with a profit of $1250. Yes, that means that we only won half of our trades but still ended up with a nice amount of profit. That’s how powerful risk management is to your trading strategy.

As seen from the example, risk management is a key to a successful strategy. This is also super easy to do since many platforms like TradingView offer a tool to do this, and luckily for you, Coin Bureau has a guide on how to use TradingView. However, when using this tool there’s one thing to keep in mind – Be Realistic. It’s not financially smart to simply put your profit levels to the moon just for the ratio to be good enough for you. Rather be realistic and if the ratio isn’t good enough then don’t enter the trade. There’s always other opportunities out there.

Different Trading Strategies

Now before getting into these strategies there are a few things I want to point out. First, don’t limit your options to only one. If you want to be a short-term trader then that’s fine, but it doesn’t have to limit your option to invest in something you believe in for the long run. The same goes the other way ’round. If you prefer to invest long-term that’s great, but it doesn’t hurt to try out some other strategies too. By using a combination of a few strategies you can lower your risk, and that’s always a good thing. Secondly, these aren’t all the strategies out there, and especially when it comes to these more specific strategies there are mountains of content to be found. And finally, these are not ordered from best to worst and you should therefore keep reading till you find something which seems suitable for your own personality.

Day Trading

Let’s begin with the most well-known form of trading. Day trading is simply buying and selling an asset during the same day. This is where many amateur traders start and also stop since they tend to lose money. This isn’t because the strategy is the worst, but rather because it’s not as easy as it might seem.

Day trading is almost always based on technical analysis (TA), which for a beginner might be quite difficult. Many people simply believe that drawing a few lines and then trading based on those will make them rich. And yes, while TA might be largely based on drawing lines you still need education to be able to draw and interpret those lines correctly. However, when you do learn the skills you might make a good amount on profits by doing this.

The hypothesis with day trading is that when trading on a shorter time frame you eliminate the risk of any black swans ruining your trade when you’re away from the market. That’s also why you usually invest without actually having that much knowledge of the fundamentals of an asset but rather just by looking at the price chart and analysing that with TA. This is why if you prefer to invest in something that you truly believe in long-term day trading might not be for you.

Scalping

Scalping is a subcategory of day trading and also the extreme of day trading. In scalping, the goal is to make a large number of small trades, and then the small profits will stack up to a large profit. In scalping, you only keep an asset for a few minutes, or even just seconds. The reason people use this is that when only holding for such a short time you eliminate the risk of any black swans, and the price actions are purely technical.

When trying out scalping there are a few things to keep in mind. When you enter a trade keep your stop losses tight and don’t go chasing high profits for one trade. Also, because the profits from one trade are almost always less than 1% you need to have a cheap exchange. Many use Binance. Furthermore, I wouldn’t recommend doing this unless you’re extremely familiar with TA. Without the proper knowledge you’ll only end up gambling and this won’t teach you a thing. Plus it’s almost a certainty you’ll end up destroying your account, even if you’re winning at first.

Breakout Trading

An extremely popular strategy used by many people, both beginners and pros, is to take advantage of breakouts. This strategy is based on the most basic technical analysis and only includes finding support and resistance lines.

When you find the support and resistance lines, where the price tends to reverse, you’ll see a range between them. The price usually tends to trade inside this range before we see a larger price movement either by breaking the support or resistance line. When you’re trading the breakout you’ll look to enter when this happens. If the price breaks above the resistance line you’ll enter a long position and if it dips below the support line you’ll enter short. How you exit your trade is more up to you. The best way to adjust your upside is to look for the next resistance or support level. Try to find a realistic level, since looking for all-time highs after one breakout won’t likely happen.

This same strategy can also be used for not only sideways movements. If you’re familiar with TA you might have heard of wedges. Wedges are basically ranges steadily ascending or descending while the highs and lows are slowly getting closer to each other. The principles in these compared to the previous example are the same and can actually result in even greater price movements when the high and lows get together leading to a breakout in either direction.

One word of warning before you start trading with this is to be careful not to get fooled. This strategy is widely known and used which means that certain bigger players might trade against you. Therefore, look for a strong breakout. Don’t enter too early on a small breakout but rather wait for a strong green candle with a large volume. Yes, you might miss out on some gains if you wait, but I guarantee you that it’s worth it in order to lower the risk, which as mentioned earlier is the key.

Range Trading

After reading through the previous strategy this might be obvious for you. Simply put, instead of waiting for a breakout we’ll take advantage of the existing range and try to buy close to the support and sell near the resistance. Typically ranges are found in sideways movements but can also be found in both ascending and descending prices where the base trendline is drawn from previous lows and the resistance is drawn for the highs. This is often referred to as a channel. The risk with this strategy is that if you happen to enter near the resistance line just before a breakout to the downside you’ll lose money. Luckily there are a few entry strategies to prevent this.

The entry strategy I would recommend is engulfing. The way you use this is by looking at when the price moves close to the support line you want to enter. When the price hits the support line there will be a red candle indicating the dropping price. After that the next candle should be green and considerably larger, if that happens you enter. By using this we have confirmed a reversal in the price and it will be less likely that a breakout to the downside will happen. Engulfing can also be used in different strategies and it works the same for entering a short position, although naturally, the candles will be in the opposite directions.

Swing Trading and Position Trading

Next up we’ve got something for those whose nerves can’t handle the stress of day trading or scalping. Swing trading is based on holding an asset for a few days to even a few weeks, while position trading is holding even longer, from a few weeks to even months. In both of these, it’s possible to combine different forms of analysis like fundamental analysis and technical analysis.

Trend Trading

I won’t get into this too much since you can find a piece on-trend trading on from Coin Bureau. However, I wanted to mention it since it’s a powerful way to trade and it can also be suitable for those who prefer other forms of analysis besides TA. In trend trading, your goal is to jump on an already existing trend and then exit when the trend makes a reversal. This means that you won’t be looking to sell at the top or even close to the top, but rather wait for a clear signal that the trend has reversed. This makes it possible for you to capitalise on both short-term and long-term trends since you won’t have a predetermined exit price, nor time.

Trend trading also offers the opportunity to trade in every different stage of the market cycle since the point is to find when certain categories will boom, not just a single coin. For example, if you see exchange tokens starting to move upwards you might enter a few of them until the interest in exchange tokens changes to perhaps gaming-related tokens. There are so many opportunities here so make sure to read the above-mentioned article on it.

Relative Strength Index (RSI)

This too is based somewhat on jumping on a trend but when using this specific indicator you might find a trend before it even begins. The relative strength index is a momentum indicator that shows you when an asset might be overbought and when it might be oversold.

The RSI gives you a reading of 0 to 100 and when it’s below 30 the asset is usually oversold and when over 70 it’s usually overbought. I won’t get into the technicalities on how it’s counted since the most important part for you is to know how you use it. RSI is usually used on a time frame of 14 days but can be adjusted for different time frames too. Because we’re talking about a few weeks RSI is perfectly suitable for swing trading but can also be used to find longer-term trends and opportunities when you adjust the time frame to say 50 days instead of 14.

Although the basic strategy on how to use the RSI would naturally be to buy near 30 and sell near 70 there are a few other ways to trade with RSI. One would be to wait for a price near or below 30 and instead of buying immediately wait for a reversal. Usually, after a small reversal, the price tends to dip again only to then jump back to near-term highs. The price we’re going to enter in on is when the price has dipped and then broken out from the previous high. If you didn’t catch what I meant you can read more about this strategy and also the RSI itself from Investopedia.

Moving Average Crossovers

Moving averages (MA) are very simple but also very powerful. They can give you a good indication of the overall trend of the markets and also, what makes this good for traders, it can show trend shifts.

To find these trend shifts the best way is to look at MA crossovers. There are two different types commonly used. One is to look at the price chart along with one moving average. Then if the price dips below the moving average it can be a sign of a downturn, and the same goes the other way around. However, the other way to use crossovers tends to work better.

When using these you combine two, or in some cases maybe three, moving averages with different time frames. Then if the shorter time frame MA crosses the longer time frame MA it’s a sign of a trend shift. If this strategy sounds familiar it might be because the terms golden cross and death cross comes from this strategy. A golden cross is a general term for when the shorter-term MA crosses the longer term. Lately, though, it has been widely associated with the 50 and 200-day MAs. Death cross on the other hand signals the same movement but reversed, as you could have guessed from the names. What people don’t often realise is that this strategy can work for any time frame MAs. I’ve seen people day trade by using 3-day and 6-day moving averages. That’s why you should take a look at this strategy since regardless of how you tend to trade it can give you good indications of the market.

Moving Average Convergence Divergence (MACD)

As with the previous indicator, this is also based on MAs and shows the momentum of a market However, there are many differences between this and MA crossovers.

First of all, this isn’t based on normal MAs but instead on exponential moving averages (EMA). Simply put, EMAs differ from normal MAs by placing more weight on the most recent price movements. When you use MACD on a chart you’ll see a line calculated by subtracting the 26-day EMA from the 12-day EMA. Then as a baseline, you’ll see the 9-day EMA. This indicator is also often depicted as a bar chart which can be easier to interpret.

The way you trade using this indicator is to buy when it goes above the baseline and sell when it dips below. However, MACD is known for giving a lot of false signals and is therefore often used with other indicators like the RSI. Since they both signal momentum changes it can be a good idea to combine those two and wait for them both to show the same signal. This should work relatively well since they are both calculated in different ways and it’s less likely that they both give the wrong signal. Also, as with the MA crossovers MACD can be used for all time frames. You can always use different periods than the 26 and 12 which can offer you ways to trade both longer and shorter-term momentum shifts.

Dollar-Cost Average (DCA)

Now, this is something for all those not interested in short-term trading and who would rather be invested in a few things they truly believe in. The time frame here is for life since what’s the point of buying something you don’t believe in or selling something you do believe in.

Dollar-cost averaging is perfect for the crypto market since high price volatility might ruin your investment if you enter at the wrong time. What you do in DCA is that you consistently buy a certain asset. One good idea would be to buy with a certain amount on the first day of each month. This way you’ll be guaranteed to buy more of the asset at low prices and less when price is high. Eventually, you’ll also buy at peaks and quite ridiculous prices but it won’t matter since your average purchase price will be lower.

A great example of how DCA has been proven to be extremely profitable is found in this article by Coindesk. Essentially if you’d have bought $150 worth of Bitcoin at the beginning of every month from Jan 2018 until Mar 2021 you would have spent $23,550. This would have bought you 3.04 Bitcoins compared to the 1.69 Bitcoins you would have, had you bought with the same amount but everything in Jan 2018. For those interested in the dollar amount, at press time it would be $151,000 compared to $84,000. Quite the difference.

Yes, you could make even more by buying everything at the bottom, but that’s highly unlikely to happen. However, there is a way to enhance the effect of DCA. This is by purchasing more when the price seems down while limiting your purchases when the price is too high. This could in practice mean that you use these different indicators talked about in this article to find trends and signals if an asset is potentially undervalued or overvalued. For example, when we had the major bull run where Bitcoin hit $64,000 in the spring of 2021 it would have been smart to gradually decrease your scheduled purchase amount since if you see a surge of that magnitude it’s almost certain that the price will come down eventually. However, don’t overthink. You can try to time your purchases to some extent but if you do it too much you’ll lose the power of DCA. Therefore, only make exceptions to your schedule in extreme cases.

Conclusion

Hopefully, from this article you found something intriguing and useful. Maybe you didn’t find the most specific strategy on how to trade but the important thing is to first know which of these different trading ways you’ll start using. If it’s day trading you prefer then you’ll find tons of content on the internet, but beware scams. Especially in day trading, many so-called pros are trying to sell you expensive courses which won’t help you at all. Funnily enough, most pros know to stick to simple and proven methods. Therefore, I suggest you stick to the free content and also try to absorb knowledge from many different sources while doing your own research on the methods you get introduced to. For those looking for longer time horizon trades, I suggest you do the same. Even for this, there’s a lot of content, although not as much as for day trading.

And lastly, before getting started make sure to have a specific strategy ready. Use what you’ve learned to draft a potentially profitable trading strategy and start executing that. Remember to track your process so you know if it works. If it doesn’t then change it and try again. You’ll possibly have to try many different approaches in order to find a working one. That’s why you’ll need to have the right risk/reward ratio with minimal losses. Good Luck!

The post Crypto Trading Strategies Used by The Pros appeared first on Coin Bureau.

Indeed, this is the skill that traders seek to refine and ultimately master on a regular basis, and it’s what they primarily use to determine the strength of a current trend during key market movements and to assess opportunities for potential entries and exits. In essence, charting enables traders to somewhat determine which direction price is likely to go in the short, medium and long-term outlook.

Furthermore, using advanced trading terminals, traders can distinguish between what is real and what is fake when a break occurs in the market structure of a specific asset pair. Thus, selecting a robust, sophisticated terminal to trade on constitutes one of the most vital elements in the toolkit of any successful trader.

Selecting The Most Efficient Trading Terminal Is Of Vital Importance To The Success Of Any Trader.

This is because today, in an age where trading and investment technologies are evolving at such a rapid pace, outdated systems can actually put traders at risk of competitive disadvantage, which means missed trading opportunities and security threats.

A well-designed trading terminal should ideally offer users non-latency in trade execution, efficient technical and fundamental analysis tools, risk management tools, multi-exchange operability, depth of market and, potentially, even some strategy back-testers.

Currently, there are many different crypto trading terminals in existence, with each platform boasting its own functionalities, applications and respective infrastructures. Shrimpy, Coinigy and Caspian are perhaps the most widely-recognised, universally adopted terminals for beginner, intermediate and advanced traders alike. However, in tandem with them, there are quite a few platforms out there offering similar tools and trading systems.

One of these terminals is, of course, Cryptowatch.

About Cryptowatch

Cryptowatch is a real-time crypto markets platform founded in 2014 by Artur Sapek. In March 2017, trusted global digital asset exchange Kraken announced its decision to acquire the already popular trading terminal Cryptowatch and on-board its founder in order to continue developing the platform as well as Kraken’s interface.

A simple and intuitive platform. Image via Cryptowat.ch

Cryptowatch is a browser-based crypto charting platform and multi-exchange trading terminal, providing traders with charts, order books, market data, and the possibility to trade on several digital asset exchanges. The platform provides cryptocurrency market data and charts for over 25 digital asset exchanges, with data being provided in real-time directly from the exchanges through their APIs, covering over 4,000 different markets.

Cryptowatch employs a rather simple, minimalist design and it aspires to deliver all the necessary tools for traders to gain in-depth insights on market movements, different crypto asset pairs and on-chain trading volumes.

Minimalist Design, Top-Notch Functionalities. Image via Cryptowat.ch

Being powered by the well-established Kraken, Cryptowatch is able to gain access to a wide array of functionalities and different networks. In fact, the trading terminal specifically tracks the markets on 28 exchanges, including:

Visual Of All The Different Exchanges Tracked On Cryptowatch. Image via Cryptowat.ch

Furthermore, Cryptowatch provides the most up-to-date price feeds and on-chain trading volumes for all the exchanges listed above. The terminal also gives traders the latest price updates for both the most popular as well as the less frequently used cryptocurrencies, including BTC, ETH, LTC, DOGE, PPC, DASH, ZEC, and a dozen other crypto assets.

Before progressing onto Cryptowatch’s diverse set of applications and discussing how to use the platform, a brief introduction to trading terminals is indeed required.

About Trading Terminals

Until about the 1990s, trading the Stock Market used to be a physical activity. Traders used to go to the Stock Broker’s office or the Stock Exchange, check the day’s value of each stock, figure out which stock they would want to invest in and then place the order with the Broker to buy or sell the shares they wanted.

Old School Trading Used To Happen On Chaotic Trading Floors. Nowadays, It’s Way Simpler!

However, with time and especially with crypto, things have changed drastically since then. Nowadays, in fact, traders are no longer required to place their trades in person at a Stock Broker’s office nor must they hop on a quick call to place a trade with a broker, as they can simply carry out their investments with a few clicks of a button on Centralised Exchanges (CEXes) and Decentralised Exchanges (DEXes), for crypto related trades, or through trading terminals.

Now, in 2021, trading terminals are used by crypto traders to connect to exchanges through APIs. In fact, with third party trading terminals, traders have access to additional features that are usually not available on individual exchanges.

By plugging into multiple exchanges at once, trading terminals can essentially act as a central hub connecting a user’s portfolio across a complex of different exchanges. Furthermore, via trading terminals, investors can place orders to buy and sell digital assets, automate order execution, and implement strategies that wouldn’t be possible without a terminal, such as making trades for multiple assets at the same time and from one platform.

Some of the most common functions offered by trading terminals include:

• Connecting to exchanges to collect account information.
• Placing and cancelling orders.
• Displaying market data in the form of graphs and charts.
• Executing advanced order types like smart orders.
• Calculating and displaying various technical indicators.

Cryptowatch Features And Benefits

The terminal offers two separate account types, Basic and Upgraded. Basic accounts are free to use and provide users with market charts customised in accordance with their personal preferences. Upgraded accounts, instead, give users access to integrated trading platforms and also allow them to receive volume updates as well as price alerts on a daily basis.

As of 2021, Cryptowatch has replaced its SaaS-style price tiers with a new, more flexible à la carte pricing model called Credits. As opposed to employing a monthly fee mechanism, in the new Credits system, each account has a running balance of ‘credits’ which are spent in a ‘pay as you go’ manner on any combination of Cryptowatch services.

Users Can Purchase Credits To Gain Access To The Services They Most Require. Image via Cryptowat.ch

Until late 2020, users looking to leverage the functionalities of Upgraded accounts on Cryptowatch had to pay a $15 monthly fee, whereas now users can simply purchase Credits to gain access to the services they are most in need of, which has actually proven to be a rather beneficial system thus far.

The platform’s Core Services, which include Portfolio, Trading, Charting and Chat, will remain free, and instead of having to choose a predetermined monthly pricing tier with a fixed set of features, clients will be able to use whichever services they’re interested in and pay only for those.

Image via Cryptowatch.ch

Cryptowatch is designed in such a way that users are by no means forced into one of several progressively more expensive pricing tiers, a model that has historically been established by single-purpose SaaS products, allowing for a more flexible, dynamic user experience.

Some of the additional free benefits that come with using Cryptowatch include:

• Free trading on multiple exchanges from one terminal, even on mobile.
• Viewing trade history, orders, and positions on the Portfolio page.

Image via docs.cryptowat.ch

• Chatting with other traders in Cryptowatch’s TrollBox.

Image via docs.cryptowat.ch

• Visualising price movements and analysing market trends through the terminal’s advanced charting interface.

Image via Cryptowat.ch

• Analysing charts with popular technical indicators, such as Moving Averages (MAs), MACD, RSI and Bollinger Bands, among others.
  

  Image via docs.cryptowat.ch

• Viewing balances across multiple exchanges in real-time on the Portfolio page.
• Setting price, volume and technical analysis alerts.
• Creating and saving custom themes.

With regards to the Upgraded, Premium features offered by Cryptowatch, these include:

• Receiving price, volume, technical analysis and order-fill alerts as text messages or email on a 24/7 basis.
• Streaming prices and order books with the terminal’s Market Data Websocket API. This API offers trades, candlesticks and order books across 26 different exchanges, and users can easily access it via their public key.
• Pulling market data into Google Sheets through the Cryptofinance.ai add-on.
• Automating orders and alerts using triggers and actions with the Zapier integration.

Zapier is an online automation tool that interfaces and connects with more than a thousand different Apps, including Gmail, MailChimp and Slack. The Cryptowatch-Zapier integration also allows traders to use any of Zapier’s trigger actions to send a trade order to any trading-supported exchange on Cryptowatch.

Some of the functionalities of the integration include recurring buys, reminder emails to purchase specific assets and even entering buy/sell orders when top influencers on Crypto Twitter tweet about their upcoming moves, for example.

Cryptofinance Google Sheets

By using Cryptofinance.ai Sheets, Cryptowatch enables traders to pull market data from exchanges, historical trades and order book information and compartmentalise it in Google Sheets for reference.

With Cryptofinance, Cryptowatch Users Can Order All Their Desired Information In Google Sheets. Image via Cryptofinance.ai

Technically speaking, Cryptofinance is a Google Sheet add-on that lets users create their own customisable crypto trading tools, such as balance tracking, data visualisation or asset management features, for instance. Google Sheets, on the other hand, is a web-based spreadsheet application that is rather similar in functionality to Microsoft Excel and it allows anyone to create templates, perform advanced calculations and organise data.

Image via docs.cryptowat.ch

All fundamental and ratings data is free to use, and participants can start a 14 Day free trial in order to become accustomed with how Cryptofinance works and see for themselves if it proves to be beneficial for their trading or not.

Image via Cryptowat.ch

If a user has sufficient Credits in their Cryptowatch wallet, their trial will be automatically converted to a paid subscription at the end of the 14 Day trial period.

Cryptowatch’s Credit System

On Cryptowatch, users can purchase specific platform tokens, known as Credits, to access services such as Alerts and APIs. Users can spend their Credits on any combination of services, however, it is important to note that Credits are not interchangeable with other crypto assets and they are only liquid on the Cryptowatch terminal. Credits can be purchased via credit or debit card, and also with Bitcoin.

Currently, $1 Equates To 100 Credits. Image via Cryptowat.ch

To refill an account’s balance using a debit/credit card, users should:

• Navigate to Cryptowatch’s Sign Up Portal.
• Add their preferred debit or credit card to their account.
• Purchase the desired amount of Credits proportional to the cost of the services on the terminal, bearing in mind that $1 equals 100 Credits.

Image via docs.cryptowat.ch

• Credits can also be purchased using Bitcoin payments through BTCPay, a self-hosted, open-source cryptocurrency payment processor.

On Cryptowatch, Credits can be used to purchase two different types of services, with these being Subscription and Pay As You Go Services. If users find themselves being quite content with utilising the terminal’s extensive set of Free Services, which include Charts, Trading, Portfolio, Chat and Custom Theming, then there will of course be no need to purchase any Credits whatsoever.

Quite frankly, the Free Services mentioned above are usually the only tools required for beginner traders to get started. Thus, purchasing Credits to gain access to Pay As You Go or Subscription services might be something traders could potentially consider further down the line in their trading careers.

Primarily, Subscription services can be activated at any time and will renew on the first day of each month, at 00:00 UTC. Most Subscription services on Cryptowatch revolve around the various applications integrated with Cryptofinance, and they can be purchased with the Credits available in a user’s account. Subscription services may be deactivated at any point, though all paid services will remain active until the end of the month.

Image via Cryptowat.ch

With regards to Pay As You Go Services on Cryptowatch, these services are billed by usage and include:

• Email/SMS Alerts, costing 1 Credit per triggered alert.
• APIs providing real-time data for exchanges, costing 2-15 Credits per 1,000 requests.
• WebSocket API for streaming trades, order books and candlesticks across 26 exchanges, costing 120 Credits.
• Zapier for cross-App automation features, costing 15 Credits per execution.

How To Use Cryptowatch

Cryptowatch acts as an all-in-one control centre for crypto trading and allows users to connect their exchange accounts, track their portfolios, and even research digital assets.

Opening an account on Cryptowatch is a rather straightforward process and, in order to do so, users will need to:

• Head to Cryptowat.ch and Create a New Account.

Image via Cryptowat.ch

• Once the account has been activated, participants will be able to access the terminal and make use of all its functionalities.
• Users can interface their preferred exchanges with Cryptowatch and begin tracking their portfolio performance and actually start trading directly from the terminal.

Image via Cryptowat.ch

• Go to the chart for a market they want to trade, like BTC-USD on Kraken for instance.
• Connecting accounts with Cryptowatch allows users to view the performance of their assets in the ‘Portfolio’ section of the terminal.
• The method for connecting each exchange with Cryptowatch is slightly different, but each one uses the API Keys standard. In fact, exchanges such as FTX, Binance, Huobi and Kraken will generate a set of keys through which users can connect their accounts with the terminal. All existing holdings in the connected account will appear on the platform, as displayed in the image below.
• To protect funds and data, users should Set Up Their Multi-Factor Authorisation (MFA) for good measure. To do this, users should Click on ‘Set Up MFA’. This is actually a required step before accessing API Keys.

Image via Cryptowat.ch

• Users can then browse through all the exchanges available for terminal interfacing and generate API Keys for their preferred ones.

Image via Cryptowat.ch

Let us now discuss how to execute trades on Cryptowatch and make use of its functionalities.

How To Trade On Cryptowatch

A major benefit to trading on the Cryptowatch platform as opposed to the interface of an exchange’s site is the ability to submit trades and do technical analysis at the same time.

Image via docs.cryptowat.ch

To place an order on Cryptowatch, users will need to:

• Expand the trading panel located on the far right side of the window.
• Enter the details of their order into the form and Click ‘Review & Buy/Sell’.

Image via docs.cryptowat.ch

As displayed in the image above, users can:

• Select their preferred ‘Action’, either ‘Buy’ or ‘Sell’.
• Select their order ‘Type’. This can vary from exchange to exchange.
• Utilise ‘Leverage’, if they’d like to do so. On this note, it is important to point out that not all exchanges support leverage on Cryptowatch.
• Select the amount of ‘Funds’ they want to invest in the trade.
• Select their desired ‘Quantity’, which determines the volume of the asset being traded.
• Select ‘Price’, which determines the specific price for the order. With certain order types, such as limit, stop loss and take profit, users are able to input a specific price in this input field.
• Review ‘Total’. This is a calculation of the Total order, with Quantity x Price giving the Total value of the order.

In This Image, The Quantity Is Being Calculated From The Price And Total Fields. Image via docs.cryptowat.ch

• Execute ‘Conditional Close’, which creates an opposing order for closing a position at the same time that the order for opening the position is created. The conditional close order’s direction is always opposite the primary order.
• Select ‘Fee Currency’. This is available on Kraken markets. The fee currency selector lets users choose which currency they prefer to pay exchange’s fees with. Options are limited to the base and quote currency of the current market.
• Click Reset, if they wish to clear fields in the trading form.
• Review & Buy/Sell to execute order.

In addition, users can submit orders quickly by clicking on any price level in the depth chart and order book, as shown in the image below.

Clicking Anywhere On The Depth Chart Will Auto-Fill The Price Of The Order. Image via docs.cryptowat.ch

Users can also click on other orders in the order book to create an order at that specific price.

Image via docs.cryptowat.ch

Moreover, traders can change the price of an open order by clicking its dot on the price chart’s y-axis and dragging up or down.

Image via docs.cryptowat.ch

To do this, traders should:

• Find the open order on the chart’s y-axis.
• Click and Drag the order up or down the axis. This will update Price in the trading form.
• Click ‘Replace Buy/Sell’. Cryptowatch will cancel the previous order and replace it with the revised version.

Tracking Market Prices And Applying TA Tools

Meaningful moves can originate on a number of top exchanges and, on Cryptowatch’s ‘Markets’ Tab, traders can access real-time viewings of market movements across many different exchanges.

By Clicking On ‘Markets’, Users Can View Real-Time Movements Across Many Exchanges. Image via Cryptowat.ch

Users can also filter the list by exchanges, assets, and quotes as well as sort on any of the columns, as shown below.

Users Can Filter Markets By Exchange, Asset And Quote Currencies. Image via docs.cryptowat.ch

Cryptowatch offers a variety of popular technical overlays and indicators, and each can be enabled or disabled on any price chart via the Analysis menu.

Image via docs.cryptowat.ch

Traders can add an analysis tool to their chart by clicking on it in the analysis tool list. When they do so, the selected tool is added to the left-hand side of the menu under the ‘Selected’ section. Users can add multiple indicators, such as RSI, MACD or Volume indicators, to their charts simply by clicking on the ‘+’ Sign next to the indicator in the Analysis menu.

Each individual analysis tool is labelled by type and categorised. To filter the overlays and indicators, users should click the filter icon found in the top left corner of the panel. Technical Analysis tools can also be sorted further by relevance or alphabetically, A-Z and Z-A, for simplicity.

Pasting Tweets On Charts

Cryptowatch allows users to take their favourite Tweets and paste them directly on their charts for reference. To paste Tweets on Cryptowatch charts, users should:

• Copy the URL of the individual Tweet they want to paste.

Image via docs.cryptowat.ch

• Go to their Cryptowatch charts.
• Use paste hotkeys, CTRL + V on Windows and Command + V on Mac, to paste the Tweet.

Image via docs.cryptowat.ch

• The Tweet will then automatically paste to the correct time on the Chart’s x-axis.

Conclusion

Cryptowatch is a Kraken-powered, browser-based crypto charting platform and multi-exchange trading terminal, providing traders with charts, order books, market data, and the possibility to trade on several digital asset exchanges.

The terminal offers two separate account types, Basic and Upgraded. Basic accounts are free to use and provide users with market charts customised in accordance with their personal preferences. Upgraded accounts, instead, give users access to integrated trading platforms and also allow them to receive volume updates as well as price alerts on a 24/7 basis.

Ultimately, Cryptowatch acts as an all-in-one control centre for crypto trading and allows users to connect their exchange accounts, track their portfolios, and even research digital assets. Users can do both technical and fundamental analysis on the Cryptowatch terminal, they can easily execute trade orders, monitor their assets and even paste their favourite Tweets on their charts for further reference.

While there are many other crypto trading terminals out there, Cryptowatch possesses the toolset required to carry on developing its use cases and potentially even become the go-to solution for charting, cross-exchange trading and asset management in the vibrant world of blockchain investing.

The post Cryptowatch: Cross-Exchange Trading Terminal appeared first on Coin Bureau.

This second investor needs some kind of tool to do analysis, and as made clear in the headline we’re going to use TradingView. TradingView is a platform with price charts for just about anything. The prices are updated in real-time by the second, which gives you the most accurate information out there. TradingView is also equipped with a ton of different tools to do the most thorough technical analysis. Therefore, I suggest you now open up any chart from TradingView and try the different features introduced to you in this article.

How to set up TradingView

To get started you need to create an account. When you create an account, TradingView will automatically save your default chart template, which is very helpful. TradingView also offers paid plans but we will dive deeper into those later.

After creating an account, and opening up the price chart of an asset you watch the most, you can then start customizing the settings. First I suggest you choose how you would like the price to be shown, candles, bars, line, or something else. You can do this from the top left corner next to the time frame, and also while you’re there you can adjust the default time frame you’d like to use. The times range from as short as 1 second to as long as 1 month. After that, you can start to further customize how you’d like your chart to look.

Find out what everything does by playing around. Image via TradingView.

To access the basic layout settings you can either right-click the screen to access them, or you can directly access them by clicking the settings icon (looks like a gear) from the top right corner. Here you can find loads of stuff, some of which are purely aesthetic, while others can be truly useful in performing analysis.

Because there are a ton of different options available, and you might not know what they all do, I suggest you start playing around. Press whatever you like and see which lines and colors pop up from each option, try to find a good look and set-up for you. And if you don’t like a change going back is as easy as clicking the Undo button at the top of the chart.

Keep in mind though that some options won’t do anything for crypto charts, for example, the adjustment for dividends won’t be relevant for cryptos since they don’t issue any dividends. After you’re done playing around we’ll move on to the different tools and features you can use for analysing a crypto.

Different Tools for Analysing

Now that you’ve set up your different colored candles with a contrasting background (I like pink and blue candles on a yellow background) we can finally move on. As already mentioned, TradingView is highly useful for those who want to do technical analysis. When using TradingView there are essentially two ways of doing TA. You can either draw your own lines and indicators, or you can use the pre-built tools like Bollinger Bands and moving averages and form your TA analysis based on them. Now in this section will go through what you can find from the left side of your screen.

Here you can find everything from a simple line all the way to something called a polyline. From the second icon from the top, which is a line, you’ll find all the basic drawing functions you’ll need. This is also what you’ll most likely use the most since in every level of TA it’s common to draw trend lines for both highs and lows. By drawing these you can also find bigger patterns which you then can analyse more thoroughly with other tools.

These tools will be the ones you use the most, so make sure to know how to use them. Image via TradingView.

Ffrom the next icon, below the line, things will get more complicated. If you’re new to TA you won’t understand a thing and these tools will be completely useless to you. Therefore for everyone starting out with TA, I suggest you head over to Coin Bureau’s Youtube channel where our lovely Guy has spoiled us by making a three-part introduction to technical analysis.

Essentially though, these are all indicators you can use to discover patterns from various price points. Again I suggest, even for those who know TA, that you play around with these and see what they do. Some might even be familiar and you just didn’t know the name of it. And to those who still don’t have a clue what any of them do, no worries. You don’t have to know how to use every single thing on TradingView to conduct valuable TA. Sometimes the most basic analysis works the best.

It’s just trading, not rocket science, although we do want to find those coins that’ll go to the moon.

Below the many confusing patterns, you’ll find additional symbols for even more confusing patterns but also for simple drawing tools. One thing from here worth mentioning is the risk/reward tool. You can find this from the smiley face symbol. You can look at the risk-reward for both long positions and short positions. Just position the middle of the tool on the price you’re about to enter and then adjust the top and bottom to match where you’re going to place your stop loss and take profit levels. This gives you a good overview of the trade you’re about to execute and whether your entry price needs adjustment for the risk/reward to be justifiable. Under these two tools you’ll also find other useful things, so play around. Next up we’ll talk about the indicators you can automatically set up on your chart.

Indicators

If you look at the top of your screen you’ll see the text “indicators” with a symbol next to it. This is where you’ll find every indicator you could ever imagine. There are both indicators built-in by TradingView along with a public library. The public library is excellent for those who follow someone via youtube or other places , who likes to make their own indicators.

Again, as with anything in TradingView, there are a lot of options to choose from. Their own built-in ones are the most commonly used and you will find some familiar and useful ones there. The public library on the other hand is endless. As you can see there are the number of likes next to the name of each indicator which gives you a good overview of whether it’s something useful or not. You can also search for a certain one if you know what you’re looking for.

Learn how to use these, they are powerful tools. Image via TradingView.

The last you can do here is to create your own custom indicators. This will need some coding skills and can be quite hard to do if you’re not experienced. However, those who do trading seriously might find some indicators which can be modified to work even better, and therefore you might be interested in the opportunity to use this feature.

Other Features

As already mentioned, TradingView is so much more than just a price chart platform. From the right side of your screen, you’ll find all the features that aren’t related to the charts. This offers the opportunity to conduct a much more thorough analysis.

Watchlist and Alerts

First, from the top you can find your watchlist. There’s not much to say about this. Simply pick the cryptos you like and add them to the watchlist. One thing which is good to remember is that when you type in Bitcoin, for example, it offers numerous trading pairs for it, therefore make sure to pick the one you want to use, and also the right exchange. If you pick the wrong trading pair or the wrong exchange, it can vastly impact your analysis and trades.

You don’t have to look at the chart all day, simply set up an alert and grab a coffee. Image via TradingView.

The second symbol from the top shows your alerts. These alerts are price alerts that you can put for certain price levels. For example, you might have noticed that Bitcoin faces resistance at $50,000 and you might be interested in entering a long trade if Bitcoin breaks above that level. There are a few ways to set up these price alerts. First, you can either use the button on the right or there’s also one at the top of your screen. These will open up a menu where you can set up which price you want to be notified about and how you want to be notified.

The other way is to use your pre-drawn lines. For example, if you’ve drawn an upwards moving trend line from previous lows you might be interested in entering when the price again hits that line. To do this you can right-click on that line and choose “add alert on trendline”. This is extremely useful for both doing trading and for beginners to test their hypothesis.

News and Calendar

Next up on the list, we have an icon that looks like a newspaper, and that’s exactly what it is. Here you can find news about the asset you’re analysing. This is particularly useful for those who like to do more than just TA before entering a position. For trend traders, it opens up the opportunity to see whether the sentiment in the most recent news is in line with the price action. However, keep in mind that this works best for larger cryptos and the news coverage for smaller coins and tokens might not be up to date. Thus, what you see in the section might be news on the crypto market in general rather than the specific crypto you’re analysing.

TradingView offers news from various sources. Image via TradingView.

The next two things do not offer much for crypto traders since the first one is just a data window with a few simple things like highs, lows, and volume. Yes, these are important numbers but they can also be found from the chart. The thing below that is the hotlist. This would be useful if it were to feature cryptocurrencies. Currently, you can only choose different countries’ stock exchanges. However, for those who like to trade crypto-related equities, this is something you can look at to see if the company you’re researching is there.

Below the hotlist, you can find a calendar. This gives you excellent information about both macroeconomic indicators that are being published along with certain statistical data about the asset you’re researching. You can filter from the top so that it only shows the most important events. These are usually the big macroeconomic indicators and they are good to keep an eye on since they give useful indications on how theworld’s economies are doing and where the broader financial markets might be heading.

Public Interactions

From the lightbulb symbol down to the two arrows, you’ll find different social tools. Here you can enter public chat groups and search for ideas from others and also share your own ideas. Just remember not to listen to all the expert traders that are trying to convince you to pump a certain coin. Do your own research and invest according to that. Additionally to the public chats, you can also create private chats if you have a friend who is also interested in analysing and trading cryptocurrency.

Be aware of scammers that are trying to rip you off.

Another fun tool is the streaming tool, which is still in its BETA mode. Here you can watch other people do trades and analyse certain assets. This might be something you can use to find those next tradable assets, but as with chats, be aware of scammers. The more someone is talking about something pumping the less you should listen to them. If someone on the other hand provides you good analysis by drawing the patterns and explaining how they work then there’s no harm in listening to that.

Crypto Screener

Before you get to analysing a cryptocurrency you need to know which one to pick. For this, TradingView offers the perfect opportunity. From the bottom left of your screen, you’ll find a button that says “Stock Screener”. You can change that to a crypto screener which then gives you all the cryptocurrencies TradingView offers. With this tool, you can then filter all the options with numerous different metrics.

From the crypto screener, you’ll find a useful metric to watch, which is the TradingView rating. This consists of several indicators that show whether an asset has strong momentum or not. This could prove to be particularly useful for trend traders, so be sure to have a look at it. Then when you find a few cryptocurrencies which you like you can start analysing them by comparing their charts. Another useful comparison could be with Bitcoin to see in which phases of the Bitcoin cyclethat particular crypto tends to soar. This feature can be found in the top left of your screen.

This too is a powerful tool to find those big money trades. Image via TradingView.

To test whether the TradingView rating or your analysis is any good you can use TradingView paper trading. This means that you trade with fake money but with real prices. This is perfect for those who want to practice and maybe try some new TA.

In comparison to many other paper trading tools, TradingView offers the most up to date prices and it also offers the opportunity to, for example, use stop losses. It’s also handy to practice on the same platform where you’re doing the TA. Then when you’re done playing around with fake money you can just connect your broker to TradingView and trade directly from there. TradingView supports brokers like Gemini. 

Paid Plans

As mentioned earlier in this article, TradingView offers paid plans. They offer three different ones with the cheapest being $14.95 per month. For beginners, I would suggest you start with the free plan. The benefits you get from paying are simply that you have more storage and a few additional tools.

The paid plans allow you to view more charts at the same time, save more templates, and use more indicators at the same time. Therefore when you’re just starting you want to keep things simple and might not need 25 indicators displayed on your screen at the same time.

See which one suites you the best. Image via TradingView.

Then naturally when you move on to more advanced TA and maybe need some of the paid custom tools along with more storage to save all your TA’s for different charts, you might want to upgrade your plan. However, before paying anything they now offer a 30-days free trial, so make sure to use that if you’re considering an upgrade.

Conclusion

Hopefully, you now have a better understanding of how TradingView works and how you can use it to potentially find the next big trade. Just remember that the platform itself does not make you a pro-trader, but rather your knowledge does. To even dream about using all the fancy features TradingView has to offer you need to be very familiar with TA. TradingView won’t give you any 100x gains if you don’t know how to do research, not even if you were to pay for the most expensive plan. Therefore make sure to educate yourself on TA and with that, you will learn how to use the platform and get the most benefit out of it.

Furthermore, although we covered a very broad set of different features there’s still so much more left to discover in TradingView. Therefore I suggest you head on to Youtube where there are videos about small tips and tricks along with videos that show you how to use different features and indicators. And also, as multiple times encouraged, play around. The best way for you to truly see what something does is to just try it. You can always go back to the way it was with command+z. Have fun!

The post How to Use TradingView to Analyze Cryptocurrencies appeared first on Coin Bureau.

Diversification is tough since trading fees can eat most of your capital, and the amount you put in one asset seems close to nothing. On the other hand, you can’t buy only one company either since you don’t know which one to pick.

This problem still exists for many. Especially in crypto markets, buying a real cryptocurrency might feel hard and intimidating, not to mention that many people don’t even know what a cryptocurrency is. Luckily for us, however, we now have tools to solve these problems.

Exchange Traded Funds (ETFs) and other fund types open the opportunity for us to put a small amount of money into a bigger pool of money. This pool of money can, in turn, be diversified into a large number of assets according to the fund description. This type of investing is considered lower risk since we rely on professionals to know where to invest our money. Both ETFs and funds are thought of as investments which you buy and hold, not as speculative assets for traders.

ETFs and Funds for Cryptocurrencies

Many of you have likely laid eyes on at least a few news articles about discussions and filings for US-based crypto ETFs. The demand for crypto ETFs has surged because institutions want exposure to the crypto market without directly buying cryptocurrencies.

This has caused numerous companies to file for permission from the SEC to issue crypto ETFs. However, the SEC has not yet granted any permissions for ETFs, which has caused many people to get frustrated since there are already other countries offering these, for example, the US neighbour Canada.

There’s lots of money waiting for an ETF approval from the SEC.

Funds are starting to pop up here and there, the most well-known one being the Grayscale Bitcoin Trust (GBTC). Another well-known and high-profile one is the Bitcoin Fund issued by New York Digital Investment Group (NYDIG). In addition to the demand for an ETF, the demand for other crypto funds has been exploding. One reason for this is that there aren’t any crypto ETFs in the US.

One significant piece of news recently for the whole crypto market was JP Morgan announcing they would make six different crypto funds available for their internal clients. This is extremely good news when even banks that could potentially take a massive blow from cryptos have to accept that their clients want to invest in cryptocurrencies, or otherwise they will leave.

Excellent example of the increasing demand for crypto exposure. Image via CoinTelegraph.

On top of crypto ETFs and other funds, there is still one similar investment, blockchain ETFs. Blockchain ETFs invest in companies that are active in both cryptocurrencies and blockchain. These include the likes of Riot Blockchain, Square, and Coinbase.

The problem with these is that you have to be quite careful choosing what you buy. Many of these ETFs have been criticized for not really relating to the topic they advertise. Goldman Sachs, for example, has plans to issue a DeFi ETF, which will hold companies including Nokia, Alphabet, and Sony, maybe not the companies you immediately think of when talking about DeFi unless the PS5 is something other than a gaming console.

Why do we need crypto ETFs and Funds?

As pointed out in the introduction, many don’t know where to put their investment capital. Because they don’t know how to build a portfolio they tend to either copy what someone else does or let them do it for them, either in the form of ETFs or some other kinds of funds. All this applies to cryptocurrencies as well.

Since we are still extremely early in their development, there is much less knowledge about investing in cryptos versus stocks. Cryptocurrencies are also vastly different kinds of assets than stocks, and the whole process of buying some and storing them in a wallet of some sort can be intimidating.

There are also over 11,000 different coins and tokens listed on CoinMarketCap, which is a lot considering that most newbies usually know about Bitcoin, Ethereum, and Dogecoin. Therefore if you are someone who has been an investor in cryptocurrencies for a longer time, then you might not feel the need to invest in a crypto ETF, but for people entering the crypto markets for the first time, it might feel a lot safer to start it off with buying an ETF.

The same also applies to institutions and wealthier people. When we’re talking about people who manage or have at least 100 million, they might not want to go through the trouble of researching something they don’t truly understand. Still, they might be very tempted to allocate 1-5% of their portfolio to something that can go up hundreds of per cent in a year.

Wealthy people can easily allocate 1-5% of their portfolio for a potential 5-10x return.

Furthermore, it’s much easier to report taxes on ETFs versus cryptos. ETFs are treated like stocks, which makes taxation simple. In cryptos, depending on where you live and which exchanges you use, it might be quite a lot of effort to report taxation on cryptocurrencies.

Many countries have not yet had the time to investigate cryptos fully, and the regulations might be a bit confusing. Therefore, for institutions to avoid the risk of using a scammy exchange or storing their cryptos without reporting it the correct way, might feel like too big of a risk.

Digital Assets Managers

Now for most people, these digital assets managers are completely useless since they do not accept small amounts of money, and many retail investors (like our readers) probably invest in cryptocurrencies directly.

Still, even though you’re not using these companies yourself, it’s good to know what companies the news refers to and understand how big of an impact these asset managers can have since they manage huge sums of money. Furthermore, although you won’t use the company, you might still buy their products from the secondary markets.

Grayscale

Grayscale is a large asset manager with over $40 billion under management. They promote themselves as leaders in digital currency investing. At the moment, they offer both trusts that are tied to one currency alone, along with two larger funds. If you want to become their private client, you need to have an annual income of at least $200,000 and a net worth of $1 million. Keep in mind, however, these figures do include both you and your spouse’s income and net worth.

For most of us, that is quite the barrier to entry, but no worries. Many Grayscale products are offered over the counter on stock exchanges, which means you can trade them as you do with any stocks. Most of you who are reading this article probably already own cryptos. Therefore investing in a stock that acts just as crypto might not be that tempting or necessary. However, Grayscale offers a few products that might be interesting for you too; their diversified funds.

This is DeFi, take notes Goldman Sachs. Image via Grayscale.

Both of these funds have a minimum investment of $50,000 and an annual fee of 2.5%. However, those who purchase the fund have a one-year holding period before they can trade their holdings on the secondary markets. Sadly for most of us, only one of these funds is available since their DeFi fund was launched in July 2021.

This means we need to wait for one year until the first shares hit the market. The fund we can invest in now is their large-cap fund which has major positions in both Bitcoin and Ethereum, along with smaller positions in Cardano, Chainlink, Bitcoin Cash, and Litecoin.

CoinShares

CoinShares is the equivalent to Grayscale; the difference is that CoinShares operates in Europe, and the amount they manage is substantially less than what Grayscale manages. CoinShares offers various services and products for their clients, from their physically-backed ETPs (Exchange-traded products) to simple investment advisory.

CoinShares is a leading pioneer in digital assets investing, this is what they have to offer for their clients. Image via CoinShares.

The two interesting things CoinShares offer are their ETPs and their crypto indexing products. Their ETPs work exactly like the one’s offered by Grayscale. In other words, the ETPs track the price of one particular crypto. Their index futures, on the other hand, track a broader set of things. Currently, they offer three different indexing strategies.

The first is the Elwood blockchain Global equity index which tracks the cryptocurrency and blockchain-related equities. The second is another one mirroring Bitcoins price through updates every hour. The third one is more interesting since it’s a mix of the three biggest cryptocurrencies by market cap plus gold. The hypothesis is that it works as a great hedge for inflation while offering lower risk than just holding Bitcoin since it also includes gold.

3iQ

Next up is Canada. Yes, 3iQ is the Canadian equivalent of the previous two, although it’s again a bit smaller. They offer their own Bitcoin and Ethereum funds along with two others issued by CoinShares. Additionally, they offer another one  with a mix of Ethereum, Bitcoin, and Litecoin. All in all, nothing special here; it’s just good to be familiar with the name, especially if you’re Canadian.

Blockchain ETFs

As previously mentioned in this article, Blockchain ETFs can be an excellent alternative to cryptocurrency ETFs and other funds. If you find a good ETF with a great mix of companies that are highly active in the crypto space, along with quality companies that have good potential, you can decrease your portfolio’s overall risk while improving your return. If you want to learn more about which companies could be well-positioned and make significant moves in the crypto space, then have a look at this Coin Bureau article about crypto-related equities.

High Crypto Exposure

Amplify Transformational Data Sharing ETF (BLOK). This ETF is great for all who want exposure to the crypto markets. It features all the major crypto-related companies; just have a look at the picture down below. It also has a good selection of blockchain industries. Its largest component is for transactions that consist of mostly Paypal and Square.

The year-to-date return from this ETF is almost 30%. It might not be as much as Bitcoin itself (almost 60%) but keep in mind that when Bitcoin tumbled 50% from $60,000 to $30,000, BLOK only lost under 30% of its value. This shows that this is a great investment for those who can’t handle, or aren’t looking for, the heavy volatility of cryptocurrencies but still want exposure to one of the most promising new technologies.

BLOK offers a great mix of companies along with good diversification. Images via Amplifyetfs.

Other similar ETFs would be the Siren NextGen Economy and VanEck Digital Assets ETF. They hold mostly the same companies but with slightly different allocations. It’s hard to say which one is the best in the long term, so make sure to do your own research before buying. The fees can also vary, so keep that in mind.

Quite similar to these two would be the Bitwise Crypto Industry Innovators ETF. This I would still consider a higher risk ETF and suitable for those more hardcore crypto lovers. This ETF holds only true cryptocurrency companies, with the biggest allocation being MicroStrategy (13%). This gives the ETF a large exposure to Bitcoin, which means it’ll move somewhat together with Bitcoin.

Low Crypto Exposure

I’m only going to briefly mention these since I couldn’t find many that make much sense to invest in if you’re looking for exposure to the crypto markets. Many I found were on the same level as the Goldman Sachs DeFi ETF mentioned earlier.

However, one ETF that could be thought of as a Blockchain ETF and offers a good potential is KOIN by Capital Link. This includes companies like Nvidia, Microsoft, and Visa. Most of these companies are already well-established with both good history and growth. This naturally lowers the downside risk, but on the other hand, many of these companies are massive, which makes the impact of their crypto-related incomes relatively small.

Many great companies, however, not maybe the leaders in blockchain, nor cryptocurrencies. Image via Capital Link.

However, for someone who likes both equities and cryptocurrencies, this could be a nice bridge between the two worlds. Even if cryptocurrencies don’t become successful, this ETF might still offer decent returns.

Conclusion

As mentioned by many, including myself, the barrier of entry to cryptocurrencies sometimes feels intimidating and scary. Therefore it’s great to see these “newbie” products, which will hopefully pour lots of money into the cryptocurrency markets. Also made evident in this article is that there are many different products to invest in, and likely lots more coming.

It will also be interesting to see more of these mixes of cryptocurrency sector funds and ETFs like the one Grayscale offers for DeFi. The more narrow and in-depth funds will also be great since it highlights how big an ecosystem the whole cryptocurrency space is, and hopefully, it will boost investment in smaller altcoins.

Additionally, for those who are wondering why we haven’t yet seen an ETF in the US and when it might be available, you should know this. The cryptocurrency regulatory frameworks are being formed all over the world as we speak. This is why the US most likely first wants to develop proper rules and regulations for cryptocurrencies before allowing large amounts of money to pour into something they can’t control. Hopefully, we will see an ETF before the end of 2021. It now looks as if an Ethereum ETF might be coming before we see one for Bitcoin.

It’s not just a coincidence that numerous companies want a crypto ETF approved by the SEC at the same time. All these crypto-related products make it impossible for even the most anti-crypto people to turn a blind eye. Cryptos are here to stay, and they are going to revolutionise many sectors.

The post Guide to Investing in Crypto ETFs and Funds appeared first on Coin Bureau.

Ultimately, the make-up of your portfolio, with regards to any asset, will hinge on your personal risk appetite. Are you looking to park some of your hard-earned cash into a long-term position in a relatively stable asset that might produce steady rewards over time? Or are you looking for as quick a return as possible and don’t mind risking the potential loss of some of your funds?

Chances are, if you’re looking at cryptocurrencies at all, your risk tolerance is reasonably high, given the high volatility involved in nearly blockchain investments. However, within the crypto-space, assets vary massively in volatility and, thereby, in risk-level.

To make life easier, we’ve broken down the crypto currency market into five categories, beginning with the safest and moving downwards towards the riskiest assets. These five categories are:

• Stablecoins
• Bitcoin (BTC)
• Altcoins
• Initial Coin Offerings
• Meme coins

The first thing to say, before we delve into the realms of different cryptocurrencies, is that the following rankings are based on prevailing opinion and past performance. In the grand scheme of things, cryptocurrencies are in their infancy, and any predictions of future price movements are fundamentally extremely speculative in nature. That said, using a few criteria, we are able to effectively rank various assets according to their respective risks.

Stablecoins

At the least risky end of the cryptocurrency spectrum are stablecoins. These are cryptocurrencies that have their value tied to some other asset such as gold or fiat currency. Examples include USD Coin (USDC), USD Token (USDT) and PAX Gold (PAXG).

As you might have guessed from the names, USDC and USDT are pegged against the US dollar. One USDC, for example, is fully backed by one dollar, held in a bank account. Each time someone purchases a USD Coin, Circle, the developer of USDC, are obliged to purchase one US dollar. What’s more, every USDC is fully redeemable for one US dollar. The result is that the value of one USDC, at any point in time, is almost exactly one USD.

Below image from CoinMarketCap.

Similarly, PAXG is pegged to gold, with one PAXG token fully backed by one fine troy ounce of gold. If you own a PAXG token, you also own the underlying asset of one fine troy ounce of gold. PAX Gold is the only gold token that you can redeem for LBMA-accredited Good Delivery gold bullion bars. This gold is held in a vault by Paxos Trust Company.

The benefit of tying the value of a cryptocurrency to another underlying asset is that you can circumvent the general volatility of cryptocurrency markets whilst still holding a digital asset. As the US dollar and gold are generally less volatile than even the most stable of other cryptocurrencies (like Bitcoin), the result is a more stable, less volatile blockchain asset. Hence, the name, Stablecoins.

The below image, from CoinDesk, helps to illustrate the relative stability of a currency like USD in comparison to BTC by showing the respective daily returns for both assets trading against the Canadian Dollar, since 2016.

However, the tradeoff for this stability is you are very unlikely to see any significant returns on your stablecoin positions, over and above the returns you would receive from simply holding the underlying asset. Here, lower risk is accompanied by low reward.

That said, many investors will hold some form of stablecoin in their portfolio to provide liquidity for swiftly executing future purchases without the hassle of depositing using standard fiat currencies like USD, EUR or GBP. Furthermore, taking profits in the form of a stablecoin may well allow you to avoid some of the fees involved in converting your cryptocurrency profits into fiat, provided you are looking to reinvest your profits.

One further reason to hold a stablecoin is that it can be staked to receive greater year on year rewards than if you were to hold USD in a traditional bank account.

Bitcoin

While it might seem strange to give BTC a category all of its own, I have done so for good reason.

Bitcoin is the ‘original’ cryptocurrency and if someone has heard about cryptocurrencies, chances are they will have heard of BTC. What’s more, BTC dominates the crypto market with generally more than half of all the capital in cryptocurrencies sitting in Bitcoin.

The below graph from Trading View tracks Bitcoin dominance over the past five years.

Within the overall crypto-space, Bitcoin can be seen as a relatively un-risky asset. This is because BTC has so large a market cap when compared with other cryptocurrencies. According to Statista, Bitcoin’s market cap exceeded one trillion USD in April 2021. A higher market capitalisation means that a greater volume of buying/selling is required to move the price upwards or downwards respectively, resulting in lower volatility.

According to CoinDesk, between May 18, 2021 and June 18, 2021, the price of BTC dropped from $43,144 to $37,722; a drop of 12.6%. Contrastingly, Ethereum, the second biggest cryptocurrency by market capitalisation, fell from $3,232 to $2,343 in the same time period; a fall of 27.5%.

Whilst it is true that a fall of 12.6% is a large decrease to occur in just one month for any asset, this is small in comparison to the losses seen by alt-coins, like Ethereum and many others, in the same period.

Bitcoin’s primary use is as a store of value and some ‘Bitcoin Maximalist’ investors center their investment strategies around stock-piling the world’s most popular crypto-asset, believing that its utility as a store-of-value make it the best coin to HODL for the long term.

Indeed, prevailing opinion suggests the entire cryptocurrency market cycle is triggered by the Bitcoin halving that takes place roughly every four years, with the most recent halving taking place in May 2020. A Bitcoin halving occurs when the total year-on-year rewards available for mining is reduced by 50%, reducing the available supply.

This helpful chart from CoinDesk helps to illustrate the correlation between BTC price and the timings of Bitcoin halvings.

Regardless of its huge market capitalisation, dollar cost averaging into BTC is still considered a sound investment strategy by many. Indeed, several prominent NFL players have started to convert their entire salary into Bitcoin!

NFL players are helping to drive Bitcoin adoption.

Sean Culkin, of the Kansas City Chiefs, was the first player to take this monumental step.

Altcoins

By ‘Altcoin’, what we really mean is any cryptocurrency other than Bitcoin. These altcoins range from a coin as big as Ethereum, with a market cap of $247 billion, to new and upcoming projects, many of which have their foundations on the Ethereum blockchain.

Naturally, these assets are more volatile than both stablecoins and Bitcoin. However, this increased volatility means there is greater potential for profits and, unfortunately, losses as well. Trading in altcoins is a quite popular activity for a subset of crypto investors!

According to CoinDesk, if you had purchased BTC on October 1, 2019, and sold your position on April 1, 2021, you would be up a highly impressive 447%. However, if you had held Cardano (ADA), a highly prominent altcoin, you would be up a staggering 1,082%.

Cardano has seen massive increase in price.

These increased gains are caused by the lower market cap of altcoins when compared to Bitcoin and by the fact that adoption of these altcoins is of a higher rate than that of Bitcoin. To put it simply, they are newer and, therefore, have greater potential for upward price movement.

Of course, this earning potential should be tempered by the fact that, being less established, altcoins are an altogether riskier asset to hold because they also have a greater potential for downward movement.

That said, the levels of risk attached to these altcoins vary wildly from coin to coin. Ethereum has reached so high a level of adoption and market cap that it is now considered to be relatively un-risky. Indeed, we might consider any coins in the top-10 by market cap to be reasonably safe compared with the universe of other cryptocurrencies.

Top 10 coins by market cap (August 2021). Image via CoinmarketCap.com

The reality is that the lower down the ‘market cap list’ we go, the smaller and, therefore, riskier the asset becomes. At the time of writing, the 100^th coin by market cap (OMG Network’s OMG token) had a market cap of $629 million; this is only 0.21% of ETH’s market cap at the same point in time.

Whilst you have a chance to achieve multiple X gains on a smaller coin, there is a greater chance that said coin will meet with a collapse in value, wiping out that portion of your portfolio.

Many investors in cryptocurrency will look to make increased profits on the altcoins. However, as previously mentioned, the altcoin of choice and what proportion of your portfolio you invest into it, will boil down to your own risk appetite and research.

‘Others’ (Meme Coins & ICOs)

In spite of the highly impressive gains that some of the top altcoins have experienced, for some investors, this simply isn’t enough. Indeed, some of the most profitable strategies have involved investment into what are now known as ‘meme coins’, or even the buying of coins before they make it to market, through processes known as initial coin offerings (ICOs).

Meme Coins

Whilst meme coins technically constitute altcoins, we’ve given them their own category owing to their increased risk level.

In reality, meme coins are a breed of altcoin. However, they differ in that, unlike coins like Ethereum, they have no real use case. They are valuable only due to promotion by influencers and the popularisation of meme-culture. They are typically highly volatile in terms of price, market cap and trading volume.

The second most well-known cryptocurrency after Bitcoin, is Dogecoin (DOGE). Originally a joke, born from the popular ‘Doge’ meme, the astronomical gains that DOGE has seen in 2021 cannot be dismissed. Dogecoin was made famous by Elon Musk’s comments on Twitter in early 2021, and by the incredible price action it has undergone, shooting up an incredible 1,250% in the period between April 1, 2021, and May 8, 2021.

Much wow. So crypto.

On January 1, 2021, DOGE’s price was $0.005405 but by mid-May, its price had skyrocketed to upwards of $0.7. In other words, its price increased by a factor of more than 129 in less than 6 months. This inflated price was the result of Musk effectively popularising the token through various social media outlets.

Elon Musk loves Dogecoin! Image via Twitter.

Whilst many of the cryptocurrencies we see today, such as Ethereum and others, have real world use cases, Dogecoin has none. Its rise in value was the result of hype and hype alone.

While Dogecoin was the first, it is no longer the only meme coin to have seen extreme gains in 2021. Shiba Inu’s SHIB token has proved hugely profitable for early investors too and the number of meme coins available to speculate on grows by the day.

This reliance on social sentiment with no fundamental use cases or strong tokenomics makes meme coins a risky gamble at best and, at worst, a sexy way to throw away your money. However, as investors, we find ourselves unable to ignore the unrivalled upward potential of such unpredictable cryptocurrencies.

ICOs

ICO stands for Initial Coin Offering and is the cryptocurrency equivalent of an IPO (Initial Public Offering) in the stock markets.

In short, by offering a portion of the total supply of a token up for purchase before that token goes to market, developers can raise capital to assist in future development and advancement of their crypto project. Indeed, the sums of money they are able to raise can be herculean in some cases. Ethereum held an ICO in 2014 that managed to raise $2.3 million in its first 12 hours.

From an investment standpoint, initial coin offerings provide a way of buying into the next big cryptocurrency as early as possible and, oftentimes, at a hugely discounted price. The price of one ETH during its 2014 ICO was a mere $0.30. Let’s not forget that Ethereum’s price in mid-May of this year was as high as $4,133. That’s right: if you had managed to get hold of $75 of ETH in its ICO, and liquidated in mid-May of 2021, you would be a millionaire in USD terms.

ICOs have been a source of massive wealth for some.

The risk of buying into ICOs is that, if a cryptocurrency is holding an ICO, they are unlikely to be established. In other words, they are in their infancy. It can be difficult to discern whether or not the project in question is the next Ethereum, or whether it will tank to negligible value, shortly after going to market, resulting in massive financial losses for investors.

What’s more, it is not uncommon for individuals to set up an ICO, allow people to buy in and inflate the price of a token, only to quickly liquidate their substantial holdings of the token to make vast amounts of money for themselves and tank the price for everyone else. This is known as a ‘rug pull’, a phenomenon that should be in the back of your mind whenever you buy into a cryptocurrency as early as the ICO phase.

The only way to be sure you are not about to get played by nefarious actors is to carry out in depth research into the project before investing. With enough information, you may well be able to spot the next big thing. This is true of any cryptocurrency investment but is especially true when it comes to ICOs.

Portfolio Allocation

It follows from the above rankings that, if your risk appetite is low, you are likely to want to adopt an investment strategy such as dollar-cost-averaging into high-cap cryptocurrencies like BTC and ETH. Indeed, this is the strategy that I use for my personal portfolio.

Dollar-cost-averaging is an investment strategy that aims to mitigate the volatility of an asset by buying at regular intervals regardless of price.

Dollar cost averaging is one good way to accumulate coins.

By contrast, if you are willing to gamble with your funds, you may want to spend time trying to predict the next Dogecoin or successful ICO; a risky strategy but one that has the potential to pay off in a very big way indeed.

Naturally, you may wish to adopt a strategy that involves investment into all five of the above categories. However, your risk appetite will influence the proportions you allocate to each category.

An example:

One possible portfolio layout may look like this. Let’s call this investor, John:

• 25% Bitcoin
• 25% Ethereum
• 15% USDC
• 35% Altcoins

This is just an example portfolio that I have made up. However, we can see why someone might want to construct a portfolio just like it.

15% of John’s portfolio is allocated to USD Coin. As previously mentioned, John is unlikely to see big gains from his USDC. It is likely, however, that John holds this USDC to make sure he has the liquidity to rapidly execute a trade if he spies an opportunity that he wants to enter quickly. Making a trade directly from USDC is quicker than buying a coin using his bank card every time. What’s more, John may have taken profit on a trade that he is, for now, holding in this particular stablecoin.

John also allocates 25% of his portfolio to BTC. Given the high adoption level of Bitcoin, John sees this as a relatively safe investment. Indeed, if the cryptocurrency markets are performing well, it is highly likely that BTC is experiencing this too.

John’s reason for holding another 25% in Ethereum is not dissimilar to the aforementioned reason for holding Bitcoin. The second largest currency by market cap, Ethereum is relatively safe too but, being younger than Bitcoin and with a plethora of Ethereum developments (Dapps, improved NFTs, increased DeFi use cases, and staking) in the works, he expects to see greater gains on his ETH than on his BTC.

The remaining 35% of John’s portfolio is held in other, lower cap altcoins. These altcoins might include, Cardano (ADA), Polkadot (DOT) and Polygon (MATIC) or countless others. A number of investors are highly bullish on these coins and John is hoping to see profits even greater than those obtained from his Ethereum position. Perhaps John has also sought to diversify his portfolio into the NFT space too. He may well hold Origin Protocol (OGN) or even AXS, the native currency to the growing NFT game, Axie Infinity.

These altcoins constitute John’s riskiest assets due to their relatively low market capitalisation, and it is for this reason that he is holding only 35% of his position in said coins.

We notice also that John does not hold any meme coins. He has decided that, despite the possibility of multiple X gains, such coins are risky enough to fall outside of his own personal risk tolerance.

A properly constructed portfolio will increase returns while reducing risk.

The above portfolio is just a fictional example of how someone, like John, might allocate their cryptocurrency position. However, we can see the thought process that a potential cryptocurrency investor will look to engage in. John’s portfolio can be considered reasonably well diversified and in line with his own risk appetite. Most importantly, John has done his own research before investing into any of the above-mentioned coins.

If you’d like the see the specific breakdown of Guy the crypto king’s portfolio, then I suggest subscribing to his weekly newsletter. You can do that, here. In it, he gives his current portfolio, any changes and why they’ve been made, as well as a wealth of cryptocurrency news and wisdom.

Conclusion

There is much more to investing in cryptocurrency than portfolio allocation. Methods like staking, for example, are something long term holders may well want to investigate. Indeed, where you actually store your cryptocurrency position is a topic in its own right!

You might want to keep some crypto in an exchange for swift trading (despite the security risks), whilst leaving most of your position in an ultra-safe hardware wallet.

If you want to learn about these topics, then you can’t go wrong by checking out other articles on our website or taking a look at our YouTube channel.

That said, hopefully this article has given you the basic information you need to start thinking about how you want your crypto portfolio to look, with respect to your own risk appetite. By understanding the respective risk levels of differing cryptocurrencies, investors can best equip themselves to deal with high levels of volatility that is part and parcel of the cryptocurrency markets.

At the end of the day, there is no replacement for doing your own research. Whilst it is healthy to learn from those more experienced in the crypto-space, the only advice worth taking is your own!

The post How to Build a Cryptocurrency Portfolio: Fill Your Bags! appeared first on Coin Bureau.

The real truth is that trading involves tremendous risks and no one can honestly guarantee you any gains. Therefore before you even think about starting you should be aware of what trading involves and how you can try to minimise your risk.

If you were to ask someone how you should trade, the obvious answer they would give is to buy at the bottom and sell at the top. This sounds fairly simple and, yes if you could succeed in always finding the bottoms and tops then naturally you would make a ton of money.

However, trying to find these tops and bottoms is not as easy as it sounds, which makes trading extremely risky, especially day trading. This is why many do swing trading. In swing trading, the time you keep an asset can vary from a week to even a few months. Swing trading often stems from analysing trends in a certain asset, which results in deliberately entering a rising market rather than trying to find a bottom.

Crypto Categories

In almost everything around you there are trends. Maybe the best example would be fashion. In fashion, we divide everything into different categories, like pants, shirts, hoodies, and skirts. For these larger categories, we have subcategories and we also have different brands which compete to be the best in these categories.

This same structure can be found in crypto markets. There are a few different ways of looking at what the main categories are, but one particularly good video about this is by our very own Guy. In that video you’ll learn about stores of value, smart contracts, oracles, payment, privacy, exchanges, and meme cryptocurrencies. On top of these, we have smaller categories that can somewhat fit into one of these bigger ones. We have sub-categories like NFT-focused cryptocurrencies and gaming cryptocurrencies.

Crypto markets tend to move in the same direction, but the amount a certain crypto moves can largely depend on its category.

It’s good to know we have these different categories since they tend to pump and dump at different times which means there’s always a chance to trend trade on something that is currently pumping. For example, NFT related coins and tokens tend to rally together and the same is true for the class of DeFi tokens.

Of course it can be tough to pick the winner from the entire NFT space, so you might be more interested in analysing and trading only a specific cryptocurrency. Even if that is the case, you should be aware of these different categories and how they tend to move together since even if you find a crypto that seems perfect, it might not pump if interest in that particular category is low. The key is to understand that trends come in different strengths and lengths, and that they can be for a specific cryptocurrency or for the broader markets.

Profits

To keep your interest level high, let’s move on to the fun part, profits. Many would think that since you’re not looking to enter at the bottom, nor sell at the top, that you won’t make as much profit as you would from day trading or any other trading for that matter. Well, that’s not actually the case.

First of all, before even talking about profits we should look at risk. In trend trading, you are jumping on an asset that is already moving upwards and if nothing special happens then it ought to continue to move upwards. When trying to find a bottom you are jumping on a downwards movement and hoping that something will happen which would turn the price around. Just from these simple examples, you should see that in a basic sense trend trading is less risky than trying to find the bottom.

It’s not just about how much you can make, you shall also consider how much you might lose

To see the power of trend trading first hand we can use Axie Infinity as an example since it has moved massively in recent months. To better understand the prices and days I’m about to refer to I suggest you open TradingView in another tab and search for Axie Infinity’s price chart (use 4 hour candles).

As Axie Infinity starts moving up at the end of June you as a swing trader start looking at it. You can clearly see how the volumes continuously rise while Axie forms higher lows. Let’s now assume that on July 9th you have confirmed there is an upwards movement and you enter the market at roughly $15.

Image via TradingView

Then on July 16th, you decide to sell at roughly $20 since the price went below an upwards moving trend line of previous lows. In just one week you secured a gain of 33 %! Not bad from someone who didn’t even buy at the bottom, nor sell at the top.

We could also have kept Axie Infinity in hopes that the uptrend is still intact and just experiencing some shorter-term downwards pressure. If you did that you would currently be sitting on an unrealised gain of 180%. Yes, that is impressive. However, we could have secured even bigger gains thanks to the fact that we sold.

Because in this example we sold our holdings at $20, but then we decided to enter again on July 21st at roughly $19 when the price broke out of a downward moving wedge. Then we would have sold at roughly $38 on July 26th when price broke below the uptrend. This would have made us about 100%. With quick maths investing $1000 in the beginning and using the profits from the first trade we would have turned that initial investment into $2600. Not bad.

$1600 in a couple of weeks, I wouldn’t mind that

As clearly seen from this example, buying at the bottom and selling at the top is unnecessary. Naturally, the closer to the bottom you can buy the more you will profit, assuming you sell at a good price. However, you need to give time for a trend to form, otherwise, you’re just gambling on something that may or may not happen. We want to be traders, not gamblers.

Now, to make a trade similar to the Axie Infinity one we need to look at some ways to analyse a trend.

Methods for Analysing Assets

In the example above all the trading we hypothetically made was based on the most basic technical analysis there is. In a real situation, it would be wise to combine some other forms of analysis like trader sentiment and fundamental analysis.

Even if you only want to use technical analysis I suggest you conduct a slightly more thorough analysis using some other indicators, like Bollinger bands and Fibonacci retracements. Also, the Axie Infinity chart formed a textbook bullish flag which if you were an experienced trader you could have spotted. In this article though we will assume that you like to do as much analysis as possible and therefore we will start with fundamental analysis.

Fundamental Analysis

If you are someone who doesn’t feel confident investing money in projects simply by looking at a chart and some patterns, then fundamental analysis might be the tool for you. In more traditional assets like stocks, it’s much easier to do fundamental analysis since companies are centralized and release quarterly earnings. Because cryptos don’t have these we need to look at the broader picture and for example, analyse a currency’s user base or use cases

In fundamental analysis you have to analyse the underlying project and not just its price actions

Let’s start by using Chiliz, which is the founder of the fan engagement platform Socios.com, as an example. First, you need to complete a quick overview of the cryptocurrency in question. Look at what they do, their market cap, the trading volume of their coin. Visit their website, and maybe even read their whitepaper.

Explaining all the analysis steps here would take too much time, so I suggest you watch this Coin Bureau video if you don’t know how to do this fundamental analysis. Yes, analysing this much for your trading might feel overwhelming but this analysis can help discover the best coins and decrease the risk of any unexpected downturns. Additionally, the trend you’re entering might be stronger if there truly are people who believe in the project entering and not just traders.

After doing the basic analysis if you feel confident that the project is good, now you need to look at when the price might start pumping, or if it already is. To do some trend analysis you could start by analysing how many users the platform has gained and see whether it is gaining popularity. This is often referred to as on-chain analysis and it’s extremely good to analyse as many factors as possible. One of the most popular tools for this is Glassnode.

Another piece of fundamental analysis would be to look for news about any major partnerships. If you find both an increasing use of the platform and a good amount of positive news coming out then that’s great!

Volumes can be found at the bottom. Image via TradingView

However, a small upwards move doesn’t matter because as already mentioned multiple times, we are not looking for the bottom but rather to get onboard in an already established trend. In this example, let’s say the price has moved up for a couple of days and the volumes continue to rise steadily while positive news just keeps flowing. Should you enter? Yes, now you could enter if you feel confident that you have spotted an upwards trend. However, if you want further proof of an uptrend you could try some sentiment analysis.

Sentiment Analysis

With sentiment analysis there are two, or maybe three especially important things to analyse. First, it would be good to analyse practically the whole world’s view towards risky assets and different financial markets in general. This is called risk appetite. You’ll have to do this since it can be hard to find any winners if you happen to buy in the middle of a crash similar to the Covid one last spring.

The next thing to analyse is the sentiment around crypto markets. Here you can take the results with a grain of salt since many people view Bitcoin and the whole crypto markets as one asset. The fact is that even when Bitcoin and other large currencies are moving downwards you can still find winners, especially from small and medium cap coins. The last analysis to do is about the specific cryptocurrency you plan to trade.

Now for those who have no idea how to do sentiment analysis here are a few tips. Sentiment analysis is done to find out what the mood around a certain thing or topic is. One useful tool to analyse the overall sentiment is the fear and greed index. You canlook at the fear and greed index for stocks to see how people view the most common type of investing, and then you can look at the Bitcoin fear and greed index as well.

Yes, it costs a couple of dollars, but it might be worth the investment if you start trend trading. Image via CryptoMood.

After looking at those two you could use one of the most popular crypto sentiment analysis tools called CryptoMood. This tool creates an overview of the mood around a certain cryptocurrency by analysing news, social media, and whale movements. Keep in mind though that to use CryptoMood for any coins other than Bitcoin you will need to pay about $5 a month. For more tips about sentiment analysis you can again turn to Coin Bureau’s Youtube channel and watch this video.

Now you have analysed both the fundamentals and the sentiment around a cryptocurrency. Next, you should move on to some technical analysis, just to be sure that you’ve picked a real winner.

Technical Analysis

For a beginner, we now enter perhaps the hardest type of analysis of them all. When conducting fundamental analysis, or sentiment analysis, you can go a long way with basic intelligence. You only need to analyse the facts you are given by the numerous tools available.

In technical analysis (TA) you have to be a bit more experienced to find patterns before they have formed. Technical analysis is often as much an art form as it is a science. Therefore you shouldn’t expect tremendous profits when you first start with technical analysis, since even most experts struggle to be profitable.

However, we now have a good basis to start doing technical analysis because we’ve already conducted both fundamental analysis along with sentiment analysis and from there decided that this certain crypto will likely go up. We just need to make sure that there aren’t any bearish TA patterns forming, and we can also use TA to try and find the optimal entry price for us.

TA might feel intimidating, but it doesn’t have to be as complicated as this picture. Stick to what you find works.

Let’s  keep things simple and begin our look at technical analysis with a few basic things. When you look at traders on Youtube, or other platforms, you probably see that they use charts with many red and green candles that show the price action.

Sometimes these candles show the minute by minute or even tick by tick movements of price.. This is something we don’t want. When doing trend trading we want to keep one candle representing one day, also called daily candles. Candles of four hours can also work well and I like to use that, especially when analysing shorter time frames.

A good thing to keep in mind when using different time variables, which you will notice and maybe get frustrated with, is that many of your found TA patterns will get tossed in the trash once you change the time frame. It is quite possible that a daily chart will show an uptrend, the four hour chart will show a downtrend, and the minute chart will show an uptrend. Because of this it is good to stick with one timeframe, either with the daily or four-hour candles.

Next, you could start with one simple line. Draw a line using all the previous lows similar to the one I used in the Axie Infinity chart. Is that line moving up? If yes, great! Now look at the current price and see if it’s moving closer to that line or further away.

If the price is moving towards your line it might be time to enter soon. The optimal time to enter would be when the price hits your line, but since we rather wait for a safe upwards movement you can test your line once and see if the price starts moving up from there. If it does then it might be time to enter.

Wait for the right entry point

However, we haven’t yet looked if any longer-term bearish patterns are forming like a death cross, head and shoulders, Wyckoff distribution, bearish flag, or something other formation traditionally considered as bearish.. I’m not going to explain all of these, therefore if you didn’t understand these terms then I suggest starting by watching this Coin Bureau video. It will give you a great understanding of these technical analysis terms and much more.

If you spot some of these bearish patterns it might be good to consider whether entering is worth it or not. You could enter for a shorter period of time and see if you can profit from that, and in the best case scenario, the bearish pattern you saw beginning won’t fully form at all. Nevertheless, you should be aware of the increased risk if a bearish pattern is looming just around the corner.

Finally, it’s time to buy.

All together, you have now used three different ways to analyse a trend. If after these analyses your trend still seems intact and you feel confident about this particular crypto then you should enter. Although I do suggest you learn to use more advanced TA than what I just demonstrated, since one line might not show the whole picture.

Low Risk – High Reward

As I mentioned numerous times it can be risky to engage in trading. Therefore you ought not expect tremendous gains in the beginning, and you should even be prepared to lose some money. I would also not encourage you to quit your job for trading, but rather view it as a hobby that can potentially make you some money.

Understandably, you might have high expectations and the part where you lose money in order to learn doesn’t entice you. That is why you should work on minimising your risk while maximising your gains.

Risk Management

First of all, trend trading itself can be thought of as lower risk than day trading. So you’re already reducing your risk profile. We have also looked at three different ways of analysing a potentially trending crypto which also lowers the risk substantially. It’s highly unlikely that you lose a lot of money on something where all three analyses look positive, although there is that possibility.

That is why you might want to use stop losses. Essentially you put an order to sell your holdings if they drop below a certain price level. This price level could be best to determine from TA. One example of a good stop loss level is when the price drops below your support line.

Don’t be afraid to take your losses.

Another way to minimise your risk is to buy a long-term winner. Yes, in this article we should be focused on trend trading for a shorter amount of time, but hear me out. If you believe in a crypto like Ethereum, then why not just enter and HODL. If you believe that Ethereum will be bigger in 10 years than it is now then enter that upwards trend and HODL.

Okay, that’s not trading anymore, it’s investing, but the point is that even when trading for shorter periods it can be wise to buy great cryptocurrencies which you might consider keeping. This can be especially good in the beginning, since if you enter a crypto and it goes down you might not be tempted to sell and take the loss, but rather wait for it to bounce back up. This is more likely to happen in a crypto with strong fundamentals and already a great use case and adoption rather than in some meme coin.

Also, try to diversify your trading into trends with different lengths and strengths. One trend might be a long one based on institutional adoption, which doesn’t happen in one week but rather over months, and another might be based on some potential partnership and maybe good TA patterns forming, which might cause an upwards trend of perhaps a few weeks.

Increasing Rewards

Practice, practice, and then more practice. As for anything in this world you need to practice to get good. One way to start is to use trading simulators where you trade with fake money. This might sound dull to some, so another option would be to start trading with a fraction of the amount you initially planned to trade with.

The important thing isn’t the dollar amount you make but rather the percentage amount you make. When you use only small amounts you can make a larger number of trades and see which ones worked. From there you try to distinguish which factors made them work and once you find the winning pattern you can start increasing the dollar amount.

Practice, practice, practice

Those who feel extremely confident could try leveraged tokens which move x amounts more than the actual coin. For example, if you buy a bull Bitcoin token with 3x leverage, then if Bitcoin goes up 1% your token will go up 3%. Keep in mind though that this works both ways and you will lose a lot more if the price goes down.

Thus if you use this you need to understand your risk level rises substantially. Still, I believe this is a much better way to trade than with actual leverage since although the token can go down a lot in one day it’s still your own money you lose rather than borrowed money.

One more thing I almost forgot to mention is; don’t get greedy. Not only should you use stop losses but you should also be ready to sell at any time. If you do your technical analysis and spot a potential upcoming top, or see that we already might have been to the top, analyse the patterns again and come up with a selling price. If you believe that a top will form at say $10 then you might put your sell order at $9.50, to avoid getting dragged into the potential pullback at $10.

This will often happen since many who are doing TA will spot that same top at $10 which is why you want to guarantee your gains and leave a bit earlier. Yes, you might not sell at the top and the price can continue to rise, but assuming you entered at a good price then those last few percentages won’t matter much anyway.

Conclusion

Hopefully, this article gave you a good view of trend trading since this is something many could do and earn some good profits. It works well to allocate a certain amount of your portfolio for trend trading since the diversification will help minimize your risks. Keep in mind though that the best strategy, according to numerous studies, is to HODL, which makes it important for you to separate your long-term holdings from your trading capital.

When starting out, remember not to rush into anything. You shouldn’t be in a hurry to enter something just because it has moved up a couple of days. Simply take your time and use all the different ways of analysis. Only with good analysis can you truly minimise your risk. You can also take help from others to analyse a certain cryptocurrency. Nowadays there are many talented people on Youtube and you can use their content to see how their analysis compares to yours, but be aware of scammers since there are a lot of those too.

Furthermore, don’t get greedy. Even a compounded 5% per month would be excellent. That would turn your $1000 into almost $1800 in a year. Also, don’t be afraid to take losses. Sometimes you win, sometimes you lose, that’s just how it is. And remember, as the saying goes, practice makes perfect.

The post Trend Trading the Crypto Markets for Fun and Profits appeared first on Coin Bureau.

Many have started to wonder whether they too could become millionaires by just investing a few thousand into the crypto markets. But the thing that stops many is the lack of knowledge and the fear of losing 50-90 per cent when the next bear market hits. So what do people do?

Well, many have started to look for crypto-related equities. Many feel that they offer relatively good exposure to the crypto market while still being a lower-risk investment than if you simply buy cryptocurrencies. It can also be easier to manage your equity, taxes, and other legal obligations if you do not know anything about how your country views cryptos.

In this article, we will take a look at some crypto-related equities and see if they truly are lower-risk investments and whether you should consider trading and investing in them.

Crypto-related Equities

The first companies that many think of when talking about crypto-related equities are probably Tesla, Coinbase, and Microstrategy. Many would potentially categorize these as crypto-related equities, and yes, to some extent, they are all related to cryptocurrencies, but it is important to see the difference between them.

Tesla has become one company that is often associated with cryptos and Bitcoin

Tesla, which is best known for its electric cars, is not necessarily the best investment if you are looking to gain significant exposure to the crypto market. The reason is that although Tesla seemed to move the way Bitcoin moved (called correlation) when it first announced its $1.5 billion Bitcoin purchase, this is still a relatively small amount compared to their other businesses. Tesla’s stock will not be moved by the price action of Bitcoin but rather by what happens in their primary business consisting of cars and batteries.

If you are looking for a company that, to some extent, mirrors the price of a cryptocurrency, then you might want to consider the company led by Michael Saylor, Microstrategy. You might have read the news that they recently passed the mark of owning over 100,000 bitcoins, which is quite a lot.

MicroStrategy

Microstrategy is a company that provides business analytics software services, so it does also have something more than just Bitcoin. However, their Bitcoin holdings are perhaps nowadays their most important thing. If you look at their market cap of $5.2 billion and compare it to their BTC holdings – which with a $40k price would be worth $4.2 billion – this leaves only a valuation of about a billion dollars for everything else that Microstrategy does, and that generated almost half a billion dollars in revenue in 2020.

Naturally, the price of Bitcoin changes rapidly. So understandably, Microstrategy might be a bit undervalued since it would also be improbable that they could sell all their Bitcoins at once without causing some fear in the markets.

That’s a lot more BTC than in my wallet for sure. Image via Twitter

As mentioned, Tesla is a company with only a small exposure to the upside of cryptos, while Microstrategy gives a far more significant exposure to the upside of Bitcoin. Now you might think that you can only benefit from the upward price movements of cryptos. But one company already mentioned could benefit from the downwards movement of crypto prices too, and that company is Coinbase.

Coinbase

Coinbase, which according to most recent statistics, is the third-largest crypto exchange, and maybe the best known for new investors, makes most of its money from trading fees. This means that as long as cryptos are traded in large volumes, and if Coinbase manages to attract new customers, then they will most definitely be a company to keep your eyes on as an investor.

After Coinbase’s IPO in April, its share price has largely moved along with the crypto markets in general, which some analysts believe is entirely wrong since Coinbase’s earnings are not tied to Bitcoin’s price. Coinbase CEO Brian Armstrong also mentioned this lack of correlation in its latest earnings release. Coinbase is also the stock for which Goldman Sachs analyst Will Nance gave a buy rating and said it’s the best stock to gain exposure to the crypto markets.

Do you prefer Coinbase?

So as an overview of crypto-related equities, you need to remember that there are many different kinds. First, there are those who almost completely follow the price actions of Bitcoin and other cryptos, like Microstrategy and some mining companies. Then we have those who benefit more from the adoption and continued interest in cryptos like Coinbase. And then lastly, we have companies that have only adopted cryptos as a means of payment and maybe made a small investment in it, like Tesla.

Crypto-related Equities vs Cryptocurrencies

The easy answer to crypto equities vs actual crypto is that if you are looking for huge gains and high risk, cryptos are the answer. But if you are looking for a more modest risk and maybe don’t know how, or don’t want to go through the process of using crypto exchanges and setting up a wallet, then crypto-related equities are likely for you.

Crypto-related equities with a price lightly attached to Bitcoin might also be a good diversification for your portfolio. But let’s dive in a little deeper to see what might be best for you.

It doesn’t have to be one or the other. Try diversifying, get a bit of both.

First, let’s consider only trading rather than long-term investments. If you only want to trade and aren’t considering investing for the long-term, there are a few things worth considering. The thing with cryptos is that you’ve probably heard about people who have made a few hundred per cent in one week or even a single day.

That sounds great, right? On the flip side, you have to remember that every time someone makes a hundred per cent, there are likely at least five people who lost just as much. You just don’t know about them since they are not the ones highlighted on social media.

Therefore you need to remember that when trading cryptos, the risk is very high and especially high in those small-cap coins that could potentially offer the biggest gains. On the other hand, crypto-related equities usually are fairly stable. While some do tend to follow the price action of Bitcoin, there is one key consideration with equities that is much stronger than with cryptos – fundamentals.

As mentioned earlier, Microstrategy is a good example of a company that actually might be fundamentally undervalued if you believe in a rising price for Bitcoin. This offers a great opportunity for some swing trading (where you keep the asset, say a couple of days to a few months).

You might purchase Microstrategy when the price of Bitcoin starts showing some signs of a bullish price movement if you want to be aggressive. Or you could be more conservative by waiting for the price of Microstrategy to start rising along with Bitcoins price. Then if the market cap of Microstrategy starts taking off more than the market cap of BTC, it might be a good time to sell.

This price action can happen because Microstrategy attracts many non-professional retail traders, resulting in overreactions in both directions compared to Bitcoins price. In these situations, it is good to keep your eyes on both the market cap of BTC and the correlated company’s market cap; then, when you compare that to their historical correlation, you can find good opportunities to buy and sell.

Buy high, sell low, or something like that, right?

So if you are trading crypto-related equities, then technical analysis is possibly not the best strategy since you can sometimes find better opportunities in swing trading with the information found about a company’s fundamentals. For example, with Coinbase, you could analyze the trading volume of the crypto market and see if the volumes have gone up, but the price of Coinbase is down. If that happens, then you might find a good price to enter.

For long-term investing, the best benefit from crypto-related equities compared to cryptocurrencies is diversification. On the other hand, a portfolio consisting of only cryptocurrencies is very high risk. If you have a family to provide for (or even just yourself), watching dips of 50-90% can make you more than nervous.

Avoid anxiety by diversifying to assets which do not correlate with each other.

Suppose you believe in a world where crypto isn’t everything. In that case, you might consider companies like Tesla, which can benefit a tremendous amount from being an early adopter of cryptos. And simultaneously, you own one of the world’s most advanced companies when it comes to electric vehicles.

So if you are looking for something to diversify your portfolio, I suggest you take an especially close look at those companies in the next section, which I’ve ranked as low and medium correlation to crypto markets.

Low & Medium Correlated Crypto-related Equities

An important thing to remember before you read about these companies and invest in them is that some of these equities might not benefit from crypto adoption. Indeed, some might not belong in the crypto space at all. In addition, these are also publicly traded companies, and their prices can vary a lot from their intrinsic value, so even when the company succeeds, it might not guarantee stock gains. Therefore you must do your own research before investing in any company.

Tesla – Amazon – Apple

Correlation to cryptos: Low (Though Tesla can mirror the price of Bitcoin at certain times)

Potential benefit from cryptos: Fair-Good

You might be wondering why I have added Amazon and Apple in here with Tesla, so I’ll explain. As we already know, Tesla has Bought bitcoin, and with CEO Elon Musk running the show, they are more than likely to continue working with cryptocurrencies. Apple and Amazon are both huge companies that have the power to attract the most brilliant minds on the planet, and they have money to do the wildest things you could ever imagine. This will allow them to invest heavily into crypto once the timing is right.

As it looks now, that time could be very soon, or even now. Amazon and Apple have both been looking for employees to join their digital currency divisions and other positions related to cryptocurrencies, which shows that they are making increasing efforts to adopt cryptocurrencies and blockchain technology. There was also a rumour that Apple bought $2.5 billion worth of BTC, but that hasn’t been confirmed.

Looking for a job? Image via Amazon

I’ve listed these three companies together because they are all companies where cryptos are not their primary focus. Plus, they are all excellent companies, which will not suffer catastrophically if cryptos plummet. They will probably not mirror the price of any crypto or the crypto markets in general.

Crypto-related income might not be a big part of their earnings since they are all mega-cap companies with huge revenues from other sources (especially Apple and Amazon). Still, they have the resources to make good use of blockchain technology and be frontrunners in this revolution.

Other names in this category are Microsoft, Alphabet, and Facebook, each of which also holds a vast amount of talent and money. In addition, Facebook has already talked about launching their own token, which shows their interest in the crypto space.

Will Apple integrate other cryptos or create an I-coin?

Twitter & Square – The Jack Dorsey Empire

Correlation to cryptos: Twitter: Low, Square: Medium-High

Potential benefit from cryptos: Twitter: Good-Great, Square: Great

As most of you know, Jack Dorsey, the CEO of both the social media company Twitter and the payments company Square, is a prominent backer of Bitcoin. Dorsey is a hardcore Bitcoin fan, and he believes that the only promising cryptocurrency is BTC.

Twitter is on this list because, in the latest quarterly report, Twitter CEO Jack Dorsey said he believes Bitcoin can be much more than just a currency. He was talking about implementing Bitcoin on Twitter with tip jars and super likes. He spoke of a decentralized social media platform with Bitcoin playing an increasing role in the future of Twitter.

Square is a more hardcore Bitcoin player and a much more “true” crypto investment. Square bought about $230 million in BTC, first in Q4 in 2020 for $50 million and then in Q1 of 2021, after the big dip, for $170 million. Still, their crypto investments aren’t their most significant crypto-related income stream.

Square has a cash app that supports Bitcoin peer-to-peer transactions along with the opportunity to invest and automatically dollar-cost-average into Bitcoin. Square’s recent earnings release showed that Bitcoin transactions accounted for 80% of their revenue, as reported by CNBC. Square also recently announced they are building a DeFi business using Bitcoin. This would be somewhat of a competitor to Ethereum and could be bullish for both Bitcoin and Square.

Dorsey seems to be all in for Bitcoin

Between these two companies, you can see that Square is the company for you if you want more significant exposure to cryptos and if you are bullish on Bitcoin. On the other hand, Twitter could be a front runner in decentralized social media since they have the publicity and fame, which gives them an edge over other decentralized social media platforms that are starting from scratch.

It is hard, though, to evaluate the potential of Twitter since we don’t know what Dorsey’s true plans are. The big risk with both companies is that they seem to be fully into Bitcoin and do not like, nor accept other cryptocurrencies. Many are arguing that Ethereum will overtake Bitcoin and that Bitcoin isn’t suitable to be built on. If that becomes true, then, of course, that would be bad for Square and Twitter.

Visa & Mastercard

Correlation to cryptos: Low

Potential benefit from cryptos: Great

Both of these traditional payment processing companies are well known around the world. They are huge companies with valuations close to half a billion dollars each. The thing that makes them potential benefactors of the crypto boom is, of course, payments.

Already you can find crypto cards from both companies where maybe the most well-known one is the Crypto.com Visa card. Both Visa and Mastercard are putting increasing amounts of time and resources into the crypto space, which can be seen when reading their latest news.

Visa recently announced they would make it possible to pay with cryptos using all Visa cards. This would be huge for crypto adoption and would truly spark the actual use case of cryptocurrencies. Visa also said that in the first half of 2021, more than $1 billion worth of transactions were made through their crypto-related cards. The even more bullish case for both cryptos and Visa is that they also said that digital payments could potentially disrupt the $18 trillion annual consumer spending with cash and checks.

Going strong! Image via CNBC

On the other hand, Mastercard announced a partnership with blockchain company R2 to develop cross-border payments, which could lead to enormous growth. Cross-border payment is one of crypto’s best features since it takes so little time compared to traditional bank transfers, plus the fees are much lower.

From this bullish news, you can see that cryptos are coming, and those companies who are ready will benefit from it. In my opinion, it looks like right now like Visa is the front-runner of these two payments companies but let’s not forget that Mastercard is a brilliant company with no lack of resources to dive deeper into the crypto space. Mastercard’s market cap is also over $100 billion smaller than Visa’s, which gives them more upside potential if they succeed in adopting cryptos.

Paypal

Correlation to cryptos: Low-Medium

Potential benefit from cryptos: Great

Another company that stands to benefit from the increasing use of cryptos for payments is the original digital payments network Paypal. Paypal was early on in adopting cryptos and has gained many customers at the expense of not payment companies but rather exchanges. So yes, Paypal has seen an increasing activity of buying cryptos through them, and this will naturally hurt “traditional” crypto exchanges like Coinbase.

The reason I think Paypal might have gained popularity among people wanting to invest in cryptos is safety. I do not mean that Coinbase isn’t safe but rather that for newbies, a well-known traditional company might sound safer than a crypto exchange that only deals with cryptos.

Especially after all these stories when crypto exchanges have been huge scams and the founders have run off with all the money (Africrypt). Paypal is also suitable for those who buy and use cryptos as payments since you can do it all with just one company. Furthermore, you do not have to move your cryptos from wallets to exchanges and back.

A big plus for Paypal is being easy and safe. Image via Paypal

Paypal is also a growth company with considerable talent behind its success. As a result, they can truly benefit from both increasing purchasing of cryptos as investments. Also, they can compete on crypto payments market share along with Visa, Mastercard, and Square. If you believe in the growing use of cryptocurrencies as payments, then a good diversification to all of these might not be a bad idea.

IBM

Correlation to cryptos: Low

Potential benefit from cryptos: Good-Great

IBM was one of the first big companies to invest heavily in blockchain technology. At the time, all their ideas and innovations sounded like something that could change the world. However, in an article from Coindesk from February 2021, it was said that the IBM blockchain is not even a thing anymore. Many people have been laid off, and only a fraction of the division is left. This was done after the blockchain division repeatedly missed revenue forecasts.

Despite that, I believe that the IBM blockchain transparent supply could have a major impact on our world. For a non-technical expert like me, all that was said in their presentation linked above sounded amazing. The problem now is the increased competition in the blockchain industry. It might be that IBM has just fallen behind others like it has so many times before. On the other hand, IBM also partnered with Stellar to create the stablecoin USD Anchor, which shows that there is some use of IBM technology.

Hopefully they get this working

Hopefully, IBM keeps working on their blockchain technology and makes more partnerships with cryptocurrencies. If they do this, then I believe that blockchain could become one of IBM’s core income streams.

Riot Blockchain

Correlation to cryptos: High

Potential benefit from cryptos: Great

Riot Blockchain is a mining company, and I do not think it needs too much explaining. We all know that mining is costly and is therefore out of reach for many people. When investing in Riot Blockchain, you are doing mining without running your own mining rigs.

Your earnings from this company will be linked to the performance of Bitcoin mining. The risk with Riot is that they might make bad investments in equipment or companies or do something illegal, which you wouldn’t do if you mined Bitcoin yourself. This could result in a lot of the profits going to solving unnecessary problems.

On the other hand, that same argument for risk is also the great benefit from owning Riot instead of mining at home. It takes a lot of money and effort to start mining, so you can imagine how much it will take if you need to upgrade equipment continually or grow to become a larger miner.

Riot keeps you up to date on their mining so that you as an owner don’t miss anything. Image via Riot Blockchain

Riot has the resources to complete significant acquisitions by taking some debt- if needed – to scale up their mining operations. I also believe that in the future, when they get their mining setup in order and if, and when Bitcoin prices rise that they can be a solid and good dividend payer. There are also other mining companies like Marathon Patent Group, but Riot is the biggest one.

Nvidia

Correlation to cryptos: Low

Potential benefit from cryptos: Great

Nvidia is a well-known company for many gamers and also those who actively follow stock market news. Nvidia operates in two segments, Graphics and Compute & Networking. The important segment for cryptos is graphics which includes Nvidia’s graphic processing units.

Nvidia has one of the most advanced GPUs for PCs and gaming, and these were widely used to mine cryptos in late 2020 (many still use them). However, Nvidia noticed the increased use for mining and made an upgrade which lowered the performance of their gaming GPUs if used for mining.

This might sound bad, and as if Nvidia doesn’t support cryptos, but the reason was not that. They had to restrict the use for mining because their core customers, gamers, couldn’t get their hands on these GPUs because miners bought them all up.

Then in February of 2021, Nvidia released a new processor made specifically for mining. In the first quarter of 2021, they said that crypto mining had generated $150 million in revenue, as stated in this CNBC article. That seems like a small number compared to their core business which generated $2.76 billion in revenue. Still, such a quick rise of revenue and a $400 million crypto-related revenue forecast for the second quarter shows how much potential there is.

You might not understand the technicalities but try to understand this. This will make them A LOT of money. Image via Nvidia

Nvidia could have the potential to become the number one mining equipment manufacturer. They do not lack the technical expertise needed, and their well-established brand makes them the go-to place for a beginner or even a professional. However, as an investment, the problem with Nvidia is its valuation, and you ought to take a look at that before making any decisions. They have a price-to-sales ratio of 25, which is very high and expose them to quite the downside risk, at least in the short term.

Extreme Networks

Correlation to cryptos: Low

Potential benefit from cryptos: Good

Extreme Networks is an American networking solutions provider. They manufacture wireless and wired networking solutions and offer cloud-based end-to-end solutions. The company lacks any news related directly to the crypto industry, but their core business with networking and cloud makes them a perfect benefactor of digital assets.

Nowadays, paying with cash can be quite odd for many and in some places, they don’t even accept cash. Therefore all stores need a reliable internet connection for their business to operate. This need will further increase when we transit fiat to digital assets like Bitcoin. It can be troublesome to buy with Bitcoin if you can’t enter your Paypal or Square cash app.

Although you did all your research a little praying for those gains never hurts.

Therefore, investing in a well-situated company for an increasing transition to the cloud might not be a bad idea. However, extreme Networks is a relatively small company with a market cap of only $1.2 billion and can therefore be a bit risky. If you want to look for some more prominent and maybe more stable companies, you could turn your head to Scandinavia, where there is Nokia and Ericsson, who compete with Huawei in manufacturing the underlying infrastructure for networks (5G).

Conclusion

As you can see, many companies might benefit from cryptocurrencies and digital assets. It is safe to say that at least some of them will be huge contributors to this transformation. There are also many more companies from different industries that could have been included in this list, for example, Norton Lifelock, a cybersecurity company that now offers you a way to mine cryptos more safely. I also didn’t include Coinbase and Microstrategy in this list since I covered them quite in-depth in the earlier parts of this article. However, I would rate them both High (Microstrategy almost equal to BTC) and Great for their correlation and potential, respectively.

The benefit you get to your portfolio from diversifying your crypto holdings into the equity markets might make you sleep better at night. It is worth considering whether you believe we will see something other than blockchains in the future and then look for companies you like and see if they are well positioned – or have already- to transform alongside our digitalised world. If you are only looking to make some gains with trading, then I suggest you take time to learn how to analyse a company’s fundamentals and learn how to tell if a company’s intrinsic value is higher than its market cap.

Then lastly, I would like to point out that in addition to Coinbase’s IPO, other crypto-related companies are looking to go public. The first one that comes to mind is, of course, the UDSC issuer Circle. Circle can be quite risky since we do not know what regulations they are planning on implementing for stablecoins. Still, all in all, it is a good idea to keep your eyes open for new IPOs.

The post Trading Crypto-Related Equities: Complete Guide appeared first on Coin Bureau.

Because people quickly realised that bitcoin can’t be valued similarly to companies, they started to look for other assets to compare with Bitcoin, and many settled on gold. The key similarity between Bitcoin and gold is that both assets are scarce. Scarcity is the main feature of these assets and why we value gold as highly as we do. After all, it’s not like gold is particularly useful or plays an essential part in our survival.

Is BTC like gold, or even better?

So now that we have assets to compare with Bitcoin, we just need to figure out how to value scarcity correctly. But first, let’s answer the question many of you are probably thinking about, what or who is Plan B.

Who is Plan B?

Plan B is an anonymous person we don’t have much information about, so we haven’t figured out his true identity. However, we do know that Plan B is a Dutch institutional investor who got into bitcoin in 2013. Plan B is said to have two degrees, one in finance on quantitative analysis and one in banking and financial law. He has always worked in finance, and also now he has a day job, with crypto being more like a serious hobby for him.

When he first got into crypto in 2013, he started to look for a way to value these digital assets. When he couldn’t find any reliable method, he started creating one himself. Plan B got his inspiration from Saifedean Ammous. For those who don’t know who he is, he created one of the most famous Bitcoin books called The Bitcoin Standard. In this book, Ammous explains the stock-to-flow model and how it creates value for gold and other scarce assets.

Then in 2019, Plan B finally published his stock-to-flow model on bitcoin, which has gained huge popularity due to its quite accurate indications. Although lately, people have started to question its accuracy since it is now the furthest away that it has ever been from the price target. After the stock-to-flow model on Bitcoin was released, he continued to develop his model. A year later, he released another model called the stock-to-flow cross-asset model, which considers other scarce assets like gold and silver.

We do not know his true identity but he uses this hat as his symbol. Image via Plan B’s Twitter

Stock-to-flow on Bitcoin

For all commodities or basically all items with a quantifiable amount and a quantifiable production, you can count their stock-to-flow. It is simply to divide the item’s stock with its flow. This gives a value that states how many years it would take to produce the amount you have in inventory; for example, gold has an SF of 62, as you can see from the chart. This is what Saifeadean Ammous explained in his book.

The stock-to-flow of a few commodities. Image via PlanBTC.com

For commodities used in everyday life like copper, aluminium, palladium, or platinum, it is almost impossible to escape the trap of a low SF because if its demand increases, so will its flow. This is why scarcity has value since, especially in bitcoin, it is impossible to increase the flow, which means that if there is demand, it will not drive the flow up, but rather the price. This is, in fact, why from a scarcity viewpoint, bitcoin is the optimal asset, even better than gold since gold’s flow could also technically rise significantly if someone finds large amounts of it.

When Plan B applied the stock-to-flow model for Bitcoin, he used 111 data points from 2009 to 2019. Then he used a linear regression which clearly showed a correlation between bitcoin’s market cap and its SF. He used different colours for his charts, where blue represents the months close to a halving and red the price a few months after that.

He did this because a halving plays a huge role in this model. After all, the stock to flow doubles when the flow gets cut in half. This is why according to Plan B, the price usually jumps a few months after halving since bitcoin gets more scarce. To further support his model, he also used the same thing for gold and silver (marked with a yellow and grey ball) and saw that they are also correlated with the model.

Chart made by Plan B. Image via PlanBTC.com

Chart made by Plan B. Image via PlanBTC.com

Many of you are probably now wondering if the model really works, and as a simple answer to that, it looks like it does. When Plan B tested his model, it gave him an R2 of 95%; why not 100%, you may ask. Well, that is never possible because there are so many things that influence the price of bitcoin, like regulations, hacks, and many other things.

That is why the price will never be on a straight line. Plan B also says that you can’t be entirely sure that there is a real correlation, but it is highly likely. Another fact that supports his model is that it showed a market cap prediction of $1 trillion for bitcoin after the latest halving, and that is roughly the level reached by Bitcoin. Of course, as already mentioned, we are now the furthest we’ve been from the price prediction, but we’ll later talk more about whether to use this model or not.

Stock-to-Flow Cross-Asset Model

The main difference between this new model and the old one is that the old one was a time series model for bitcoin, and this new one is a model that you can use to value all similar assets. Basically, time has been swapped with other assets in this new formula. Plan B also mentions that to use this new model, you need to understand phase transitions which play an essential part in using this model.

To explain phase transitions, Plan B uses three examples, water, dollar, and bitcoin. As probably all of us know, water can be solid, liquid, gas, and ionised; it is still water but just in different phases.

Typically we only talk about three of these, solid-liquid-gas. Image via PlanBTC.com

Plan B explains that phase transitions also appear in finance, for example, in the dollar. First, it was a gold coin, then a paper backed by gold, and then just paper backed by nothing. In all these phases, it was called the dollar, although it was a completely different thing.

Gold coin – paper backed by gold – paper backed by nothing. Image via PlanBTC.com

Now to the bitcoin phases. First, we had “proof-of-concept” when Bitcoin was first released. Then we had the “payments” phase when one Bitcoin was equal to one dollar. Thirdly came the “e-gold” phase, which was after the first halving. And then now we are in the “financial asset” phase.

Okay, so how do these phases work then? In the chart down below, you can see monthly data from the original SF model and how they form these clusters. You can also see the gold and silver data points which seem to line up with the rest. Plan B explains that these clusters are being formed and correlated with the SF and market cap; according to him, this model has an R2 of 99.7%.

Chart made by Plan B. Image via PlanBTC.com

Do the Models Work?

We already briefly looked at this for the SF model but let’s see if we can further look at how these models could possibly give us a hint of where we are going.

So with the original model, we currently should have a price of around $110k, and this is why many have started to wonder if the model actually works. For the stock-to-flow cross-asset model, we have a price target of $288k between 2020-2024. As you probably noticed, the target prices are quite far from each other and even further away from the current price; what should we do?

On Scott Melker’s Youtube channel, Plan B himself said that markets should not be predictable, and that is, of course, a fact to some extent since otherwise we would all be at least millionaires. However, we also know that bitcoin is a relatively young asset, and to find a formula that represents some sort of correlation might not be that difficult.

The correlation might just be a coincidence. This is, in fact, what Ethereum founder Vitalik Buterin said. Or, to be more accurate, he didn’t say that the SF model was wrong. He just said that you can’t know whether this model actually works, but neither can you say that it doesn’t work.

Hmmm… Read till the end to find out.

On top of those who have neither discarded nor acknowledge the model, there are also those vehemently against it. One of the perhaps “best” critiques against this model comes from Nico Cordeiro, the chief investment officer at Strix Leviathan LLC. In his article, he explains how SF is just a chameleon model.

The term chameleon is used for something that seems true when first looked at, but it turns out to be nonsense when digging in deeper. In my opinion, there are three crucial factors in the article which made me question the whole SF model. Firstly from the chart below, you can see 115 years of data points for gold, and I think everyone can see that they are not in a line.

No straight line in this chart. Image via Strix Leviathan

Secondly, as for all markets, you can’t predict the price based on its historical performance. This is again a fact that has been researched numerous times and is also quite logical since if we could predict the price based on history, then all of us would be millionaires.

Then lastly, maybe even the most crushing statistic of them all. Based on the SF model, in 2045, the price of ONE bitcoin would be $235,000,000,000. Yes, the price of one bitcoin. I don’t even think we have to talk about this number any further since even you, who are the most bullish about Bitcoin, might understand that this will probably not happen.

With one bitcoin worth $235,000,000,000 even my 0,001 BTC would make me rich

So, is this it for the Models?

NO! As I listened to Scott Melker’s Youtube video in which he had Plan B as a guest, I got a lot more confident in his hypothesis. Yes, as seen from the previous section in this article, the model might not be completely accurate and can have some flaws, but that’s just how it is. Try to tell me one model that has ever predicted an asset’s price accurately over the long run. That’s right, you can’t. That is because markets can’t be predicted.

Okay, so why do I believe in the model? Well, as seen before, it has been able to predict the price whether it was a coincidence or not. I also think that the fundamental value of scarcity is there and that the SF model could be accurate in the growth phases of bitcoin, so at least until bitcoin reaches the value where it starts to stabilize. Because if you think about bitcoin, it is its scarcity that makes it attractive. That is why we want to use it as a hedge for inflation.

Inflation decreases the value of a dollar and in theory BTC could be a hedge for that.

We can also see that the adoption of bitcoin has increased tremendously, and many hedge funds are thinking – or have already – about investing in bitcoin. This supports the fact that Bitcoin is in its growth phase. I believe it will continue to follow the SF price because of its flow.

When Bitcoin grows and many more start using it as an asset to HODL, the supply will be limited, but the demand will remain. This will force those who want bitcoin to purchase it from someone else since there is no other way. Yes, you could start mining, but then again, it has a high cost of entry, it takes a long time to become profitable, when more people mine, your chances of making money decrease, and it will take too long for, for example, hedge funds to gain a position they are comfortable with.

Then at some point, I think we will reach the price where Bitcoin starts acting more like gold now does. After that, we won’t see huge swings, and I do not believe that halvings will play an as important part as they do now. When Bitcoins market cap reaches over a certain point – which I can’t calculate – there won’t be enough money to push it up although the SF value increases, and that will be the point when Bitcoin and SF part ways.

High demand + low supply = TO THE MOON

Hopefully, some of you understood what I was trying to explain, although I’m no financial expert and can’t provide you with any approximate numbers. But the main point was that Bitcoins scarcity is its value and that a limited supply + increasing demand + impossible to increase flow = higher price.

Current Market Conditions

Before wrapping this up, I wanted to quickly go back to Scott Melkers Youtube video, which I already talked about, since there Plan B explained where he believed we are now and where we are going. The video came out on the 20th of May, and there he explained that according to his on-chain analysis, this cycle is not over yet. Unfortunately, he couldn’t tell what he used to make this analysis, but he gave us some price predictions.

Plan B believes that with the current market sentiment, we could go as high as $400-500k and then see a drop back to $100-200k. He believes that if we start moving up, then FOMO will drive the price up until fear pushes it back down. He explained that the money would come from increasing adoption from institutions and also retail investors. Although Plan B believes in his bullish predictions, he also said a few important things to remember:

1. Only invest in bitcoin what you are willing to lose, which makes sense because it is a risky asset.
2. Don’t take his models too seriously; he thinks you should take it more like an estimated average target and not an accurate price prediction.
3. He believes that there will be one big battle between BTC and governments that can influence the market and further push it away from his model.

Conclusion

After reading this article, you might have very mixed feelings about these models and whether to believe them or not, and that is precisely how I felt, too, after doing all this research. There is clearly something accurate, and it would be highly unlikely that everything Plan B has said is nonsense and just based on coincidence. But on the other hand, we have those who have proved it wrong with some solid facts.

So in these mixed feelings, I would suggest to again, as always, keep your head cool and not make any moves just because of one model. It is great to see these bullish predictions, and it might be tempting to believe the most bullish scenario, but you have to think rationally and do your own research. Bitcoin is still a young asset, and we need to further study it and see how it evolves and how we evolve with it.

The best thing to do if you believe in bitcoin is HODL, and look at your portfolio in 10 years and see what has happened.

The post Plan B’s Stock-to-Flow Model on Bitcoin: Beginner’s Guide appeared first on Coin Bureau.

With Cryptohopper you will be able to trade the markets 24 hours a day, never missing a solid trade setup. The bot works tirelessly, trading based on the conditions pre-programmed by you.

Cryptohopper has been helping traders succeed since 2017, and even though there are a number of other automated trading solutions that have been developed since, Cryptohopper remains as one of the most reliable and trusted automated cryptocurrency trading solutions.

With that in mind let’s have a detailed look at the Cryptohopper platform. The following review will cover many topics, such as how Cryptohopper works, how to use it effectively, what exchanges it supports, and of course the costs involved.

Cryptohopper Overview

The first thing we want to do is answer the basic question “What is Cryptohopper”. At its core it is an online platform that allows users to access and use an automated trading bot for the cryptocurrency markets. Such a bot places trades on your behalf, using conditions that you’ve set for it. It’s really quite genius, and it takes all of the emotions out of your trading, which is considered to be one of the keys to success in trading any market.

The intersection of humans and AI in trading. Image via Cryptohopper.com

Cryptohopper first came on the scene in 2017, and since then has grown to a community of over 400,000 cryptocurrency traders.

As you’ll learn in the following sections, Cryptohopper is actually no more than a tool for traders. While it will continue to perform on its own until turned off, its results are only as good as its programming.

That means you need to give it a good strategy if you expect it to be profitable. And there are no guarantees of profitability. However there are many ways to program this tool, and ways to test your strategies before putting them out into the wild. And these can mean the difference between profits or losses.

Cryptohopper will currently work with 14 of the largest global cryptocurrency exchanges, including Binance, Coinbase Pro, KuCoin, and others. This means your bot will have plenty of liquidity to take advantage of any market opportunities, no matter when they occur.

You’ll also find that Cryptohopper is suitable for traders of all experience levels. New traders can take advantage of the Cryptohopper Academy, and other educational resources to get started with a solid basic understanding of how to use the tool. And seasoned traders can take advantage of the more advanced features of the bot, including the more than 130 technical indicators supported by Cryptohopper.

New traders can get training from the Cryptohopper Academy. Image via Teachable.com

Using Cryptohopper a trader can build an automated trading bot that mirrors their own trading strategy. They can unleash their magic trading strategy into the wild to trade without emotion on the markets 24 hours a day. Or you can purchase tested trading strategies from the Cryptohopper marketplace.

You can get started with Cryptohopper today at no cost by taking advantage of a 7 Day FREE Trial of the world class crypto trading bot. Take it for a test drive, make some profits, and use those to pay for an ongoing subscription to the service. Pricing starts at just $19 a month.

Automated Cryptohopper Trading

Before you begin using Cryptohopper you’ll obviously want to know how it works. This is important because it will help dispel the myth that you can simply subscribe to the bot, set it free into the wild of the cryptocurrency markets, and start raking in profits. Nothing could be further from the truth.

No, these bots function exactly how they are programmed and that means a trading strategy used with them can be successful, but it also means it could fail. The bots are best used by those who have a proven trading strategy that can be programmed into the bot through the use of IF/THEN logic.

Conditional statements are the basis of the bot programming. Image via DarinThompson.ca

As an example, suppose you’ve had great success trading a range in Litecoin during the week. While you could certainly implement a strategy to trade the range on your own, it would mean you need to remain glued to your computer. Any time you are away, even to sleep, means you could miss a profitable entry of exit.

Instead you could program Cryptohopper to execute the strategy for you, but telling it when to buy and sell. The bot will merrily go along 24 hours a day, following your instructions, until you decide to turn it off. This gives you back your time, and still allows you to profit from your strategy all week long.

Perhaps most importantly, and I know I’ve mentioned this before but it bears repeating, the Cryptohopper bot removes and emotions from your trading. No more fear or greed, no more chasing the market, no more losses due to “hunches”, and no more losses due to emotional trading. Cryptohopper has no emotions, it simply follows the instructions given to it.

Cryptohopper Bot Features

If Cryptohopper is sounding like a pretty good tool for automating your trades check out some of the primary features of the platform:

A full collection of powerful features. Image via Cryptohopper.com

Paper Trading Accounts: With Cryptohopper you don’t need to risk a single satoshi until you know your strategy will work. Paper trading lets you test any strategy, whether simple or complex, to determine its potential profitability. Take Cryptohopper for a FREE 7 Day test drive and test your own strategies.

Professional Analysis Tools: Creating profitable strategies means having access to a solid array of indicators and tools, and Cryptohopper has a huge library of tools. Depending on which package you’re using you could have access to as many as 90 candlestick pattern recognitions and 30 unique indicators, plus customization tools to personalize your crypto bot. Best of all is that there’s no coding experience needed to implement any of these, simply click to set alerts and indicators.

Copy Trading Functionality: With the Cryptohopper Marketplace at your disposal you’ll be able to purchase all the tools you need, from some of the most successful cryptocurrency investors and Cryptohopper users. Each strategy provider in the Marketplace is screened by Cryptohpper to ensure only honest, reliable, and profitable bot creators are included. In addition to buying bot templates you can also chat with other investors or subscribe to trading signals.

No Additional Fees: The Cryptohopper platform doesn’t take a percentage fee from your trades. The monthly fee you pay is all you’ll pay. There’s no additional commissions, or per trade fees. That keeps your trading costs lower.

Trading Changing Market Conditions

Cryptohopper has features that can be useful in all types of markets: bear, bull, or consolidation periods.

Bull Markets: When the market is trending higher in a bull phase the trailing stop loss is an excellent way to capture profits and avoid gains turning into losses when the market whipsaws. You can also instruct the bot to place trades at key pricing targets as identified by various support and resistance tools.

Capture bull market moves. Image via Cryptohopper.com

Bear Markets: When the markets turn lower it’s time to put your bot on the defensive. You can instruct Cryptohopper to sell at the first, or subsequent signs of a downtrend. And if you are connected to an exchange that supports it you can even instruct Cryptohopper to place short sales and profit from the falling markets. Another potential strategy here is to have the bot add to your holdings at pre-defined intervals so you can profit from the eventual rebound in prices.

Consolidating Markets: Sideways markets are often a trap for traders as they get whipsawed back and forth, without a clear trend emerging. However you can also use these periods to scalp profits from the market as price bounces back and forth. For example, with Bitcoin trading in a range of $30,000 to $35,000 for several months you could have instructed Cryptohopper to enter and exit the market near the bottom and top of the range.

Programming  a Cryptohopper Bot

The Cryptohopper bot is only going to perform well if you program it properly. The bot simply follows your instructions, so a poorly designed strategy will almost surely cost you money, while a well designed strategy could potentially be the gateway to recurring profits.

Your results are only as good as your programming. Image via Cryptohopper.com

When you program the Cryptohopper bot you can think of it in terms of IF/THEN logic. So each instruction is designed as IF something happens, THEN take this action.

Consider our earlier example of trading a range in Bitcoin. You could tell the bot “IF Bitcoin touches $30,000, THEN buy 0.1 BTC”. And at the other end of the range you could tell the bot “IF Bitcoin touches $35,000, THEN sell 0.1 BTC”.

Of course you could make the bot even more advanced by telling it to sell when profits reach a certain level, or by coding in a stop loss or a trailing stop loss. You could even dollar cost average into a trade by telling the bot to buy every time Bitcoin price increases by 3% until a certain level is reached.

On the other side of the market you could also tell the bot to sell a given amount every time the price of Bitcoin decreases by 3% or some other amount.

Automate your trading. Image via Cryptohopper.com

The key principle here is that if you wanted to do this manually it would be a nightmare, and you would be chained to your computer, watching the markets at all times for your triggers to be hit. With Cryptohopper you simply “set it and forget it”.

Drag and Drop Implementation

Cryptohopper has made it so easy to create new strategies by using a drag and drop interface in the designer. This means you’re able to create your strategies without knowing a single line of code. You just click on the indicator you’d like to add to the automation and drag it to your bot. Then you’ll configure whatever variables are needed for the indicator and you’re good to go.

Technical Analysis

Experienced traders know how important technical analysis can be to their success, which is why Cryptohopper has included so many technical analysis tools. Depending on which package you’re using you could have access to as many as 90 candlestick pattern recognitions and 30 unique indicators, plus customization tools to personalize your crypto bot. You’ll find momentum indicators, oscillators, moving average indicators, and much more.

Pre-Live Testing

One of the top features of Cryptohopper is the pre-live testing hub, where you’re able to test any strategy you’ve created right within the strategy designer. This has the benefit of letting you see whether or not the strategy you’re planning on using will be profitable or not before you risk any of your own money.

Cryptohopper Marketplace

While creating your own automated strategies is extremely powerful in its own right, there’s another valuable feature to Cryptohopper, particularly for those who are new to automated trading. Of course I’m talking about the Cryptohopper Marketplace, where any Cryptohopper user can get bots that have been built by other Cryptohopper users.

Best of all, some of these come for free, although others do have a price tag.

Just one of the great services in the Marketplace. Image via Cryptohopper.com

For example, if you are new to automated trading and have little to no experience in creating trading strategies, the Marketplace is almost a necessity. Even if you have some experience, but are terrified to create and release your own bot into the wild, the Marketplace is going to be invaluable for you. In either case you can browse through the Marketplace to find a bot that’s been programmed in a way that suits your trading personality.

You’ll see that most creators will be very clear in what the bot is programmed to do. More importantly, the fundamentals of the bot are transparent, and you can see the historical track record of the bot before you attempt to use it. There’s also a rating system, where prior users of the bot are able to leave feedback, so you can see what others have thought about using any given bot.

The other great thing about the Marketplace is the ability to modify the bots you find there. That means you might find a basic bot, and then you can make adjustments that tailor it to your specific needs.

Killer strategies for excellent results. Image via Cryptohopper.com

Of course past performance is never a guarantee of future success, so always be careful when using a bot that’s been created by someone else.

Bot Trading Fundamentals

If you’ve made it this far you know what Cryptohopper has to offer, and how its automated algorithms work. However we haven’t discussed how the bot actually approaches the market on your behalf yet. It’s actually pretty simple, and the good news is that the Cryptohopper bot never has access or the authority to make withdrawals from any of your accounts. You never need to provide the platform with any funds, your funds remain on the exchange. This means your funds will always be secure when using the Cryptohopper automated trading bots.

In order to give the bot the ability to trade you will link the bot with your exchange account using an API. The process of doing this varies from one exchange to the next, but typically you’ll be able to find the API keys within your account settings.

Notice that Withdrawal access is not given. Read and Trade only. Image via Cryptohopper.com

Once you have the API keys you add them to your Cryptohopper account and this authorizes the bot to use the funds in your exchange account to execute trades on your behalf.

Cryptohopper Exchange Compatibility

As of July 2021 you can use the following exchanges with Cryptohopper:

• HitBTC (Official Partner)
• OKEx (Official Partner)
• BitPanda Pro (Official Partner)
• Bitvavo (Official Partner)
• Binance
• Binance US
• Coinbase Pro
• Bittrex
• Poloniex
• Bitfinex
• Huobi
• KuCoin
• Kraken
• com
• Exmo (Currently in Beta)

Covering most of the market volume and liquidity. Image via Cryptohopper.com

As you can probably tell from the list these exchanges represent the vast majority of liquidity in the cryptocurrency markets. That means your bots shouldn’t have issues with unfilled trades or slippage.

As far as which coins you can trade the platform currently supports Bitcoin, Ethereum, Litecoin, and 100+ other cryptocurrencies. More are added as they reach large enough trading volumes.

Cryptohopper Accounts

Cryptohopper has four account tiers, which includes the free, but limited Pioneer package. The first paid package is the Explorer Hopper package which costs $19 a month and gives much greater power and options. If you’d like to try it out for yourself Coin Bureau is offering a FREE 7 Day trial of the Explorer Hopper package.

The next tiers are the Adventure Hopper at $49 a month and the Hero Hopper at $99 a month. Which level you choose will ultimately depend on your trading needs as each higher tier comes with more positions, coins, triggers and added features.

Each tiers yields better features. Image via Cryptohopper.com

No matter which tier you choose it’s pretty certain that just one profitable trade will pay for your monthly fee.

Customer Support

Customer support comes in several flavors at Cryptohopper. For the most basic questions you’ll likely be able to find an answer in their comprehensive online Knowledge Base. If your answer isn’t found there you can submit a ticket and wait for the support team to get back in touch with you. There’s also an online form and email address (support@cryptohopper.com) where you can contact support, or you can use the online chat feature on the website. Unfortunately there’s no telephone support available.

Conclusion

As you can probably tell from our review, when used properly and with respect for the market, Cryptohopper can be a good way to automate your trading. This is true for every level trader, from beginners to trading pros. Of course those with more trading experience will be able to take advantage of more advanced strategies, but the learning curve isn’t difficult so new traders will also be able to get up to speed quickly.

In fact, we really liked the drag and drop framework used for the Designer. Plus it’s great that no coding knowledge is required in creating Cryptohopper bots. It makes it so simple to create a trading strategy that anyone can do it.

Plus you can get started for FREE with a 7 day trial. And once you see how simple it is to create your own automated crypto bot with Cryptohopper you can progress right to the paid plans, which to be honest are so inexpensive that just one good trade will pay for your monthly (or possibly yearly!) subscription.

Warning : Trading Bots do NOT guarantee profit. Always exercise risk management

The post Cryptohopper Review: Complete Bot Overview appeared first on Coin Bureau.

The same has happened to those who have tried to avoid a bear market by selling in the few sharp drops we’ve had. If you are one of these two people and keep wondering why every time you think something is going to happen, the opposite thing happens, and that it is like someone wants you to lose money, then you need to read this article because someone is doing precisely that.

In the last few weeks or earlier, you might have read or heard about a term called the Wyckoff method. This term may not mean anything to you, and you maybe haven’t looked into it any further, but it is time for you to know what it is and how it affects your crypto investments.

What is the Wyckoff Method About?

To understand the Wyckoff method, you need to know the basics of technical analysis, or at least know what it is. You can watch the Coin Bureau video about technical analysis from this link; it would help you tremendously ito understand this topic. For those who didn’t watch the video, let me just briefly tell you what technical analysis is.

Are you confused by crypto technical analysis? Get knowledge here! Image via Pexels.com

In short, technical analysis is when traders analyze charts to try to distinguish different patterns that should predict where the price is headed and then trade stocks or cryptos according to those. TA might sound stupid for some people since it does not take into account any fundamentals of an asset you are analyzing.

But when thinking about what it is truly based on, you find that it’s just looking at how people react in certain situations. When studied long enough, you start seeing patterns that happen regularly due to human psychology and how we respond to emotions like fear and greed.

Because many people use the same basic technical analysis by forming support and resistance lines to see from where the price usually jumps back up and from where it starts going down, it is easy for big institutions to manipulate the market by going against these typical patterns.

Technical analysis tries to find these areas of support and resistance. Image via IQTraderPro.com

For example, usually, when the price breaks up from the resistance line, it tends to continue to go up for some time, but if big institutions go against that and push the price down, then fear will take over for those who were certain that the price was going up and they will sell as panic and uncertainty take control of their actions. That, in turn, makes the price go even further down, which opens up a perfect time for institutions to buy low.

This is basically what the Wyckoff method is all about, institutions going against typical trading patterns to benefit from other people’s FUD.

History of the Wyckoff Method

In the 1930s, Richard Wyckoff noticed that these institutional investors were playing against retail investors in the stock market and that they made a lot of money while retail investors couldn’t understand the market movements, which made them buy and sell at completely wrong prices. In hopes of educating people about how the institutions are tricking them, he exposed the method they use, which is now named the Wyckoff Method.

Wyckoff wanted retail investors to learn how the markets move so that they too could benefit from it. For people to better understand the markets, he suggested that the price movements in the stock market should be thought of as the actions of one man, which he named “composite man”.

“…all the fluctuations in the market and in all the various stocks should be studied as if they were the result of one man’s operations. Let us call him the Composite Man, who, in theory, sits behind the scenes and manipulates the stocks to your disadvantage if you do not understand the game as he plays it; and to your great profit if you do understand it.” (The Richard D. Wyckoff Course in Stock Market Science and Technique, section 9, p. 1-2)

How do you spot the Wyckoff method?

There are only two different kinds of patterns representing the Wyckoff method, and both are fairly easy to spot. What makes it harder to benefit from these patterns is the structure. Both patterns are divided into phases, and it might be hard to distinguish the different phases, as patterns can be many months long or just a few hours long. One of the patterns is called accumulation, and that is when institutions will push the price down to buy at a discounted price, and the other one is distribution, where they are looking to sell high.

Wyckoff accumulation and distribution. Image via Stockcharts.com

If you want to learn more in-depth about the Wyckoff Method, I strongly suggest watching the coin bureau video about it from this link. However, if you don’t have the time to watch it now, then you can look at these pictures below and visit stockchart.com for more information.

What you can see from these pictures is the basic shape that accumulation and distribution take. You can also see that both are divided into different phases.

Price action follows a series of phases. Image via Stockcharts.com

This is because institutions with their large holdings can’t simply buy however much they want, or whenever they want, without influencing the market, which is why they have to form these sideways movements where they buy/sell consistently.

This is why, as already mentioned, the sideways movement can vary in time and size depending on how much institutions buy or sell. There can also be other factors like some unexpected black swan which disrupts the pattern and can make it harder for both institutions and retail traders to get a hold of the market. Generally speaking, though, you can find all of the most important phases if it really is institutions or large investors using the Wyckoff method.

How does it apply to the Crypto Market?

As you might have noticed, Wyckoff has not been alive at the same time as cryptocurrencies, so you might be wondering if it even applies to cryptos. The simple answer is yes, yes it does, and in my opinion, it is even easier to use in cryptos than in stocks. So hear me out.

In general, cryptos are much more volatile than stocks. Due to a lack of knowledge in the crypto space, it is much more difficult to estimate a cryptocurrency’s intrinsic value than it is for a traditional company. This is why I believe that institutions have a lot easier to cause fear or greed in the market. If the Bitcoin price suddenly drops 20% due to manipulation, it will most certainly cause panic among newbie retail investors who thought they would get rich quick with cryptos. This further pushes the price down and can create an even greater drop than 20%, which gives institutions a more than perfect time to buy in.

Wyckoff distribution in Bitcoin. Image via Youtube

The same applies when institutions want to sell, and actually, this year’s spike to $64,000 was a perfect case example of the Wyckoff method being used by large investors.

While big names in the business industry were giving crazy price targets from $100,000 to $500,000, Bitcoin continued surging past $50,000 and $60,000. This caused many retail investors to get hit by FOMO (fear of missing out) and greed. This, in turn, caused them to buy in no matter how high the price was. At the same time, though, large investors were dumping their holdings and taking home huge profits, which led to a large supply of coins and eventually, there was more supply than demand which made the markets crash.

Where are we Now?

Hopefully, you were interested enough to watch the videos that I referred to earlier because if you did, you should now truly know what the Wyckoff method is all about, but if not, you can always go back and watch them from the links I left. But even if you watched both videos, there might still be one question you would like to know the answer to – where are we now?

Well, right now, many of the traditional patterns of TA are being broken, which might mean that someone is manipulating the market. Another fact that further supports the argument that the market is being manipulated is the statistics from Chainanalysis, which tells us that 86% of daily trading volume comes from large investors.

Just look at this chart and compare it to the chart of how a typical accumulation phase looks, then tell me they do not look similar.

Past three months price action in Bitcoin. Image via TradingView.com

As I thought, you can’t do that. The question then is, where are we now. As a newbie to these myself, I could try to argue that we are already past phase C and the string, but when further researching it, I now strongly believe that the string is still ahead of us, and why is that?

Well, right now, there is a lot of uncertainty in crypto, especially in bitcoin due to regulations with China and then a large Grayscale bitcoin fund getting ready to unlock shares which might cause some selling pressure. This uncertainty makes, for example, JP Morgan analysts think that bitcoin’s price will likely hit a low of $25,000 before bouncing back up, and that could then be the spring phase.

This, of course, isn’t something you can be completely sure about, and before even thinking about making any moves in your crypto portfolio, I strongly suggest you read the rest of this article.

How to use your Knowledge

The question that still stands is how you should use this information to guide yourself to bigger gains in the crypto market. The answer actually isn’t that hard to find and might come out as kind of simple. The answer is – don’t use it – and I’ll tell you why.

What will you do with your new-found crypto knowledge?

First of all, because technical analysis isn’t the only factor that plays a role in the market. You might get completely burnt when some unexpected event happens, like a huge wave of regulations worldwide starting tomorrow. I’m not saying this will happen, but it is something that you couldn’t forecast by looking at charts.

Second of all, because of the high volatility in crypto, trading can be extremely costly when prices can dip more than 10% in a matter of minutes. Lastly – as in all trading – the amount of money you would have to use to cover the trading fees and potential taxes is quite a lot. You would be left with just a small fraction of the amount you made from your trade.

The best thing to do if you are a believer in cryptocurrencies for the long run is to become a fellow HODLer and try to stay calm when others are struck by fear or greed.

It’s best to simply Hodl.

These patterns, like the Wyckoff Method, may be moving the price of cryptos in the short term, but if the product (in this case cryptos) is good, then the price will also reflect that when you look at it again in 10 years.

What if I want to use my Knowledge?

You might be completely bored with my answer in the last section, especially after reading this whole article and watching the two videos I referred to, so let’s play a game of how you could use all this information IF it were something that would be smart to do?

Well, because we can try to see the different phases both in an accumulation and distribution, you could try to time your buying and selling in these to get the best price. Before you buy, it might be smart to check the chart and try to spot where the price could possibly bottom and then start buying when we get closer to that point. It could also be smart to buy in small positions in case that your analysis was wrong and the prices keep dropping from the level you thought we might bounce back up.

The same applies to when you are trying to sell your coins. You can try to spot where we might be and start selling when we start approaching the place you believe is the top. One thing you do have to remember is that, as already mentioned, the different phases can vary in both time and size, and you can potentially lose a lot of money if entering at the wrong time.

If timing the market were easy, we’d all be rich.

The problem with trying to play the market like the institutions do is that when more and more people start using the Wyckoff charts as bases for trading or trying to buy low or sell high, then that will become the next normal and institutions will see that and they will start playing against you with a different approach. If everyone is now waiting for the spring to happen – so that we could buy the dip – institutions might keep pushing the price further down until fear starts taking over and the sell-off they were hoping for becomes even greater.

Conclusion

That is why I’ll stick to my opinion that the best thing to do is to consistently buy the dips and then HODL. The value of Bitcoin, or any other crypto for that matter, will move upwards in the long run if it keeps getting adopted and we see more positive news for cryptos.

Therefore trying to play the market in the short term will most certainly only lose you money compared to what you could have made with just buying consistently and HODLing. If you do not believe me in this, then just take a look at the numerous researches made about the stock market where almost always those who trade actively lose to the ones that are in it for the long run.

Occasionally, of course, when you are in the market and especially the crypto market you will experience large drops where you cry at night for not selling and then buying back later. But it is impossible to know when the market will turn; the prices could just as well go up another 100%, and if you would have sold, you would most certainly be even more depressed than if it was the other way around. That is why you’ll just have to remember your initial bull case and try to stay calm when navigating your crypto vessel through the ocean of fear and greed.

Hopefully, you know now what the Wyckoff method is all about and how the institutions are trying to trick you into doing what benefits them the most. With this knowledge, you may not make any 100x gains but at least you can try to stay clear of buying or selling if you notice these patterns taking shape.

If you still want to learn more, I suggest you navigate your way to Youtube and search for the Wyckoff method. There is a lot of quality content about this phenomenon, and it’s always good to further educate yourself.

The post How does the Wyckoff Method apply to Cryptocurrency Markets? appeared first on Coin Bureau.

Granted it’s a fairly large divide still between cryptocurrency owners and stock owners, but we also have to keep in mind that cryptocurrencies have been around for just a dozen years, while stocks have been around since 1611, or for more than 400 years. I think cryptocurrencies will catch up to stocks over the coming 400 years!

In terms of tradable opportunities there are now more than 10,000 different cryptocurrencies according to Coinmarketcap.com. Some are huge, like Bitcoin, Ethereum, and Binance Coin, while others are so small that they have under $1 million in daily trading activity.

While some people are investing purely to speculate, others look at cryptos as a way to store value or hedge against inflation. The following guide will talk about how to invest in crypto in 2022, whether you should start investing, and what to know before you jump into this new opportunity.

Prepare for Volatility and Risk

I think it’s pretty well known that cryptocurrency investing and volatility go hand in hand. While the larger coins like Bitcoin and Ethereum have calmed down to some extent, moves of 10% are still not unusual. However smaller tokens can move that much and more day after day, and those moves can come in either direction. That makes it crucial to learn as much as possible about any token and its underlying project before investing.

In fact, the more you understand, the better investing decisions and choices you’ll be able to make. For example, some investors approach Bitcoin in much the same way they approach gold. They see it as a store of value, and as a way to hedge against inflation. That’s why Bitcoin has picked up the names “digital gold” and “gold 2.0”.

Ethereum is a different story, with investors attracted to the second largest cryptocurrency based on its utility and use in smart contracts and decentralized finance.

Cryptocurrencies are considered an alternative asset, a group that also includes real estate and commodities, because they are a way to diversify out of traditional assets like stocks and bonds. While they are great at providing diversification cryptocurrencies also remain quite volatile, and can even be influenced by news items and comments from popular personalities.

The good news is that despite the volatility, over the long-term Bitcoin has an average annualized return that’s greater than 200%. So embracing volatility can lead to impressive gains.

How to Invest in Cryptocurrencies in 2022

Cryptocurrency investing saw increased adoption in 2021, however it remains an option that’s not available from traditional stock broker – yet. Until it is investors need to become familiar with the various types of cryptocurrency brokers and exchanges that can help them get started in this new asset class. Those include the centralized brokers like Coinbase, the centralized exchanges like Binance and FTX, and the decentralized exchanges like Uniswap.

In addition to the buying and selling of cryptocurrencies there are other ways to invest too, and that means getting to know about staking, yield farming, crypto lending platforms, and even non-fungible token platforms.

Three Investing Principles to Keep in Mind

These three principles below might not seem new to experienced investors, but they are just as relevant in cryptocurrency investing in 2022 as they are for any other investment classes. If you take nothing else away from this article at least try to remember these three things:

1: Never invest what you can’t lose.

When you first start investing it can be very exciting, and even addictive for some. This can be especially true if your first purchases occur during a bull run, when everything is heading massively higher. You might think things will be like that always, and that can lead to over committing yourself and your capital.

Experienced investors know that there is always an element of risk in any investment. While some do have lower risks, the cryptocurrency class has some of the highest risks you’ll find. That means cryptocurrency investing should be approached carefully. Start with small amounts and grow your account slowly. And most importantly don’t use money you need for rent, food, or other necessities.

For some reason there are those who feel like they need to purchase 1 BTC or 1 ETH. This simply isn’t true. You can get started with cryptocurrency investing using as little as $10. Brokers and exchanges will let you purchase just 1 satoshi, which is the smallest fraction of Bitcoin and is equal to just one hundred millionth of a single bitcoin (0.00000001 BTC).

Start small and slowly build up your crypto portfolio over time is the prudent course.

2: Invest in alignment with your own interests and values.

There are many ways to invest, from stocks to real estate and of course cryptocurrencies. Some people would never consider investing in real estate, others try to avoid investing in certain classes of stocks, such as energy or tobacco companies. And still others will likely want to avoid cryptocurrencies, no matter how large the market grows.

Everyone should only invest in those assets that align well with their own values, beliefs, and interests. If you believe cryptocurrencies are the future of money, or that blockchain is the future of many types of technologies, then cryptocurrencies are an ideal investment opportunity. However if you question the value and utility of cryptocurrencies and blockchain technology then it might be best to avoid the asset class altogether and focus on investments that are better aligned with your own ideals.

3: Follow a Core-Satellite Strategy

Diversification is a key to investing, but to meet your investing goals you should have a focus to your portfolio. This is accomplished by using a core investment and a group of smaller satellite investments. Your cryptocurrency investments will likely by a satellite to your overall investing strategy, but within that you can also have a core to your crypto investments, surrounded by satellite tokens or coins. The majority of your capital in allocated to the core.

For your crypto portfolio you will want to choose one of the top ten cryptocurrencies as the core. These are proven, and while still volatile they will be more stable than new projects. You might choose Bitcoin, Ethereum, or something like Ripple as your core. Your satellites will be smaller projects, or those cryptocurrencies you aren’t as confident in quite yet. Think of the satellites as more speculative investments.

It’s key that you identify your core and your satellites, and don’t confuse the two. Once you’re comfortable that you understand these three principles of investing in cryptocurrencies you’ll be able to choose the cryptocurrencies you want to invest in with confidence.

Bitcoin Remains Dominant in 2022

Historically the largest cryptocurrency by market cap has been Bitcoin, and that continues to be the case in 2022. That’s why it is the most talked about cryptocurrency, and the cryptocurrency that attracts the most investment capital. Bitcoin dominance in January 2022 is over 40% of the total market. In a far second place is Ethereum, which has a market domination of just over 18%. Then there are others such as Binance Coin, Ripple, and Cardano.

Given its dominant position and longevity Bitcoin is currently the most reliable cryptocurrency for creating a core position. That said, Ethereum has performed better in 2021, albeit with more volatility as well. And some smaller cryptocurrencies have done even better. That’s why we recommend a diversified crypto portfolio.

Either Bitcoin or Ethereum would work well as a core, with smaller cryptocurrencies making up the satellite positions in your portfolio.

Keep in mind too that the broader market often takes its lead from Bitcoin. So when Bitcoin is rising the rest of the market also tends to do well. And when Bitcoin is falling the rest of the market tends to follow it lower. Consider Bitcoin as the core and all other cryptocurrencies as more speculative in nature and you will have a good start to a cryptocurrency portfolio in 2022.

These facts and tendencies should not be underestimated. Also note that many of the cryptocurrencies introduced since 2009 have disappeared. That means any smaller project you invest in could disappear, leaving you with nothing. And that could happen very quickly, due to the inherent volatility of cryptocurrencies.

Next Steps in Cryptocurrency Investing in 2022

Once you know how you want to build your portfolio (which coins and the amounts), it’s time to find a suitable cryptocurrency exchange.

There are quite a few, and you’ll also want to decide if you’re going to use a broker (Coinbase is the largest) or a true exchange (Binance is the largest here). The benefit of the larger brokers and exchanges is that they have more coins listed to choose from, plus they are more liquid and more stable. And these larger brokers and exchanges will also support staking, which allows you to generate passive income from your cryptocurrency holdings.

After you’ve made your choice of broker or exchange the next step is to create an account, complete the identity verification requirements (if necessary), and fund the account with some fiat currency. Remember that it isn’t necessary to buy an entire coin! If you only have $100 you can buy just that amount. Do watch out for the transaction fees however as they have become quite high in 2021 for many cryptocurrencies, including Bitcoin and Ethereum.

HODL in 2022

HODL is a term used in cryptocurrency that is an acronym for “Hold on for Dear Life”. It came about in the early days of cryptocurrency, when someone in a forum misspelled “hold” and has caught on as a defining term for the cryptocurrency markets.

Learning patience and the power of hodling in 2022 can be key to your investing strategy. Prices can move 20% or more in a single day, and in either direction. Prices could drop for an extended period of time. For example, Bitcoin hit a high of nearly $20,000 in December 2017, but a year later was trading under $3,500. Many people lost a lot of money by selling during this time, and it was needless because in April 2021 Bitcoin hit a new all-time high of nearly $65,000. Hodling could have saved them from losses and given them a massive profit instead.

Consider too those who might have bought Bitcoin early in 2020 when it was trading around $9,000. Because of the COVID-19 pandemic the price lost nearly 50% by March 2020, however as we know 2021 saw a massive rally in Bitcoin that saw prices go from the $5,000 level in March 2020 to almost $69,000 slightly over a year later. An investor might have sold at $10,000 or even $20,000 for an impressive gain, but it would have been peanuts compared to what they could have made.

Beyond Buying Bitcoin in 2022

Buying and hodling Bitcoin (or Ethereum) will very likely be the core of your cryptocurrency investments, but as mentioned already you should also consider adding some smaller satellite positions. One way to supercharge your returns even more is to choose some of the staking coins as part of your holdings.

Consider Staking

Cryptocurrency staking is the processes of locking coins in a wallet and receiving rewards in return. These can be thought of as equivalent to the dividends you might earn from holding certain stocks. Whereas the stock dividends come from company earnings, the staking rewards from cryptocurrencies come from the transaction fees generated by the network, or from a pool that was created for the purpose of providing staking rewards.

Staking also provides value to the blockchain by securing the network against attacks, and as a way to verify transactions.

As a crypto investor staking provides you with the means to generate passive income from your crypto portfolio. And the more cryptocurrency you hold, the greater your staking rewards become. It’s a great way to supplement your investing capital.

Popular Staking Coins in 2022

As you already know there are many different cryptocurrencies, and there are also many different cryptocurrencies that can be staked to earn yield. While the list below is far from exhaustive, it will give you a starting point in your research for good staking coins in 2022:

Cardano (ADA) – Cardano was created by one of the founders of Ethereum who was frustrated at the slow pace of development of Ethereum back in 2016. Cardano is also unique in that all its technology goes through a peer review process prior to being implemented. In July 2021 Cardano staking yields roughly 6.5% APY.

Ethereum 2.0 (ETH) – Technically Ethereum is not yet a proof-of-stake blockchain, but that change is expected to occur in late 2021 or early 2022. In the meantime it is still possible to stake Ethereum, but any rewards can’t be withdrawn until the blockchain officially switches to proof-of stake. Ethereum is yielding around 6.1% APY as of July 2021.

Polkadot (DOT) – Polkadot facilitates the cross-chain transfer of any data or asset types, not only cryptocurrencies. This achieves blockchain interoperability, which makny believe will be one of the keys to blockchain adoption in the future. Polkadot is yielding roughly 13.3% APY as f July 2021.

Binance Coin (BNB) – This coin was created as a dedicated utility token for the Binance exchange and ecosystem. Since then it has caught the attention of speculators, making it the fourth largest cryptocurrency. As a staking coin it yields 9.6% APY as of July 2021.

Where to Stake Crypto

There are a number of ways and methods to stake cryptocurrencies. Some require you to hold them in a specific wallet, while others have minimum staking requirements that make it more feasible for most users to delegate their tokens to an actual node operator. And many are now supported by the various centralized cryptocurrency exchanges, with yield being paid out simply by holding the tokens in an exchange wallet.

In addition there are new services that have been created specifically to allow users to deposit and stake. These services specialize in staking rather than exchanging or brokering. They include Staked and Stake Capital.

It’s worth noting that you’re going to find different terms, requirements, fees, and rules at the different staking platforms. It’s worth your time to examine these at the various places where staking is support in order to be sure you’re getting the best deal, and that your goals align with the offerings of the service.

Crypto Lending for Yield

Do you know where to find the best cryptocurrency interest rates?

As DeFi and CeFi applications continue growing and expanding, adding lending services, staking services, margin exchanges and more over the past few years it is becoming increasingly difficult to determine where investors can find the best yields for their idle capital. Answering the question of which platform has the best yields and interest rates is difficult as the rates are a moving target. Instead it’s best to look at each and see how an investor might benefit from adding that service of protocol to their portfolio.

DeFi Lending

DeFi lending was created as a way to provide margin to traders on decentralized exchanges and for a way to borrow through DeFi applications. However it’s important to understand that the supply and demand from these applications make yields for DeFi lending fairly volatile. In addition, because the majority of applications run on the Ethereum network the majority of borrowing and lending is with Ethereum, ERC-20 tokens, or wrapped tokens.

Popular DeFi lending platforms include:

Compound – A DeFi platform for tokenized lending and collateralized borrowing.

Cream – A lending platform based on Compound Finance.

dYdX – A DeFi platform for collateralized borrowing, lending, and margin trading.

AAVE – Aave is a DeFi platform for collateralized borrowing and lending.

Centralized Lending

While decentralized lending has taken the spotlight recently, there are also a good number of centralized crypto lending platforms that investors can access. While you give up decentralization with these platforms you typically gain more stable interest rates since the lender is setting the rates rather than relying on pure market forces. Investors will also find that interest rates on the centralized platforms are typically higher than those on decentralized platforms.

Popular CeFi lending platforms include:

• NEXO
• Block-Fi
• Celsius
• com
• Hodlnaut

Yield Optimization Platforms

If searching through the lending platforms to find the best yield seems like a thankless task to you, then why not give it up and let a yield optimization platform handle the heavy lifting. Thanks to the innovations brought about by Yearn.Finance investors are now able to set it and forget it when it comes to finding yield.

That’s because these “programmable money” platforms use the tools available from the Ethereum network to locate the optimal interest rates at all times. With a yield optimization platform investors are freed from the drudgery of constantly watching yields and moving their assets.

Yield optimization works by creating a pool for each asset that’s deposited. When a user makes a deposit to one of these pools they receive yTokens, which are simply a yield-bearing equivalent of the coin they deposited to the pool. As an example, if a user deposits CURVE into the protocol they receive an equal amount of yCURVE in return.

The assets held in the protocol are automatically shuffled to the highest yield bearing lending platform in the entire DeFi ecosystem, thus maximizing yield at all times. The protocol checks for better yield bearing opportunities every time a user makes a deposit into the protocol, and will rebalance the entire pool if necessary. Users are able to burn their yTokens at any time to receive their initial deposit and any accrued interest.

Only Invest What You’re Willing to Lose

It shouldn’t be necessary to tell you this, but as an experienced investor I want to remind you that you should only ever invest money that you can afford to lose. If you’re investing your rent money you need to stop right now and find a way to free up some capital for investing that isn’t needed to pay for your everyday expenses.

Remember, the purpose of investing is to grow your wealth, not to risk losing it entirely.

Maintain a Healthy Crypto Portfolio

Keeping a healthy portfolio means creating your core investment, and making sure you diversify by adding in a number of satellite investments. This helps to even out your returns as the winning picks offset any losing picks.

This is true of diversifying your entire portfolio by including cryptocurrencies and its true of the crypto portion too. By adding a number of different cryptocurrencies you’re diversifying your risks and spreading your exposure to a broader mix of assets.

While this type of diversification means you’ll almost surely have some losers in your portfolio it’s far better to lose a few while winning some rather than losing it all because you kept all your crypto investment in one coin. You might not get the eye watering returns of a single rocketing coin, but you also won’t risk losing everything if the coin you pick crashes and burns.

Don’t Make Investments on Hype

It’s true for stocks and even more true for crypto. Ignoring hype around a project or coin is going to be crucial to your success.

When cryptocurrencies are involved you should never base your investing on what others are saying (that’s true for any investment). Instead you should be studying the market, the project, and the price action of the coin and then taking all that knowledge and using it to make informed investing decisions. You still might take some risks, but at least they will be well-informed and calculated risks.

Basing your research on the advice of others can be acceptable, but you will need to learn how to distinguish between those with good knowledge of trading and investing and those who are simply trying to shill for a coin. Mastering this will allow you to filter out much of the noise in the crypto markets and focus on important information that lets you develop your own strategy.

Conclusion

When it comes to investing in cryptocurrency, education is the key in 2022.

Understanding the basics of cryptocurrencies and crypto investing will help you make better sense of the crypto conversations that seem to be everywhere in 2021.

As an investor, even if you’re against cryptocurrencies, it is vitally important to understand them and to keep up with news and developments in the space. This will allow you to remain informed, and to modify your investing decisions if need be. It will also give you the ability to explain cryptocurrencies to friends and family who might be considering investing.

Ultimately it will be basic financial education that will help you decipher the latest positive trends from dangerous pump and dump schemes. Making cryptocurrencies a part of your investing strategy can help you to maximize your returns over time.

The post Investing in Cryptocurrency in 2022: Complete Guide appeared first on Coin Bureau.

The following piece will take a look at the differences in trading vs investing, which can be helpful in sorting out your own approach to buying and selling cryptocurrencies.

Getting Rich with Crypto

Cryptocurrencies present us with several ways to generate income and profits, or even to become rich in the long run. These methods include mining crypto, staking and yield farming, investing, and trading.

Crypto trading and crypto investing could be your path to riches.

Mining seems very attractive until you realize that setting up the equipment for mining is quite expensive and requires some experience in working with complex software and computer hardware. Not to mention the ongoing maintenance required and the expense of electricity and cooling for your mining equipment. Yes, mining can be quite profitable, but it’s not for everyone.

Staking and yield farming are both attractive alternatives, and probably fall under the heading of investing, although there is some of the trading mindset involved here as well, especially for yield farming.

The two most common methods in use to get rich with crypto, or even to simply improve your financial status, is through crypto trading and crypto investing. The two activities are often thought of as being the same thing, but there are fundamental differences between the two, and understanding how each matches with your own goals is important before you start buying and selling cryptocurrencies.

Master Investor vs Master Trader

Before looking specifically at crypto trading and investing let’s look at an example of successful traders and investors in the traditional markets. There are two men we can look at who undeniably embody trading on one hand and investing on the other. These two men are George Soros and Warren Buffet. No doubt you’ve heard of them. Both have become incredibly wealthy during their lives, but in quite different ways.

Warren Buffett – Master Investor and George Soros – Master Trader. Image via Quora

George Soros has based his financial life on trading, making short term bets on various assets in search of profits. He is a legendary trader, known as the man who broke the Bank of England in reference to his shorting of the Pound Sterling in 1992, causing the Bank of England to withdraw the Pound from the European Exchange Rate Mechanism (which would later lead to the creation of the Euro), and pocketing roughly $1 billion for himself on the trade. Five years later in 1997 Soros would again make huge bets on currencies, this time the Thai baht and Malaysian ringgit, and net hundreds of millions of dollars.

Soros also managed what is arguably one of the world’s most profitable hedge funds. His Quantum Fund delivered returns of roughly 30% to investors over the course of three decades. To put that in perspective, if you had invested $1,000 in the Quantum Fund in 1970 by 2000 that initial investment would have been worth $4 million!

Soros has been one of the most successful traders of our age, amassing a personal wealth of over $8.6 billion, although he has also donated $32 billion in addition to his current personal wealth.

In contrast to Soros there’s the most famous investor of all time – Warren Buffet. Buffet prefers a value investing style, and has been known to say that when he purchases a stock he does so with the expectation of holding it forever. That is truly investing!

Warren Buffet is the GOAT when it comes to hodling. Image via Reddit.

Buffet has amassed over $100 billion in personal wealth, and Berkshire Hathaway, the company he founded and runs, is worth over $400 billion. All of that wealth was created by purchasing stocks and other assets that Buffet believed were undervalued in relation to their true intrinsic value. In the financial world the intrinsic value of something is determined through a process known as fundamental analysis, in which all the available information about a company or asset is analyzed to determine the true or intrinsic value of the asset.

Buffet has the gift of being able to do fundamental analysis very effectively, and over the years he has bought and sold hundreds of companies and their stocks, making huge profits on many of the investments. Those profits were made over years, if not decades as this type of investing takes time for the assets to appreciate. However it can also yield far greater profits than trading.

Soros has made his fortune by finding short-term trades caused by short-term market imbalances. Buffet made his fortune by finding long-term investments that were undervalued based on their intrinsic worth. These are two different styles for approaching the market, but as you can see both can be successful. Whether one trades or invests is a function of the person’s personality, goals, risk appetite, and approach to finances.

Types of Investors

Investors come in different types, but in general there are three dimensions to investing in cryptocurrencies:

• Active vs passive management;
• Growth vs value;
• New vs established projects.

So many investing strategies to choose from.

Understanding these dimensions and your own preferences can make it easier to determine what crypto investments might be best for your own portfolio.

Active vs Passive Management

For most investors in cryptocurrencies an active style is required. That’s because there currently aren’t the same types of funds and ETFs available for cryptocurrencies as there are for stocks and the like. This active management style means that the investors are doing their own research and selecting their own cryptocurrencies to invest in.

For those who do want to remain hands off for now there are trusts being created by the likes of Greyscale and Osprey that could fit the bill until ETFs and more traditional funds are created for the passive investor. Note that these trusts do come with hefty fees, however that’s offset by the fact that working with a fund means that you deal with the company that manages the fund for any account questions or information you need, such as setting a password, tracking gains and losses or gathering documents for filing your taxes.

Growth vs Value Investing

Investors can choose value, investing in cryptocurrencies they believe are undervalued, or growth, which are the cryptocurrencies that are seeing the greatest current growth.

Sometimes growth is best, but other times value outperforms. Image via Euclidean Technologies.

For example, in 2020 decentralized finance (DeFi) was all the rage. There were many new projects that sprouted up around DeFi applications and many of them were the fastest growing in the cryptocurrency space. By contrast, more established players, while still delivering good returns, weren’t growing as quickly since they were already considered to be fully valued.

New vs Established

This is tightly related to the value vs growth characteristic. Basically it means investors can choose to invest in established cryptocurrencies such as Bitcoin and Ethereum. These projects have a much larger community, larger market capitalization, and are so well established that it’s unlikely they are going to suffer a complete wipeout.

By contrast there are the new, up-and-coming projects. These are untested for the most part, and while they typically offer much richer rewards, they also come with much greater risks. A new project might take off like a rocket, or it could sink like the Titanic.

Types of Traders

There are several different types of traders based on the time horizon of their trades:

Scalpers: This is the most short-term trader of all types. Scalpers look to take advantage of very short-term changes in price trading in and out of a coin within minutes or even seconds. Scalpers often look to take advantage of arbitrage opportunities or mismatches within the order book and can make hundreds of trades per day, accumulating small profits on each trade that add up to large daily profits.

Scalping is the most active of the trading styles.

Day Traders: Popularized in the forex and equity markets day trading is a strategy where the trader ends each day flat, or with no open trades. This minimizes overnight risks, which can be particularly helpful in the volatile and fast-moving cryptocurrency markets. Day traders might keep positions open for as little as minutes or as long as several hours in order to capture the daily movement in a coin or token.

Momentum Traders: Momentum traders look to take advantage of the current price trends within markets. Their underlying assumption is that the current direction or trend of the price will continue, allowing the trader to make a profit from the continued trend. Momentum trading requires a good understanding of market conditions and a strong sense of timing since it is important to be able to judge when a trend is losing steam and could possibly reverse. Trades could be held from hours up to weeks depending on the strength of the trend.

Swing Traders: Swing trading is similar to momentum trading in that it looks to take advantage of the short term movements in a coin’s price. Swing traders use technical analysis quite extensively in order to determine proper entry and exit prices and their trades can last anywhere from days to weeks. Swing traders often look for the explosive moves that happen in breakouts or trend reversals.

Crypto Investing vs Crypto Trading

Now that you have a real-world example to refer to let’s take a deeper look into the characteristics that define investing and trading.

Time Horizon

The time horizon is one of the top characteristics that distinguishes investing from trading. Investors are concerned with the long-term. They are buying and hodling, not concerned with the day to day fluctuations and volatility in the markets. An investor believes that in the long-term, we’re talking years or even decades, that the coin they are purchasing will increase in value.

Some primary differences between traders and investors.

The mind-set behind this for cryptocurrency investors is often that the technology is so new, and adoption rates so low, that massive growth in the coming years is inevitable. They strongly believe that blockchain technology will overtake the traditional financial systems, but realize that it could take years for this to play out.

Traders have a different mindset in which they are concerned with the short-term price movements of the various coins and tokens they track. Some very short-term traders are even concerned with the hourly movements in prices. Traders look to make quick profits from the markets, and believe they can do so with the assistance of technical analysis of the price history and trading volumes of various assets. Traders rely heavily on volatility to help them realize large profits in a short period of time. The volatility of cryptocurrencies makes them an ideal asset class for traders.

One important thing to understand about the cryptocurrency markets, that affects both crypto investors and crypto traders, is that the cryptocurrency market cycle is very short when compared with traditional asset classes such as equities or commodities. This means cryptocurrency markets experience both bull markets and bear markets over a shorter time frame, and with greater intensity. For example, cryptocurrency bull and bear markets might last for as long as a year or two, while bull and bear markets in equities can stretch on for a decade or longer.

Trade Frequency

The trade frequency refers to how frequently trades or investments are executed. Traders tend to have a high trade frequency, whereas investors have a low trade frequency. Where traders might execute trades on a daily basis, or even multiple trades daily, investors frequency might be measured in weeks or even months.

You can tell a trader from an investor by holding time. Image via InvestorsUnderground.com

An investor is looking for long-term price appreciation in the coins they purchase, and thus could accumulate coins over the course of months or years. This could mean they only make purchases and sales at very long frequencies, buying when coin prices are depressed, and potentially selling when prices are stronger.

Traders look to make profits frequently however, which means their trade frequency is necessarily much greater. A trader looks to profit from constantly evolving market opportunities, making small profits on each trade that add up to large profits in the long term.

Risk Profile

The risk profile of a trader or investor is a measure of how much risk an individual is comfortable with. Cryptocurrencies are already considered to be quite risky, and risk is correlated with the potential returns of an investment.

The large price fluctuations of the cryptocurrency markets make them the riskiest of all asset classes. However risk doesn’t exist in a vacuum. It needs to be compared with returns as well. This is known as the risk / reward ratio. If the potential rewards from an asset are considered to be quite high, as they are in cryptocurrencies, then the amount of risk that’s acceptable is also higher.

If you want to stack some coins you need to take some risks.

Anyone who is in the cryptocurrency market can already be assumed to have a high risk tolerance, since cryptocurrencies are the riskiest asset available. However it is still possible to categorize cryptocurrency speculators based on where they fall on a scale of risk tolerance. Crypto investors tend to be a more risk-averse group in general, which is why they tend to focus on the long term and ignore the daily price fluctuations seen in the cryptocurrency markets. That’s because time helps to smooth out volatility in the long run, and at the same time it also lowers risk.

Traders are more willing to accept the risk inherent in short-term market moves in the belief that they can offset that risk with the greater rewards possible from rapid trading in and out of the market. The short-term volatility in crypto markets does increase risk, but it also increases the potential reward. Traders who have an extremely high tolerance for risk might even engage in margin trading, which can greatly enhance profits, but also carries the risk of greatly increasing losses as well.

Analysis Type

One of the key differences in crypto investors and crypto traders is the type of market analysis they use to determine what and when to buy and sell. Because investors have a long time horizon they are far more likely to use a fundamental style of analysis, where they look at all the underlying factors of a cryptocurrency and the project it is associated with. This includes adoption rates, hash rates, and the utility of the blockchain.

Two different strategies for analyzing cryptocurrency markets.

Traders are more concerned with the pure price action of the cryptocurrencies they  trade, and so they are far more likely to engage in technical analysis. This is a method for predicting the future price of an asset based on statistical variables, and the historical price action of the asset. Technical analysis includes reading chart patterns, support and resistance levels, trend lines, and many other statistically based indicators.

Profit Mindset

The profit mindset is the way in which crypto traders and crypto investors look to make profits and generate wealth from their activities. Cryptocurrency investors typically have four primary ways in which they profit from their activity:

1. Price Appreciation: This is the most basic way in which profits are made. It is simply an increase in the price of the cryptocurrency relative to the purchase price. When you buy Bitcoin for $10,000 and the price increases to $30,000 this is price appreciation.
2. Dividends: While not strictly the same as dividends in the equity markets, where shareholders receive a portion of the company’s profits, there is a similarity to some aspects of cryptocurrencies. For example, staking coins pay those that hold them and generate an annual yield. Those payments come from the transaction fees generated by the network, and can be considered as very similar to stock dividends. Another type of dividend in cryptocurrencies comes from the practice of burning coins. This reduces their supply and is equivalent to a stock buyback plan in the equity universe. A third dividend type comes from the practice of yield farming, which is when investors receive yield from their coins by lending them to provide market liquidity.
3. Forks: While not as common as they once were, forks once provided cryptocurrency investors with very nice dividends in some cases. A fork occurs when there are two philosophies within a development community, leading the blockchain project to split into two different forks. When this happens anyone holding the coins of the original fork gets to keep those coins, plus they get “free” coins from the creation of the new fork. For example, there are 105 forks of Bitcoin, 74 of which are still active and holders of Bitcoin at the time of the fork also received “free”coins.
4. Airdrops: This is when a project distributes coins for free to the community, generally for marketing reasons. Airdrops can be distributed to those who have participated in the project, or a related project. They might also be distributed to those who simply register for the airdrop.

Whether trader or investor, there’s always a profit mindset.

Traders have just one motivation for their activity – price appreciation. They look to profit from the short-term price movements of the cryptocurrencies they buy. Traders might also purchase coins to take advantage of hard forks and air drops, but would then sell the “free” coins they received immediately to collect their profits.

Shorting the Market

Where investors only profit from the upward movement in prices, traders are able to profit from both increasing and decreasing prices. Making profits when prices are trending higher is easy. You simply buy low and sell high. However it is also possible to make money by selling high and buying low, which is known as “shorting the market”.

Shorting is quite common in stock trading, but is a bit more difficult with cryptocurrency due to the lack of brokers offering margin. When shorting an asset you borrow the asset from your broker and sell it at the current price with the belief that price will decline in the future. If you are right and price does decline you later buy the same asset at the lower price and then return it to the broker.

The difference in the selling price and later purchase price is where the profits are generated.

Short Selling – Sell high and buy low.

For example, you might believe that Bitcoin is entering a bear market phase. The current price is $40,000. If you borrow 1 BTC from your broker you can sell it immediately for $40,000. Several days later Bitcoin’s price has dropped to $30,000. You purchase 1 BTC with the money made from the earlier sale and return it to the broker to settle your debt with them and keep the remaining $10,000 as your profit from this Bitcoin short sale.

Conclusion

As you can see there are fundamental differences in the mindset, risk appetite, and strategies used by crypto traders and crypto investors. Understanding what these differences are can help you understand if your own personality is more suited to crypto trading vs crypto investing.

The fun part is that you don’t need to settle on one or the other. Cryptocurrencies are still in the very early stages of their development and will likely increase in value in the coming years, making them a good investing choice.

While you’re waiting for those crypto investments to mature the volatility of the cryptocurrency markets still makes them attractive for traders looking for quick profits. Taking advantage of this can allow you to increase your investment holdings through trading activity.

Ultimately the decision is yours. It’s also important to note that the volatility of the cryptocurrency market does make it very important that you only invest money that you are willing to lose if things end up going badly in the crypto markets.

Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.

The post Crypto Trading vs. Crypto Investing: Complete Beginner’s Guide appeared first on Coin Bureau.

While this is going to be a fairly long piece, it will still only be going into the basics of crypto trading. It will give you everything you need as a beginning in crypto trading, and if you’re interested in a quick start you could be making your first trade later today.

If you don’t have time to read the entire piece just now though here’s the tldr;

1. Find an exchange to trade on and register for an account;
2. Complete any verification requirements for the exchange;
3. Fund the account;
4. Begin trading.

Get started crypto trading today.

You’ll also want to have an external wallet to transfer your cryptocurrencies to when done trading. For the highest level of safety we always recommend choosing a hardware wallet like the Ledger, Trezor, or Opolo. Other options for wallets include desktop wallets like the Exodus, or online wallets such as MetaMask.

Choosing a Crypto Exchange for Trading

Once you’re ready to start trading cryptocurrencies your first job will be to find a suitable exchange. That might not be as easy as it sounds because there are different types of exchanges to consider and different regulations based on where you live.

The first consideration to be made is whether you want to use a centralized exchange (CEX) or a decentralized exchange (DEX). For beginners we do recommend using a centralized exchange. It will be easier to get started, and they will provide you with more tools and support. Decentralized exchanges are great and we love them, but they aren’t really suitable for beginning traders in our opinion. Plus the decentralized exchange will limit you to trading only the coins on the chain that’s supported by the DEX (Ethereum, Binance Smart Chain, etc).

There are a huge number of cryptocurrency exchanges to choose from, and you’ll want to read through their terms and conditions to get a feel for which one will support your own trading best. Some have a wider selection of cryptocurrencies, some have better fees, and some have better support.

You have so many exchange choices.

The top three exchanges at the time of writing are Binance, Coinbase Pro, and Huobi. All three are very solid exchanges. Binance is going to give you a greater selection of coins for trading, as well as much better trading conditions. Coinbase Pro (and the even easier Coinbase) isn’t as great when it comes to selection and fees, but it is easier to use. And those looking for the simplest way to purchase and trade cryptocurrencies can get started with a basic Coinbase account and later transition to Coinbase Pro.

Other potential exchanges include Kraken, BitMex, Poloniex, and Gemini.

Note that many exchanges remain crypto-only, meaning you are unable to deposit or withdraw fiat cash from the exchange.

Cryptocurrency Exchange vs Cryptocurrency Broker

While many people use the terms “broker” and “exchange” interchangeably, the truth is that there’s some difference between the two that’s important to understand.

A broker is not the same as an exchange. Image via YouTube.

A broker is a person or company that acts as an intermediary in financial transactions. For their assistance in brokering sales and purchases they receive a commission. The well known Coinbase is a broker, although their Coinbase Pro platform is an exchange. Broker’s fees are typically quite high when compared with an exchange.

The upside is that cryptocurrency brokers provide a more suitable environment for those just getting started in the purchase and trading of cryptocurrencies. They offer a means to purchase crypto with fiat currency, and to convert back from crypto to fiat as well. Prices are set by the broker so there’s no slippage involved and buyers know exactly what price they will receive when buying and selling. Brokers can also provide additional services such as cold storage for large amounts of cryptocurrency.

In contrast an exchange connects buyers and sellers with one another using an order book that contains the orders of all the users of the exchange, and often from outside sources as well. Because the exchange is simply connecting buyers and sellers they receive a much smaller fee for their services when compared with brokers. The exchange is simply the platform where buyers and sellers get together.

The downside to this is that slippage can occur in fast moving markets, which means buyers and sellers might not get the price they expected.

Cryptocurrency exchanges are suitable platforms for more advanced holders and traders of cryptocurrencies who want to take advantage of price fluctuations through speculation, hoping to make gains and to avoid losses.

Indirect Solutions for Crypto Trading

While things are getting better in terms of access and removing restrictions on cryptocurrency exchanges, there will likely still be some of you out there who will either have difficulty dealing with a traditional centralized exchange, or simply don’t want to deal with one of these exchanges. Fortunately there are still some options that you could explore.

There are plenty of cryptocurrency exchange alternatives to choose from.

If you still want to buy actual cryptocurrency you could try Square’s Cash App, which is a particularly good way to avoid using Coinbase if you are just interested in buying and selling Bitcoin. This is also a good option if you need to buy some Bitcoin to deposit to another exchange for trading.

Some other options for very basic crypto trading include Robinhood and Paypal. The downside to these options is that neither allow you to withdraw crypto from their platform, and you’ll only find a handful of the largest cryptocurrencies to trade.

The upside to using Robinhood is they also offer access to equity markets, meaning you can take an even more indirect approach to crypto trading through the various Greyscale Trust products, or through trading stocks that are related to crypto, such as Coinbase, Bakkt, or Riot Blockchain.

There are also swap services out there like Changelly and SimpleSwap which are great for a quick exchange, but not really suitable for crypto trading due to the high fees charged on each transaction. They’re convenient for sure, but you do pay for that convenience.

The Logical Trading Progression

Many new traders go through a typical logical progression with cryptocurrencies. They start with something simple like Cash App or Coinbase to buy and trade a small number of cryptocurrencies (Coinbase has gotten much better for this). Once they are comfortable with these easy entry points to crypto trading they begin to look into the full featured exchanges such as Binance and Coinbase Pro. This gives them a far greater selection of crypto assets, as well as introducing them to technical analysis tools and charting tools.

As you advance you’ll get access to a broader group of cryptocurrencies and analysis tools.

While that’s as far as some traders go, others continue exploring and move on to the centralized exchanges such as Uniswap or PancakeSwap. In addition to using these decentralized exchanges this is also the level at which traders begin looking into yield farming or the use of leverage and derivatives in their trading.

This logical progression lets you gradually build on learned skills, and taking these steps out of order could lead to problems, so try not to run before you can walk.

Another good idea along the way is to educate yourself about other areas of the crypto investing universe such as mining and staking. And of course you’ll want to educate yourself on the basics of how blockchains work and how smart contracts work, as well as other technical aspects of blockchain operations. Of course you can do all of that here at the Coin Bureau blog and over at our YouTube channel.

Learn about Market Order Types

If you’re starting out with a broker like Coinbase rather than an exchange you won’t need to know about order types, but once you move to Coinbase Pro, Binance, or some other exchange knowing the different order types will become important for risk management and order management.

The most basic order type is the market order. With this type of order you are simply buying or selling at the current market price. But there are other order types that allow you to fine tune your entries and exits. The most common is the limit order, which allows you to specify the price you buy or sell. So Bitcoin might be currently selling for $40,000, however with a limit order you can specify that your order is only executed if the price is $39,000. This way you don’t have to constantly monitor the market, but can still get a better price.

Another commonly used order type is the stop-loss order. This is a conditional order that protects you from suffering a loss. The stop order is a type of limit order that is placed below the current price or your entry price to protect from sharp drops in price that could lead to large losses. The opposite order type is a take profit limit order. This type of limit order is placed above your entry price at a target level that matches the amount of profit you’d like from the trade.

A great way to protect your account from huge losses.

These various order types can help protect you from the inherent volatility of the crypto markets.

Learn about Fundamental Analysis

Fundamental analysis is one method for determining the actual value of an asset. In fundamental analysis the financial and economic factors of the asset are studied to reach what’s considered a fair value for the asset. This analysis can be very broad and takes in such things as the broad economy, conditions within the industry, and the state of the company or project, which can even include the strength of the brand and the management.

The ultimate goal of fundamental analysis is to determine the fair value of the asset to see if it is currently overvalued or undervalued. Then the trader or investor can use that information in their investing decisions.

If you want to find the true value of an asset fundamental analysis in invaluable.

When it comes to performing fundamental analysis on cryptocurrencies the analysis will include the emerging field of on-chain metrics. This includes the number of holders, the top holders, how many addresses are on-chain, the growth of the blockchain, hash rate, and many other metrics. Using all of the available data about the project the analyst can determine the strength of the network and the potential value of the project.

Fundamental analysis is widely used in equity and currency markets, but isn’t as useful for cryptocurrencies since the asset class is so new. There’s currently no standardized measures that can be used to determine the market value of projects, plus the speculative nature of cryptocurrencies often makes fundamental analysis unhelpful in determining the market movements of a coin or token.

In time the market will mature and then fundamental analysis will be far more useful.

Learn about Technical Analysis

One of the top methods used to determine potentially profitable entry and exits points for cryptocurrencies is crypto technical analysis. This is the analysis of the past price action of an asset to identify possible patterns, such as support and resistance areas, current trends, and potential trend reversals, among other things.

Technical analysis has a long history in fiat currency “forex” markets, and in commodity and equity trading as well. It is well tested, and many of the indicators and methods used can increase the success rate and profitability of trades. Technical analysis is based on the principle that certain patterns in price repeat themselves. While it uses price and volume it is ultimately based on trader psychology, as certain levels tend to create specific reactions from traders.

Price action informs the technical trader.

The study of technical analysis can be a life-long endeavor, and there are entire websites and massive books dedicated solely to technical analysis. As a starting point you might want to look into the basics such as support and resistance levels, trend lines, and moving averages.

More advanced technical analysis indicators include the relative strength index (RSI), moving average convergence divergence (MACD), Bollinger Bands, Fibonacci Retracements, and others. Some of the most popular trading methodologies include a number of these indicators. These methodologies include Dow Theory, Elliott Wave Theory, and the Wyckoff Method.

Technical analysis is most often thought of as a way to predict price movements, but it is also a useful framework for risk management. Because technical analysis provides a model for analyzing markets it allows the trader to make their trading more measurable and defined. This allows a trader to more accurately analyze their own performance, and to include risk management strategies as a part of their overall trading strategy.

Types of Crypto Traders

It’s always best to have a trading strategy when approaching the markets. Your trading strategy is the plan you follow when executing your trades. It can be simple or it can be complex, but there’s no correct method. The best method is always one that aligns with the trader’s own goals, risk tolerance, and preferences.

You won’t really know what type of trader you are until you start actually trading.

No matter what method you decide to follow it is crucial that you do establish a trading plan. And don’t worry when starting out. Your trading plan will likely be simple, but it will also evolve over time. And if you come to find that it doesn’t suit your trading style you can always change it later. The important thing is that it will establish some clear guidelines and goals, and it will keep you from making emotional trades or trades based on your “gut feeling”.

In general the trading plan includes what you’re going to trade, how you’re going to trade it, and what your entry and exits points will be. In a larger context most trading plans also fall under one of the following trading styles: Day Trading, Swing Trading, Position Trading, and Scalping.

Day Trading

Day trading is a popular trading strategy that involves entering and exiting trades on the same day. The term comes from traditional equity markets which are only open for set hours each day. A day trader closes all their positions by the end of the trading day and keeps no positions open overnight.

Cryptocurrency markets are a bit different from traditional markets in that they don’t close – ever. You can trade cryptocurrencies 24 hours a day, 7 days a week, and 365 days out of the year. Yet trading within the context of day trading is still useful for cryptocurrency traders. With this style a trader would keep to a set trading schedule and close out all their trades by the end of their trading day, whether that’s 5pm or midnight.

If you didn’t know about day trading before, you do now.

Day trading relies on technical analysis to determine entry and exit points. Profits may be smaller since trades are closed each day, but this also allows for more diversity in the set of assets you trade. However some day traders do choose to focus on a limited number of assets and stick to those exclusively. There’s a benefit to this as the trader can become intimately familiar with the price action of a limited set of assets.

This style is popular because it provides a good amount of action, but also limits stress for traders since they don’t have to worry about waking up to surprise moves in positions held overnight. That can be particularly helpful in the volatile cryptocurrency markets.

Swing Trading

Swing trading focuses more on longer term trends in the markets, and positions can be held for days or even up to several weeks. The goal is to identify undervalued assets that are just beginning to see an increase in buying momentum and upward price movement. The swing trader looks to get into the asset as it trends higher, and then sell at a later date for a profit.

As with day trading technical analysis is widely used, but because the strategy is focused on a longer time frame fundamental analysis might also be used. For example, a project that has an upcoming large code base change, or the launch of a mainnet might be expected to see a longer term trend in their upward price momentum and could be good picks for swing traders.

Swing traders look to take advantage of larger moves over a longer time frame.

Swing trading tends to be more beginner friendly because it doesn’t feature the fast-pace and stress of day trading and other short-term trading strategies. Swing trading allows a trader to take their time and make more informed trading decisions.

Position Trading

Position trading is one step away from investing in that it is a long-term strategy in which positions are generally held for months at a time to capture a long-term price trend in an asset. Position traders may not strictly be hodlers, but they are similar to investors given their long-term horizon.

What specifically distinguishes the position trader from the swing trader is the rationale behind the trade decision. Position traders are most concerned with long term trends in the price of an asset. Swing traders might not be as concerned with the long term trend, and are willing to trade counter-trend for a week or more to capture a pullback or bounce in the price of an asset.

Because of the long time horizon favored by position traders it isn’t unusual for them to rely more heavily on fundamental analysis. That’s because their longer trade window allows them the luxury of watching fundamental events play out. That’s not to say that they don’t also rely on technical analysis. Because they are working on the assumption of a continued trend the use of technical indicators can be useful in identifying potential trend reversals.

Position traders take advantage of superior risk / reward ratios.

Position trading also tends to be a good strategy for beginning traders as the longer time horizon gives them plenty of time for analysis and trade decisions.

Scalping

The aforementioned strategies, even day trading, use a longer time frame, while scalping is confined to very short, well timed traders. Scalpers might look to make many smaller profits by getting into and out of trades in a matter of minutes, or even seconds.

They use technical analysis almost exclusively, and can also use more advanced techniques like arbitrage and exploiting bid-ask spreads. Because of the short time frame the profit on each trade is necessarily small, but scalpers might make dozens of trades a day. Automated scalping systems can be in and out of trades in seconds and place hundreds of trades daily.

Scalping is the most active of the trading styles.

Scalping is in no way suitable for beginning traders. It requires an in-depth understanding of the markets, the trading platform, technical analysis, order types, order books, and more. However for more experienced traders who have all this knowledge, scalping can be an excellent strategy that yields excellent profits.

Other very Important Crypto Trading Concerns

With the information above you could get started in your crypto trading journey. However there’s much more to learn yet if you want to get into trading with a good level of preparation. Keep reading to help set yourself up for success.

Securing Your Trading Account

Hacking is a real thing for crypto traders, and if that happens to you you’ll lose everything. Recovering coins from a hacked account rarely happens, so keeping your account and wallet secured is super important. Follow the basics of using a secure password, 2-factor authentication, and other security practices.

You can never be too safe with online trading. Image via Pinterest.ca

If you are using Coinbase, that includes turning on whitelisting to make it more difficult for a hacker if they try to access your account. For external wallets it means backing up and encrypting your wallet, and keeping a secure offline copy of your seed phrase to recover your wallet if necessary. Finally, make sure to secure your passwords by using a password manager.

Beginners should avoid Margin and Leverage

Margin trading involves trading using funds that are borrowed from a third party. In traditional markets this is usually the broker. In cryptocurrency markets margin might be provided by the exchange, or it can come from other exchange users. The use of margin in trading amplifies the results obtained – both profits and losses. Using margin gives traders access to more capital than they might have otherwise, and is also considered an efficient means for trading since the same sized position can be opened with much less capital.

Leverage is often mentioned together with margin, and they are different but related. Margin is the amount of capital provided by the trader and is expressed in percentage terms, such as 10% margin or 2% margin. Leverage is how much the position is amplified and is expressed in terms of 2x or 10x.

So, 10x leverage amplifies a trade by 10 times and would be accomplished by putting up 10% margin.

Leverage is a two-edged sword.

The potential profits of using margin and leverage often have greedy traders watering at the mouth, but leverage amplifies losses just as much as profits. This means that even though a $100 profit becomes $1,000 when using 10x leverage, the same is true for a loss. That can quickly wipe out an account, particularly in the volatile and fast-moving cryptocurrency markets.

Derivatives are not the same as Actual Cryptocurrenies

Now that the cryptocurrency market is growing up there are a number of different derivatives that have become available. It’s important to understand that these derivatives are not the same as the actual underlying cryptocurrencies. A Bitcoin futures contract or option is very different from owning actual Bitcoin. Options and futures come with their own specific risks that make them unsuitable for beginning traders.

Cryptocurrencies are also becoming increasingly available from CFD brokers. These CFDs, or contracts for difference, are only based on the price of the underlying crypto. When you buy a CFD you do not own the underlying cryptocurrency. They can be fine for speculating on price, but it’s important to know the difference between an actual cryptocurrency exchange, where you are buying cryptocurrencies, and a CFD broker where you are purchasing a derivative product that is only speculating on price action.

Cryptocurrencies are Taxable Assets

In most jurisdictions cryptocurrencies are now considered to be taxable assets, and there are tax implications for trading cryptocurrencies. For one thing, different coins aren’t necessarily considered to be “like-king assets”, which can lead to surprises when you file your taxes. Thankfully there are now crypto tax services that track your crypto gains and losses from trading and help you with your tax filing.

On Cryptocurrency Mining

Cryptocurrency mining or staking is a great way to get involved in cryptocurrencies. However it isn’t so much trading as it is investing.

Crypto mining can help provide funds for your trading activity.

It is relevant to talk about in this crypto trading piece however because staking coins need to be acquired from an exchange, and mining profits can only be turned into fiat currency or other cryptocurrencies by using an exchange – which is trading.

Conclusion

So, that’s quite a bit to digest, and yet it’s really only scratched the surface of crypto trading. We could go into far more depth regarding both fundamental and technical analysis. An exploration of exchanges and their strengths and weaknesses wouldn’t go amiss either, and we’ve actually done that already for Binance and KuCoin so you can check those out before you start trading.

Other future topics could focus on trading strategies, risk management, trading software, and other aspects of trading in cryptocurrencies. You could also head over to our YouTube channel and subscribe. Guy does a great job in presenting the pros and cons of many different cryptocurrencies that you might be interested in trading.

After all this our best advice is just to choose an exchange and start trading. Start researching different coins and tokens, start learning more about trading strategies, and just start doing trades. Will you make a mistake because of your inexperience? Probably. But that’s all part of the learning process. By the 10^th trade you’ll feel more comfortable, and by the 100^th trade you’ll feel like a trading expert.

So get out there and get started crypto trading!

Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.

The post The Basics of Crypto Trading: Complete 101 Guide appeared first on Coin Bureau.

Not exactly surprising and you’d be forgiven for wondering how it took so long, but it’s still the sort of news that tends to give investors the jitters.

More serious for the crypto community though was the news that the Commodity Futures Trading Commission (CFTC) has hit trading platform BitMEX with a number of charges, including unregistered trading and failure to comply with anti-money laundering (AML) regulations.

The Knock on The Door

Various news outlets report that the company’s owners, Arthur Hayes, Ben Delo and Samuel Reed have all been charged, along with the web of companies that operate and control BitMEX.

The Three BitMEX Founders. Image via BitMEX

Reed has been arrested and warrants are out for the other two, along with BitMEX’s first employee, Gregory Dwyer. All four are also being charged with violating the Bank Secrecy Act (BSA) of 1970.

The charges being brought by the CFTC are serious ones and will have major repercussions for the crypto space beyond the recent blow to prices. Before we look at these charges in more detail and consider their implications, let’s first take a look at what BitMEX is and why it has managed to attract the ire of the US authorities.

BitMEX: A Potted History

The platform is one of the older names in the world of cryptocurrency, having been around since 2014. It quickly made a name for itself by offering bitcoin derivatives and margin trading with up to 100x leverage.

Its ‘perpetual bitcoin leveraged swap’ feature proved insanely popular, as it allowed users to trade up to $100 worth of bitcoin for every dollar they put up as collateral.

WorldWide Exchange or Dodgy Business?

These high-risk trading options attracted a lot of business and the exchange is reported to have handled $11 billion in deposits while raking in more than $1 billion in fees.

Another attractive proposition for many investors was BitMEX’s cavalier attitude towards know-your-customer (KYC) procedures. By allowing users of the platform to operate anonymously, BitMEX fell under the suspicion of being the go-to exchange for money launderers and other criminals, as well as other unorthodox traders and those unwilling to pay tax on their crypto assets.

The company gained added notoriety for the brazen way it flouted the rules and ignored the demands from authorities to put KYC procedures in place.

Lack of KYC at BitMEX Caused Issues. Image via Shutterstock

Such behaviour was bound to make BitMEX a target for the regulators and, as a result of it having many customers in the United States, the authorities there had it firmly in their sights.

The CFTC is thought to have had BitMEX under investigation since at least July 2019 and in August this year, almost certainly in response to this scrutiny, the platform announced that it was finally going to start implementing mandatory identity verification.

Although BitMEX was founded in Hong Kong (where Hayes, Delo and Dwyer are currently thought to be) it is incorporated in Seychelles through HDR Trading Ltd, one of its several parent entities.

The BitMEX Bribe with Coconuts. Image via Shutterstock.

This incorporation beyond US jurisdiction is key to the CFTC’s list of charges, as Hayes is said to have boasted that the regulatory authorities in Seychelles are easier to bribe. His boast that a mere ‘coconut’ was all that was necessary to grease the palms of officials there may yet come back to haunt him.

United States of America vs BitMEX

BitMEX was courting trouble by accepting orders from US-based customers. In order to comply with US regulation, KYC and AML procedures are required from any exchange looking to operate there.

CFTC Press Release Charging BitMEX

BitMEX failed to put any of these in place, all the while actively courting US customers in defiance of the CFTC. The CFTC states that:

BitMEX has failed to register with the CFTC, and has failed to implement key safeguards required by the CEA and CFTC’s regulations designed to protect the U.S. derivatives markets and market participants.

It is further alleged that Hayes, Delo and Reed knew that BitMEX was being used by money launderers and other criminals. It is also thought to have been used by countries such as Iran to circumvent US sanctions imposed on their economies. The accused have been warned that they face fines and possible jail time if convicted.

In response to the filing of the CFTC’s charges and the arrest of Reed, spokespeople for Dwyer and BitMEX have both refuted the allegations and vowed to fight them. Dwyer’s attorneys issued a statement, saying that their client ‘always worked in good faith to comply with all applicable regulations and requirements,’ and furthermore: ‘was never so much as invited to speak with prosecutors in the United States Attorney’s Office in Manhattan.’

Meanwhile BitMEX, through a statement issued by HDR Global, countered the allegations, saying:

We strongly disagree with the U.S. government’s heavy-handed decision to bring these charges, and intend to defend the allegations vigorously … From our early days as a start-up, we have always sought to comply with applicable U.S. laws, as those laws were understood at the time and based on available guidance

Clamping Down

For many people, part of crypto’s appeal is the anonymity it can offer. Not everyone seeking to keep their identity hidden is a criminal and many users have a deep (and often well-founded) distrust of traditional financial institutions.

The financial crash of 2008 shook many peoples’ faith in banks and the banking system, especially as hardly anyone from the sector was held accountable for what had taken place on its watch.

The emergence of bitcoin and the wave of other cryptocurrencies that followed in its wake was seen as a unique opportunity to chip away at the power of central banks and put individuals in sole control of their own money. Anonymity played a big part in this and there are plenty of strong arguments for keeping banks and bankers at bay.

Anonymous and Easy to Launder Funds. Image via Shutterstock

Sadly, not everyone was motivated by the desire for a fairer and more equal financial system. Bitcoin swiftly gained notoriety as the currency of the dark web, where it was used to buy drugs, weapons and worse.

Money launderers have found it an ideal tool to help them ply their trade, while people across the world use it to keep money hidden from the taxman. The public image of crypto is still stained by its associations with crime and misdemeanour.

It was always inevitable that regulatory bodies and law enforcement would get involved once crypto really started to take off. There was no way this new and unpredictable asset class could be allowed to grow and flourish without some sort of oversight.

The sector has been rocked by more than its fair share of scandal during the short span of its existence. Exchanges have been hacked, funds have been stolen and countless scams have been perpetrated. Nobody could reasonably expect the authorities to simply sit back and watch the mayhem unfold.

BitMEX Started Blocking IPs from Restricted Zones

Yet as regulation has been imposed on the sector, there has been a growing acceptance of crypto from the powers that be. Initial hostility has softened into acceptance in some cases and enthusiasm in others. Governments across the world have come to realise that – like it or not – crypto is here to stay.

The result has been that the crypto sector has been gradually brought into line. The US authorities have been at the forefront of this and have worked hard to ensure that exchanges and other platforms adhere to matters like KYC and AML. The old days of the crypto wild west are receding into history.

Throwing the book at BitMEX

The advent of bitcoin futures and the risks they entailed, especially when traded with leverage, only added to the sense of urgency surrounding cryptocurrency regulation.

Financial products that are hard for most people to understand play into the hands of those offering them and it’s hard to criticise the US authorities for wanting to protect their citizens from exposure to such risk.

Perhaps the most remarkable aspect of the BitMEX tale – and this latest chapter in it – is the fact that Hayes, Delo and Reed felt able to defy the CFTC for so long.

Arthur Hayes Playing with Fire. Image via Twitter

By ignoring the repeated calls to register the platform in the US and put KYC and AML procedures in place, all three were making some powerful enemies.

They must surely have been aware that, by failing to actively prevent money laundering through the platform, they were in breach of the BSA and thus liable for eventual prosecution under federal law.

Arthur Hayes must also have had an inkling that his ‘coconut’ comments might stoke the ire of the authorities. There are certainly plenty of people who would give a lot more than a penny for Samuel Reed’s thoughts as he sits in a jail cell right now.

The Consequences

Many people have pointed out that, although the price of bitcoin took a knock as news got out about the CFTC indictment and Reed’s arrest, it wasn’t as big as might have been expected.

This may in part be due to the fact that BitMEX’s share of the bitcoin derivatives market isn’t as big as it once was. Competitors like Binance, Huobi and OKEx have overtaken BitMEX in recent years, as the popularity of leveraged trading has continued to soar.

Bitcoin Price Reacts to BitMEX News. Image via CMC

If the CFTC had acted a couple of years back, when BitMEX had much more of the futures market cornered, the impact could have been greater.

There is a worry that the bitcoin price may take another, possibly bigger hit if BitMEX’s US-based customers are forced off the platform and resort to selling their holdings. The dumping of large numbers of these bitcoins on the open market could act to push prices down.

Despite BitMEX’s loss of pre-eminence, some are predicting that its troubles could help bring some stability to the market. Whenever price swings took place, it was known that BitMEX’s perpetual swaps made them worse, as margin calls liquidated positions. The spot market could well benefit from a respite from these in the future.

It’s likely that the severest consequences of all this will be reserved for the exchanges themselves, however. The issue of accommodating US traders has been a thorny one for a while now and is likely to pose even more of a headache now that the CFTC and the Department of Justice have started flexing their muscles.

US Regulators are Flexing their Muscles. Image via Shutterstock

US authorities are not fond of leveraged trading: they see it as far too risky and a trap for the unwary. It is permitted, but at nowhere near the levels of leverage that BitMEX and others offer. 100x just ain’t happening. The highest level for a US-regulated bitcoin futures contract is currently 3x – hardly the sort of stuff to get the blood racing.

There is also a growing concern that the CFTC’s actions could have a negative impact on the decentralised finance (DeFi) space too. A large part of DeFi’s appeal derives from not only its decentralised nature but also its relative lack of regulation.

Although such decentralisation makes these projects and platforms harder to target, the US authorities can still put the squeeze on individuals. If a project’s developers are targeted that could be enough to discourage people from using it altogether, regardless of whether or not those devs have access to the admin keys.

In a series of Twitter posts crypto and DeFi expert Adam Cochran has outlined the threat posed to DeFi by the actions of the CFTC and the DoJ. The point he makes is that DeFi is perhaps not as insulated against the attention of regulators as it might like to think.

Risks of SEC Action in Defi. Image via Twitter

The BSA has a long reach and gives regulatory bodies like the CFTC a great deal of power. Many will now be waiting to see whether that power gets exercised against DeFi.

Conclusion

By moving against BitMEX, the CFTC has issued a stark warning to exchanges everywhere: if you want to serve US customers then get regulated or get out of town.

Many in the industry admit in private that a lot of exchanges are guilty of operating in a similar way to BitMEX and may well be next in the firing line.

BitMEX’s brashness in flouting the rules and refusing to toe the line was probably what put it at the front of the queue for a dressing down. There will doubtless be some worried folks at other platforms wondering if it will be their turn next.

Featured Image via Shutterstock

The post BitMEX Lawsuit By The CFTC: Complete Overview appeared first on Coin Bureau.

At the time of the report Bitcoin trading volume was roughly $6 billion per day, however, the exchanges reporting the greatest volume are unrecognized by most cryptocurrency investors.

The report claims and shows that nearly all of this volume is faked or the result of non-economic wash trading. Even though the data from these exchanges is widely reported, even by mainstream media, it has been shown to be utterly wrong.

The data in question is that reported by CoinMarketCap.com, widely considered the go-to source for Bitcoin volume and pricing. Data from this site is used by every major media outlet in the world including The Wall Street Journal, The New York Times, Forbes, CNBC, and Barron’s.

And yet its data is egregiously wrong, including a significant amount of faked trading volume, which paints a false picture of the size and nature of the Bitcoin market.

What is Exchange Volume Faking?

Exchange volume faking, which is also called wash trading, is when a trader buys and sells at nearly the same instant, with the purpose of feeding the market with false information. Wash trades can be done by a trader and exchange working together, or by two traders colluding with each other in traditional markets.

The Bitcoin market wash trading is especially pervasive because it can be done by the same person using the same account. In equity markets in the U.S. wash trading is illegal, but because cryptocurrency markets are unregulated the same is not true for them.

Some Pretty Obvious Exchange Faking on OkEX. Image Source

Wash trading was most recently in headlines in 2013 when the then-Commissioner of the Commodity Futures Trading Commission launched an investigation into potential violations of wash trading laws in the high-frequency trading industry. High-frequency trading is when trading software is used to perform thousands or tens of thousands of trades per second.

The then-Commissioner felt that carrying out wash trades using this type of technology would be extremely easy. He was right and guess what other industry has adopted high-frequency trading software in the past few years? Yes, the Bitcoin and cryptocurrency traders use such software.

Why is Volume Faking Used?

The largest crypto exchanges in the world get to decide which tokens will get liquidity, and which won’t. This is critically important to token projects, particularly those in the ICO or IEO phase because without liquidity there’s little chance the token price will rise.

This gives these projects an incentive to pay huge sums to get listed on an exchange, and naturally one of the criteria they use when deciding which exchanges they will pay to get listed on is trade volumes.

This type of volume faking is common in self-reported league tables, but for crypto exchanges the incentives to inflate volume is huge. The exchanges that show the most trading volume are able to command listing fees from ICOs that are reportedly in the millions of dollars.

It might seem as if this type of agreement shouldn’t be a big deal since it is between the ICO and the exchange, but what is the impact when exchanges are faking volume to boost listing fees? That’s the subtle danger in faked exchange volume.

Another potential reason for faking volume is from new exchanges who are trying to attract traders to their platform.

Why is Volume Faking Risky for Users?

It doesn’t matter if it’s wash trades or something else, faking exchange volume has serious consequences for traders. Those who trade large amounts have the most to lose and take the greatest risks.

There was a study done in March 2018 by trader Sylvain Ribes in which he investigated the impact of volume faking when selling $50,000 worth of cryptocurrencies in various pairs on the then-largest volume exchange OKEx.

Slippage as a function of volume with Log Scale. Image via Sylvain Ribes

His study showed that even pairs which supposedly had volumes of $5 million there was the potential for slippage (the difference between the quoted price and the actual trade price) of 10%.

That’s huge and it makes it extremely difficult to trade markets effectively. It also makes it impossible for large accounts to trade in and out of crypto efficiently.

Examples of Real Exchange Volume

Coinbase is one of the most well-known cryptocurrency exchanges, at least in the U.S. It is based in San Francisco and went through the necessary steps to obtain a BitLicense to operate in the state of New York. At the time of the Bitwise study, it was reporting $27 million a day in Bitcoin volume.

Here’s a screenshot of their Coinbase Pro trading platform.

Screenshot of Coinbase Pro Platform. Image via Bitwise Report

On the right is the trade history, giving trade size, price and time. The trade price is shown either in green, for buy orders that increased the price, or in red, for sell orders that lowered price. You’ll notice that there is no pattern and that green prices far outnumber red prices. If you take a screenshot at a different time the opposite might be true.

The trade size column also shows no pattern. Trade sizes vary randomly. One notable non-random feature of trade size is the prevalence of trade sizes featuring round numbers, such as 0.10 BTC, 0.50 BTC, etc. This is expected because people have a tendency to trade in round numbers.

In the center of the image is the trade graph, with each candle representing a five-minute time period. You can easily see that the size of the candles changes over time. Some five minute periods see greater price changes than others. And under the price candles are grey volume candles which also vary randomly.

Finally, if you look to the left of the chart you’ll see the order book. That’s all the open orders waiting to be matched. Sell orders are on top in red and buy orders are on the bottom in green.

In between the two is the spread or the difference between the highest buying price and the lowest selling price. In this case, it is $0.01 on a trade price of $3,419.60. In percentage terms that’s a 0.0003% spread, by far the tightest spread you’ll find in any financial instrument in the world.

Example of an Exchange Faking Volume

At the time Bitwise did its study CoinBene was the largest exchange in the world, with reported daily volume of $480 million or 18 times the Coinbase Pro volume.

CoinBene Exchange Faking

The trading interface for Coinbene shows pretty much the same information as that for Coinbase Pro. On the right is the trade history. Note that the red and green trade prices are evenly distributed and alternating. It is nearly impossible that trades would alternate in such an even manner.

If you look at the timestamp column you’ll see that orders are coming in pairs, with one buy order and an offsetting sell order. And the trade sizes are also nearly matching, which allows buy and sell orders to basically offset each other over time. Sounds suspiciously like a series of wash trades.

Trade sizes also follow a very different pattern. You’ll notice there are no round number trades, despite the human tendency to trade in round numbers. And the smallest trade is 0.43 BTC, or roughly $1,400. Coinbase Pro had trades as small as 0.0017 BTC or $5.

Looking at the order book you can see the highest buy order is $3239.59 and the lowest sell order is $3,274.33. This is a spread of $34.74, which is 3400 times the size of the Coinbase Pro spread! That’s very unusual since increased volume always leads to tighter spreads in any other financial market.

Another Example of Faking It…

There are other ways to see the faked volume on crypto exchanges, and one is clearly demonstrated by RightBTC, which at the time of the Bitwise study claimed four times the volume of Coinbase Pro or more than $100 million per day.

RightBTC Fake Volume

What’s notable here is that despite the reportedly large volume of trading, the chart shows hours and even days at a time in which there are no trades at all. The red and green candles at the bottom of the chart represent volume, but there are large gaps when there is no trading volume. There’s no correlation with time of day or uptime or any other factor.

Looking to the left at the order book shows the spread at RightBTC to be $371.99. That’s absolutely insane. It’s more than 10% versus the spread of 0.00003% at Coinbase Pro, despite RightBTC’s claims of greater volume.

One More – Faking Till You Make It

The exchange ChaoEx claims to have more than double the volume of Coinbase Pro at $70 million per day.

ChaoEX Exchange Screenshot with Fake Volume

As you can see from the image of the ChaoEx trading platform above this volume is at times monotonic. That is, it doesn’t change at all from hour to hour. It is inconceivable that volume would remain the same hour after hour, ignoring real-world events, news, time of day, and price movements.

The chart above shows the trade volume remaining exactly the same every single hour for three consecutive days. That’s nearly impossible.

Solving the Problem of Fake Trading Volume

Following this report from Bitwise, there have been several proposed solutions to the problem of cryptocurrency exchanges faking trading volumes. CoinMarketCap would be the first part of the solution by improving how they present market data.

That isn’t likely to happen however as the company behind CoinMarketCap has said their policy is to over-provide on data and let users draw their own conclusions based on the data.

CoinMarketCap has said they will be updating their metrics to give users more insight into real trading volume, but so far that hasn’t been the case and no timeline has been provided for when the data metrics might change.

In the meantime, those who want to see exchange volume only from the exchanges that have not been found to be faking their volume the site OpenMarketCap has that data. The open-source EDGAR database Messari also has data specific to the exchanges not faking volume, which it calls the “Real 10 Volume.”

The Top 10 Ranking by “Trusted Exchanges” as Determined by BitWise Report

Of course, the real solution needs to be with the exchanges themselves, not the data providers. Greater transparency is needed in the entire industry to help eliminate these types of problems. Additionally, it is possible that sites such as CoinMarketCap could use their influence in the cryptocurrency ecosystem to help promote ethical behavior among the cryptocurrency exchanges.

One suggestion made is for CoinMarketCap to consider imposing fines or suspend the listing of exchanges found to be engaging in unethical behavior. Of course, the question then is who makes the determination on which exchanges need to be suspended, and how large fines might be.

Ultimately, and as much as proponents of decentralization hate the idea, exchanges will need to face regulation. That way there is impartial third-party monitoring of the behavior of these platforms to ensure they aren’t engaging in market manipulating tactics.

Conclusion

If the Bitwise report is accurate and 95% of the reported Bitcoin volume is being faked, then the cryptocurrency markets have a serious problem that will require a solution sooner rather than later. If claims of faking are true traders and investors are up against market manipulation that prevents market sentiment from determining what the true price of Bitcoin should be.

One can hope that the negative impact will diminish as the market matures and more traders move to reputable exchanges, and as more reputable exchanges join the ecosystem.

Up until now, it isn’t certain that all the fake wash trading occurring has had a significant impact on the price of Bitcoin, but then again there’s no way to prove whether it has or not. However, by focusing only on the ten exchanges deemed to be providing real market data it appears that the Bitcoin and cryptocurrency markets are actually more stable than previously thought.

Based on research thus far, nearly all of the actual market liquidity is coming from the 10 “honest” crypto exchanges, even though there are literally hundreds of exchanges offering trading services. It’s easy to see that the price of Bitcoin is quite similar and consistent among the ten exchanges deemed to be faithfully reporting trade volume. Perhaps significantly for the future of the industry is that nine of those ten exchanges are regulated.

As long as the broader market remains unregulated this type of volume faking will continue. There is no disincentive for exchanges, and every reason why they should engage in faking, from increased listing fees to growing their customer base to the contention that “everyone is doing it.”

Inflating trade volume makes an exchange look more important, and increases its visibility. In turn that draws more traders to the platform, while also attracting more ICOs and allowing for higher listing fees. It’s a cycle not likely to solved from inside the industry.

Featured Image via Fotolia

The post Exchange Volume Faking: How They Fake it Till They Make It appeared first on Coin Bureau.

They give their traders the opportunity to trade a number of different markets such as cryptocurrencies, Forex and Commodities with leverage all the way up to 400:1.

Yet, are they a safe broker and can they be trusted?

In this MyFX Markets review, we will take an in-depth look at this broker and give you what you need to know. We will also give you some top tips to make the most of your trading.

Overview

MyFX Markets is a broker that was founded in 2013. They are registered as Milson’s Fintech which is incorporated in the republic of Mauritius.

Their address is at Level 2, Raffles Tower Cybercity, Ebene, Republic of Mauritius. Even though the company is registered here, the operational team is based in Sydney.

They are a Contracts For Difference (CFD) broker which offers a total of over 100 different assets to trade. They use the MT4 platform and give their traders leverage of up to 400:1 on low ECN spreads.

MyFX Markets is expanding their global business operations and have recently opened an office in Dubai and the United Kingdom. They take traders from around the world and have translated their website into 4 languages in addition to English.

Despite this though, there are a number of regions where they do not accept traders. The most prominent of these is the United States.

Is MyFX Markets Safe?

This is perhaps one of the most important questions that you will have of any broker.

MyFX Markets Benefits

In order for us to determine how safe they are, we have to take a look at their internal security protocols as well as their global regulations.

Regulation

MyFX Markets has a regulatory licence from the Financial Services Commission in the republic of Mauritius. They have a Category 1 Global Business No. which is C118023066.

There are a number of benefits that come with a broker that has a regulation over those that do not. The FSC requires brokers to meet a number of minimum requirements before they can obtain these licences. These include:

• Capital Reserves: Before a broker can obtain a license from the regulator, they have to demonstrate that they have significant reserves in place. They need to have 350k EUR in reserves.
• Background Checks: The broker will have to go through a number of background checks both at the corporate and director level.
• Regular Reporting: The broker has to keep regular reporting records conducted by an external and independent auditor.
• Ongoing Checks: Once the broker has their licenses, they have to send yearly reports to the regulator. This is to make sure that they are maintaining the required standards.

Apart from knowing that the broker has to complete these steps, it is also helpful to know that there is someone to turn to in case of any issues.

MyFX Markets has also implemented a number of other safety protocols that protect clients.

Segregated Accounts

MyFX Markets also has segregated bank accounts for their clients. This means that they keep their client funds in a bank account that is separate from the main broker operations.

Why is this important?

Having a segregated account means that no matter what happens with the broker, your funds are kept safe. So, even if MyFX Markets was to go under or into liquidation for whatever reason, your funds are kept safe.

No Dealing Desk

As an Electronic Crossing Network (ECN) broker, MyFX Markets merely matches client orders with those of external liquidity providers. This means that they don’t operate a dealing desk and will never trade against their clients.

MyFX Markets liquidity Providers

They also have to source this liquidity from the most reliable pools of liquidity. MyFX Markets makes use of some top tier liquidity providers. This ensures that their clients are getting the best market quotes and that their orders are being executed as quickly as possible.

Assets & Leverage

There are numerous different assets that you can trade at MyFX Markets.

They have Forex, Equities, Commodities and cryptocurrencies on offer. You can get a complete list of all of the assets in their product schedule. However, here is a handy overview of some of their main trading pairs:

• Forex: You have over 100 different forex pairs. These include most of the majors and a number of minors.
• Index CFDs: You can trade a number of international indices. These include markets in the US, UK, Australia China and more.
• Commodities: Reasonable selection which includes Oil, Cocoa, Copper, Natural Gas, Soybean etc.
• Metals: Number of precious metals that you can trade including Gold, Silver, Platinum and Palladium
• Crypto: Top 5 Cryptocurrencies which include Bitcoin, Litecoin, Ethereum, Ripple and Bitcoin Cash.

Note?: Markets are only open at certain times. Take note of these in the product schedule

This seems to be a pretty reasonable selection of assets. However, there are no single stock CFDs on offer which is unfortunate. There is also a relatively limited range of cryptocurrencies compared to some of the larger crypto exchanges.

Leverage

The instruments that you are trading at MyFX Markets are CFDs. These are leveraged derivatives that are traded on the margin. This means that you are trading with borrowed money and your capital is only a fraction of the position.

MyFX Markets Margin & Leverage

Given that the capital that you put down for the position is only a mere fraction of the entire position, it means that you are taking on a substantial leverage. At MyFX Markets your leverage factor can go up to a maximum of 400:1.

Of course, this is only the max leverage that can be achieved on some Forex pairs. Max leverage will differ according to the asset that you are about to trade. For example:

• Forex: 400:1
• Index: 100:1
• Commodities: 100:1
• Crypto: 5:1

So, while there are attractive leverage levels for Forex and the other pairs, it is quite low for the likes of Cryptocurrencies. If you would like to trade these with more leverage then you can always check out 24option.

It is also important to mention that the max leverage that you are allowed in Europe will differ. This is because ESMA (European Regulators) have set a cap on leverage for European traders at 30:1.

Caution: Leverage is a double-edged sword. Be sure to practice adequate risk management when placing trades

You should also be aware that there are levels as which MyFX Markets will institute a margin call. This is when they will get in touch with you and ask you top up your account. They have set this at 90% of account equity.

There is also a “liquidation” level that is set at 20%. If your account equity is to reach this level then they will close the position on your behalf and seek funds back from you.

You can calculate your account equity by using the following formula:

Equity = (Account Balance + / - Unrealised Profit)/(Margin Requirement)

MyFX Markets Fees & Spreads

As an ECN broker, MyFX Markets makes their profit based on the spread of the trading pairs. This is the difference between the bid / ask.

Given that they are using some of the best liquidity providers in the industry, these spreads were quite thin. The exact spread that will be charged depends on the assets you are trading as well as the account that you are on.

For example, if you are trading on the “Pro” account, you are getting the raw market spreads straight from the liquidity provider. The “Standard” account has slightly wider spreads of about a pip on top of that. Below are some indicative Forex spreads (pips)

As you can see, the spreads are generally quite low. It is important to point out that this is indicative and will be different when you are trading on the platform.

While the Pro account does have a lower spread to trade, there is a “lot” commission that is charged on the number of lots that you trade. This is $7 per round trip (buy and sell).

As with most other Forex brokers on the market, you will be charged a “Swap” fee / rebate. You can think of this as an overnight “fee”. This is in order to make up for the difference in interest rates between the two pairs.

Note?: On Wednesday nights you will be charged a 3 day swap fee in order to make up for the two days on the weekend.

The Swap fee is dynamic and is constantly changing. You can access this information in the MT4 platform. All you will need to do is head on over to the platform and then click on “Contract specifications”. Below is the specification on USDCAD

Checking Swap Rates on MT4 Platform

With this, if you go long USDCAD then you will have to pay a Swap fee of 1.92 pips. However, if you were to short the pair then you would get a rebate of 6.48 pips.

Deposit / Withdrawal Fees

When it comes to deposits, MyFX Markets will not charge you any fees. However, you may incur third party fees that will depend on the way you decide to fund the account.

For example, if you are going to fund via wire transfer, there may be intermediary banks that will charge you a Swift fee to route the funds. Your own bank may also charge you a fee for the transfer.

However, if you fund your account through their credit card funding option then you are unlikely to incur any fees. This is the same for a deposit as it is with a withdrawal.

If you are going to be withdrawing funds through a wire transfer, then you will be charged a flat rate of $20 by MyFX Markets in order to cover their banking fee. If this is an issue then there are other withdrawal methods that you can consider.

Finally, there are a few small administrative fees that you may incur if you choose to receive paper statements or if they have to try and recover any debt from you.

Account Types

There are three different account types that you can make use of at MyFX Markets. These are their Standard and Pro Forex accounts and their Crypto account.

The main ways that these accounts will impact on your trading is how they differ according to the spreads on the assets as well as the types of assets that you can trade.

Below is a breakdown of the main differences between these accounts:

Various Account types at MyFXMarkets

For all of these accounts, you can trade micro lots. This means that you can trade a minimum lot size of 0.01 Lots.

Also worth noting is that all of these have been optimised for running Expert Advisors (EAs). They have no issues if you want to run your own EAs and trade the markets 24/5.

The main difference between the Forex accounts and the Crypto only account is that the latter gives you more flexibility while trading crypto. This has the direct ECN connections to the crypto liquidity providers.

Whether you will decide on the Pro or Standard when trading Forex really comes down to your trading preferences. If you are a more active trader then you could consider the Pro in order to lock down those lower spreads.

MyFX Markets Demo Account

Why risk funds at first if you can first test out the trading platform for free?

MyFX Markets has a no obligation and unlimited demo account. These are accounts that come with demo funds that you can trade on to your heart’s content.

The benefit of these demo accounts is that they give you a good idea of how live trading on the platform will be. They allow you to observe the spreads that you will get as well as develop and refine your own EAs.

Note : One thing that demo accounts cannot replicate is the “slippage” on the accounts

If you want to set up a demo account you can sign up for it at MyFX Markets. They will top up the account with the demo funds. You can top this up as many times as you need to and there is no time limit on this demo account.

MyFX Markets Trading Platform

As mentioned, MyFX Markets makes use of the widely popular MT4 trading platform.

This is well known in the industry and has been used by millions of traders around the world. It is also the primary platform that has been installed by Forex and CFD brokers.

MT4 is a MetaTrader platform that has been developed by the MetaQuotes company. It has been developed specifically for professional traders and has the tools and functionality in order to satisfy most traders.

Below is the standard MT4 interface on MyFX Markets. On the left you have your respective markets; in the middle you have your charting areas and at the bottom you have all your order history / current orders.

MT4 Platform at MyFX Markets

MT4 is a great platform for those traders that like to use technical analysis to inform their trading. This is because of all the charting features as well as other studies that you can overlay.

Moreover, the MT4 program is “widgetised”. This means that you can detach the charts and position them according to your own preferences. For those traders who like trading with number of screens, this functionality helps a great deal.

The MT4 trading platform also has its own programming language. MQL4 allows you to code your own Expert Advisors. This means that you can develop bots and algorithms to trade the markets even when you are away from the desk.

The platform is available on a number of different devices and operating systems. You can trade on a PC, Macbook or through your browser on the website version.

We would suggest that you opt for the PC / Mac software over the web version as execution is that much more effective. This is because you are connected directly to the trading server and don’t have to work through the website server first.

Of course, for those traders that are on the go and can’t be at their PC the whole day, there are mobile alternatives.

MyFX Markets Mobile App

MyFX Markets does not have their own mobile app unfortunately. This means that you will have to do any sort of account administration in your mobile browser.

However, because they use the MT4 software, you also have access to the MT4 mobile application. This is the most popular trading application that is currently on the market and has over 20m downloads across iOS and Android.

MT4 Mobile App for iOS in iTunes

The app has most of the basic features that you will find in the PC versions. For example, you can chart the markets as well as overlay them with indicators. You can also place numerous technical studies (although it will look very cluttered).

You can download the App for free from the iTunes store as well as Google Play. If we take a look at these stores you can see all the ratings that users have been giving. They appear to be quite positive:

Ratings for MT4 App in iTunes and Play Store

So, should you use the mobile app?

We would always encourage the use of the desktop version. This is just because of the difficulty that comes with charting on a mobile screen. Moreover, you could face delays in execution that come from using mobile networks. Of course, if this is your only option then it is the best app to do it on.

Funding / Withdrawals

It is pretty easy to fund your account at MyFX Markets. However, before you can do this you will need to complete their KYC requirements. This is different to most other brokers who ask their clients to do this only on the withdraw phase.

Once you have done this, there are a range of funding options that you have at your disposal.

• Bank Wire: Through their accounts at Commonwealth Bank of Australia
• Credit Cards: They take most of the major credit cards
• Bitcoin: They use BitPay as their crypto payment processor
• MyBitWallet: Well known web wallet in Singapore
• STICPay: Another Web wallet
• China Union Pay: Easy payment option for Chinese Traders
• FasaPay: Simple payment processor from Malaysia
• AliPay: Another payment option for their Chinese traders

How long the transfer will take really depends on the method that you decide to use to fund your account. A bank transfer will take about 1-3 business days depending on where your bank is located.

Note : You are not allowed to make third party transfers from an account in someone else’s name

If you are using a credit card it should be instantaneous. If you are using Bitcoin it should take between 30mins – 1 hour as it has to clear on the blockchain. All of the web wallets should be instantaneous.

Two of the most notable missing methods above are Neteller / Skrill. This is unfortunate as most traders have accounts at these web wallets.

Withdrawals

When it comes to a withdrawal, it is pretty simple to do and you have most of the same options that you have to fund (barring Bitcoin).

If you wanted to withdraw your funds then you will need to navigate to your account administration section. Here you have an option for banking and where you can push a withdrawal request.

As is the case with funding, the speed of the withdrawal will depend on the method that you decide to use. Perhaps the fastest method will be through a credit card. If you are going to be using a wire then it will take 2-3 business days.

Credit Card Note ?: If you funded with a credit card and made a profit, MyFX Markets will refund your initial deposit to the card and the balance through another method

We opened an account at MyFX Market and did a test on the withdrawal. The wire was pretty smooth and arrived in our account within 3 days (being based in Europe).

MyFX Markets Customer Support

This is something that can make or break a trading experience. Hence it is one of the main criteria that we look at when we are deciding on a broker.

How does MyFX Markets stack up?

Well, for one they have standard email support options. This can be reached on customer.service@myfxmarkets.com. When we were dealing with our KYC documents, they were quite helpful and professional. We were able to get approved in 1 day.

Note : Regulation means that they have to complete KYC on you and verify you. They will need a copy of an ID as well as a proof of address

In this case we dealt with their operations team in Sydney and given time difference, it took a bit longer than we would have liked. However, since they have opened a support team in the UK this could make it a lot more efficient.

MyFX Markets Live Chat Function

If you want to get hold of someone in their team quickly then the best method is perhaps through either their live chat feature or through a dedicated phone number. MyFX Markets can be reached on +64 9 889 4022.

We called their number in order to test how responsive they were and they answered almost immediately. Of course, you should take note of their office hours (Syndey Time).

If you had a simple question that was more general in nature then you could always take a look at their FAQ section. These cover most of the standard questions that you may have of the broker.

Promotions

MyFX Markets also runs a number of promotions which could add to your trading experience.

For example, last year during the Soccer World Cup they ran their “World Cup” promotion. This saw traders competing against each other in how many lots that they can trade.

They had a similar promotion at the beginning of this year with the Chinese New Year. This ran from February to March and was structured as a “raffle”. You would get a raffle ticket for each time you traded 5 lots. These were then drawn and some traders won prizes such as an iPhone XR.

Winners in Chinese New Year Raffle

These promotions come and go but one that has remained permanent is the “refer a friend” promotion. With this referral scheme, you can get $25 for each confirmed trader that you bring onto the platform.

You will have to get a link from MyFX Markets which you can then use to refer your friends / followers to the broker. If they deposit the minimum $200 then MyFX Markets will credit the funds to your account.

While this is a nice top up to your account if you do refer someone, we think that the referral commission is quite low. If we were to compare it to other brokers, we will see that it is markedly more than this.

Areas For Improvment

We could not complete a MyFX Markets review without going through some of the things that we did not like and that warrant improvement.

Firstly, we would have liked to have seen more in the way of asset coverage. For example, there are no single stock CFDs which means that you cannot trade your favorite companies. It would also be great to see more cryptocurrencies on offer.

Secondly, we think that the limited funding / withdraw options are a bit unfortunate. This is especially true given that users have to pay a $25 admin fee on wire withdrawals. It would have been great to more web wallets for example.

We also were slightly disappointed to see that there were no educational materials or webinars. This is usually something that is pretty common at other larger brokers such as Pepperstone. They are always a great way to help traders navigate the markets.

Finally, there are none of the other standard tools and features that are offered by other brokers such as IC Markets. These include thing such as MT4 plugins, copy trading services, trading analysis or VPS deals.

Conclusion

Our MyFX Markets review found them to be an honest and respectable broker that have stood the test of time. Their low spreads on numerous different Forex instruments was a great selling point for us.

Moreover, their flexible leverage parameters as well as micro-lot sizing made our trading experience that much more effective. It was also a nice touch that their customer support was always responsive and effective.

Of course, there are a number of things that we did not like. However, these can be improved on relatively easily so one would hope they could implement this relatively soon.

So, should you consider MyFX Markets?

We woudld encourage you to do your own research but based on our analysis, we think that they are indeed worth a try.

Warning : Trading CFDs is very risky. Make sure that you practice adequate risk management and never invest more than you can lose.

Featured Image via MyFX Markets

The post MyFX Markets Review: Forex Broker Overview appeared first on Coin Bureau.

The Cindicator team has dubbed this “hybrid intelligence” and they feel that the combination of human and AI is the future of prediction markets. They have been able to build an ecosystem that generates over 400,000 forecasts a month utilizing over 30 machine learning algorithms.

However, can Cindicator really execute on their ambitious plans?

In this Cindicator review, I will attempt to answer that question by digging into their technology, team members and use cases. I will also analyse the long term adoption and price potential of the CND tokens.

What is Cindicator?

Unlike some of its rivals, Cindicator is already a working platform, with over 115,000 analysts weighing in on daily financial questions to create crowd sourced market predictions. This type of crowd sourcing is increasingly popular due to the accuracy attained through the wisdom of the crowds.

Cindicator uses the wisdom of the crowd each day by sending out questions about financial and cryptocurrency markets. Analysts answer the questions and the answers are aggregated to help make market predictions.

The human intelligence is combined with artificial intelligence as Cindicator AI system evaluates the analyst responses. It also gives a higher weight to those analysts that have historically been more accurate. The AI runs trading simulations to determine the profitability of each analysts responses and once all the data is developed it is aggregated and sent out as a final analysis.

At this point the Cindicator community is able to put the analysis to use through the Cindicator bot and the Cryptometer.

Why Cindicator is Needed

Humans love to predict the future, and this is especially true in financial markets, where correct predictions can create immense wealth. Prediction systems in financial markets have led to the use of robots and in the 21st century much of the trading volume in the world’s stock exchanges is controlled by trading robots.

These robots and prediction methods are so valuable that in 2015 $4 billion was spent on analytical systems and over $50 billion was spent on the financial data needed to make predictions. This amount is expected to balloon to $300 billion spent on data by 2020 as stated in their whitepaper.

The Cindicator solution not only provides predictions, it also generates vast amounts of data, and as we already know the financial sector is willing to pay huge amounts of money for good data. If Cindicator can capture just one quarter of this need for data it could be worth $75 billion. And that’s just in the financial industry. Cindicator can be used in many other arenas, such as elections, sports betting and anywhere predictions could be useful.

Cindicator Technology

In addition to the pool of analysts there are two additional elements that complete the Cindicator system. These are the artificial intelligence engine and the actual prediction product for end users. Let’s have a closer look at each.

The Analyst Pool

The Cindicator platform currently includes over 115,000 analysts, some of whom are professionals, but not all. The Cindicator platform gives anyone the chance to monetize their knowledge of financial markets and in return it receives valuable input for its prediction engine.

Cindicator has a very simple method for gathering data from these analysts. Each day a set of questions are sent to the analyst to answer. These questions are based on the analysts stated interests and fields of expertise.

Image via Cindicator Blog

One type of question commonly asked is a binary question that can only be answered with a yes or no. These binary questions are answered in a probability percentage range, with anything under 49% taken as a no and anything over 51% taken as a yes. Percentages are used to gauge the degree of confidence in the response.

The second type of question posed is a price related question. These types of questions give traders extremely useful data and are usually posed as a minimum/maximum type question. For example, Cindicator may pose the question: “Facebook shares closed at $163.53 on March 22, 2019. In your opinion what will the minimum and maximum price of Facebook stock be on March 25, 2019?”

Analysts don’t answer these questions from the goodness of their hearts. They have two types of motivation: personal and group.

The analyst gets their personal motivation through their public rating on the platform, which is based on the accuracy of their predictions. In addition there is a financial motivation since the analysts with the best prediction scores at the end of each month receive a reward that is paid in either CND or ETH. Each month scores are reset and a new competition begins.

Analyst prediction forecast accuracy of Bitcoin Price

Analysts also receive a portion of the profits from Cindicator’s own portfolio at the end of each quarter. This gives the analysts a group incentive, since the better their predictions are, the larger the quarterly prize pool becomes.

Cindicator Artificial Intelligence

All of the data collected by Cindicator is analyzed by the artificial intelligence system in five main ways:

1. Individual analysts are studied to determine patterns and common factors. Analysts are classified in a variety of ways such as bulls and bears, trend followers, wide versus narrow price predictions and many more factors.
2. The AI will also study how often an analyst makes a mistake, what situations are most likely to cause a mistake, and how the analyst responds to changing market conditions.
3. The AI uses a variety of predictive models to build complex algorithms that measure analyst performance.
4. Data clusters and groups of analysts are also studied and experiments are conducted to determine the best possible groupings of data.
5. Analysis of predictions compared with actual market performance provides valuable insights.

The Cindicator Products

After all the data is collected and analyzed by the artificial intelligence system Cindicator makes it available to CND holders through two different products. The first is the Cindicator bot. It has four levels of access, with the beginner level requiring 5,000 CND tokens for access. The top Expert level requires 700,000 CND tokens.

There is also the Cryptometer, which gives cryptocurrency arbitrage opportunities, and automatically monitors 5 crypto exchanges and 18 cryptocurrency pairs. The Cryptometer is only available to those with a CND balance of 1 million CND or greater.

Cindicator Team & Advisors

Since its beginnings in 2015 the Cindicator team has done an excellent job in creating a useful product and positioning it in the financial services industry. The team has grown to more than 60 members across nine countries. It includes specialists in data science, trading, platform development, marketing and customer support.

The co-founders of the Cindicator Project

The leaders of the Cindicator project are the three co-founders.

• Mike Brusov – The CEO of Cindicator and a co-founder, Mike brings 8 years of experience as a tech entrepreneur, with most of that experience in big data and predictive analysis.
• Yuri Lobyntsev – The CTO of Cindicator and co-founder, Yuri begin in technology as a 10 year-old software coder. He has extensive experience as an application developer and is passionate about merging artificial and human intelligence.
• Artam Baranov – The COO and a co-founder of Cindicator, Artem is a serial entrepreneur with experience founding several different companies prior to his involvement at Cindicator, where his involvement includes pulling the team together to function as a single force.

Cindicator also has a pretty strong advisor pool to tap. Some of the prominent names that are lending advice to the project include the like of Charlie Shrem, Anthony Diiorio and Evan Cheng. For those who do not know, Charlie is an early Bitcoin proponent and a founder at the Bitcoin foundation. Anthony is a founder of Ethereum and the founder of Decentral and Evan is the director of Facebook engineering.

The Cindicator Community

Cindicator has been growing their community, and while it isn’t huge, it isn’t too small either. They have nearly 40,000 Twitter followers and over 6,200 followers on their sub-Reddit. They are also approaching 1,000 subscribers to their YouTube channel and have over 5,800 likes on their Facebook page. As I said, not huge, but not small either.

Cindicator needs to keep developing new products and attracting new fans to keep their momentum moving forward. Otherwise they could have the best prediction tool on the planet and still get outpaced by a more popular project. Growing the community will also help support the value of the CND token.

In order to help foster this growing community, the Cindicator team tries to keep their members up do date with the project developments. The most important of these are posted through their official blog.

The CND Token

Cindicator held their ICO back in September 2017 and it concluded on the 24th, with the project raising $15 million. They sold 1.5 billion CND tokens, which is 75% of the total supply, for $0.01 per CND.

CND Price Performance. Image via CoinMarketCap

Unlike many projects, the token remains above its ICO price even after the brutal bear market of 2018 and as of late March 2019 one CND is selling for $0.016253. The price has also been gaining in 2019 as it began the year right around the ICO price of $0.01 per token.

If you’re interested in buying CND, perhaps so you can gain access to the Cindicator bot, then there are a number of exchanges that you can use. However, over 96% of the volume is currently being traded on the Binance Exchange. It is listed on HitBTC but volumes are non-existent.

Despite so much trading taking place on only one exchange, there remains healthy levels of liquidity on the order books. Despite this though, CDN remains quite volatile in comparison to similar sized altcoins so you should trade them with caution.

Register at Binance and Buy CND Tokens

Once you have your hands on the CND token then you will probably want to move them off of the exchange and store them in an offline wallet. Keeping large amounts of tokens on an exchange is always a risky practice and should be avoided.

The CND token is an ERC-20 token, so it can be stored in any ERC-20 compatible wallet. If you’re using it to access the Cindicator platform it must be held in a stand-alone ERC-20 wallet, not in an exchange wallet.

Conclusion

The Cindicator project hasn’t gotten as much recognition as some other crypto prediction markets such as Augur, but it is doing better than others like Gnosis. It remains a unique project and th fact that it already has a function platform with paying customers puts it ahead of the majority of blockchain projects.

And while the outcome its seeking to achieve may be complex, blending human and artificial intelligence to predict financial markets, the use case is actually easy to understand and grasp.

The fact that the token price held up during the 2018 bear market is also encouraging for the future of the Cindicator project and for investors in the CND token. With tens of billions of dollars in customer funds available in the finance sector alone Cindicator has a bright future if they can keep performing and moving forward.

Featured Image via Fotolia

The post Cindicator Review: Hybrid Intelligence for Financial Forecasting appeared first on Coin Bureau.

However, those that are able to use if effectively and in a risk controlled manner can increase their returns for a set amount of capital. It gives them the ability to trade on borrowed money.

It is also a great way for traders to not only take a long view on the asset in question but also to short sell it.

In this post, we will give you everything that you need to know about crypto margin trading. We will also give you some essential hints and tips as well as look at some of the best places to trade on margin.

What is Margin Trading?

Margin trading is essentially the practice of trading with money that has been borrowed. You are trading with “leverage” as the margin (collateral) that you are putting down for the trade is usually only a fraction of the amount required.

Given that this is a leveraged position, you are able to increase your profits (and losses) from a given movement in the price of the asset. This is why margin trading can often be considered a double-edged sword.

Of course, given that with margin trading you are borrowing funds, there will be fees involved. These are interest rates or “overnight” rates that are applied to the total amount that you have outstanding.

Practical Example

Let us assume that you would like trade some Bitcoin on margin. The exchange in question will have maximum leverage (or minimum margin) that is required for you to take the position. Let us assume that the min margin is 20%.

This means that if you would like to take a position in Bitcoin you will need to put down 20% of the amount of the notional of the trade. So, if your position is in 10BTC you will need to put down 2BTC as collateral or margin.

This also means that the leverage on the position is 5X. Leverage is a measure of how much your position will react to the movement in the underlying asset. So, in this example, if the price of Bitcoin moves by 1% your position will move by c. 5% (percentage approximation).

Example of a Margin Trade on Stock. Image via Interactive Brokers

You can now see why margin trading can be lucrative and at the same time risky. Some exchanges and brokerage firms allow leverage to go up to 10 – 100 times. A well-placed trade can either make you a highly profitable return or completely wipe out your capital.

In order to avoid the latter outcome, some brokerage firms will require what is called a “Maintenance Margin“. This is the minimum that is required to be held in the margin account once the trade has been opened. If the position falls below this then the trader will get a margin call from the broker.

Pros & Cons of Margin Trading

There are quite a few advantages that come with margin trading that are universally agreed:

• Greater Return: This is of course an obvious one. Margin trading allows you leverage which means that your return is X times larger than without (where “X” is the leverage level).
• Can Short the Asset: Margin trading also allows you to short the asset in question which means that you can benefit from falls in the price as well.
• Structured Trades: When combined with different degrees of leverage and buys / sells, margin trading allows the investor to place more structured trades. They can essentially develop strategies that look quite a bit like option trades.

As most may know, increasing returns in the cryptocurrency markets also means increasing risk. Trading on margin does not come without its drawbacks:

• Larger Losses: As we said, leverage is a double edged sword. Sure you can increase the returns on the upside by X but you can also magnify your losses. If you do not have risk management structures in place you can very quickly deplete your capital.
• Funding Cost: Even if you have a view on the direction on the asset and the trade does eventually go that way, you are still at risk of a margin call and a liquidation. This is because with leverage often a small move in the opposite direction could result in your position being called or closed. Of course, given that you are borrowing funds in order to place the trade you will have to pay interest on those funds. This is the rollover rate that is applied to the position. If you have a really large position and you keep this open for an extended period of time it can eat into your profit.

The key thing to appreciate about margin trading is that there are risks and that these risks can be significant if you do not have a strategy.

However, most successful margin traders will agree that as long as you are able to most effectively manage these risks, you can make a success of it. This is something that we will touch on a bit more below in some of Margin Trading Top Tips.

Crypto Margin Trading Exchanges

So, you have now decided that you would like try your hand at some margin trading. The next most important step is for you to find a platform that is best suited to your individual needs. This is important because the margin and futures products offered by these exchanges can be vastly different.

In the below list we take a look at some of the best-known crypto margin trading platforms. It is important to point out that these are by no means exhaustive and there may be other exchanges that offer similar products. Be sure to do your research before you start using the services of such exchanges / brokers.

BitMEX

BitMEX is perhaps one of the best-known derivatives and margin trading platforms that are currently on the market. They have been around since 2014, operate out of Hong Kong and are registered in the Seychelles.

The products that are offered at BitMEX are Futures instruments. These can be considered analogous to spot margin trading with the difference being that you are trading an instrument that will be settled and closed sometime in the future on a future price.

BitMEX does have a spot price version of their futures contract and this is their “perpetual swap“.

The BitMEX futures trading platform

This is essentially a rolling futures contract that does not have an expiry price. It will be marked-to-market every day based on the movement in the price of the underlying asset and will never reach a termination.

When it comes to the leverage numbers at BitMEX, they are pretty high. For example, on their premier BTC futures contract, the minimum amount that you are required to put down is 1% of the notional. This implies a 100x leverage on the underlying asset.

Once your position has been opened then BitMEX has a more refined calculation for the maintenance margin. You won’t get a margin call from BitMEX but they will draw on your funds or, in the event of fund depletion, they will liquidate your position.

BitMEX also has a range of other cryptocurrrency assets. In the below table we have a list of the coins on offer at BitMEX as well as their margin and and trading fees.

There are also a host of other things to consider when you are trading on BitMEX. You have many more options around trade functionality and risk management. If you wanted a complete overview then you are advised to check out our comprehensive BitMEX review.

Deribit

Deribit is another Bitcoin derivative exchange that has been around since 2016. They are based in Amsterdam in the Netherlands.

Like BitMEX, Deribit also offers these futures contracts on the price of Bitcoin. However, Deribit is one of the only fully operational crypto option exchange. They provide a market for a range of different option instruments on Bitcoin.

We won’t go into too much detail on options here. This is because although short options do require posting margin, options are not really margin trading instruments. You can read our comprehensive guide to crypto options should you want more information.

Deribit platform with Perpetual contract order books

Like BitMEX, Deribit also has a minimum of 1% margin on their main Bitcoin futures. It is important to note that this 1% margin is not constant and will adjust by a factor of 0.5% for each 100BTC size in the position.

However, unlike BitMEX, Deribit lists their Maintenance Margin. This is predefined and is 0.55% and is also scaled according to the size of the position.

Something else that Deribit has on the margin side that is not on offer at other exchanges is what they call their “portfolio margin”. This is an interesting feature that allows traders to offset margin requirements on particular trades based on positions they have in others.

If you want to read more about portfolio margin, their option instruments or more about their advanced platform then you can read our complete Deribit overview.

Kraken

Those of you who have been in the Bitcoin market for some time will no doubt have heard of Kraken. They are perhaps one of the oldest Bitcoin exchanges around having launched in 2011. Kraken is based in San Francisco in the USA.

They are best known for being a physical crypto exchange although they have started offering services akin to margin trading. They allow users to borrow funds in order to take positions in particular coins.

Unlike BitMEX and Deribit, these margin requirements are really quite tame. The minimum margin that you can post is 20% of the Notional which implies a leverage of 5X. Nevertheless, you can still short the crypto assets by selling with borrowed funds.

These leverage limits as well as total borrowing limit will vary according to what pair you are trading as well as what account level you have been verified up to. If you wanted to get more information on this then you check out their margin borrow limits.

In terms of fees, you will be charged a standard fee for opening the position as well as a fee for rolling over the position every 4 hours. The opening fee and rollover fees are the same and are 0.01% for the XBT and USDT base positions and 0.02% for all of the other base cryptocurrencies.

If you were interested in more information about their trading platform as well as their options for physical cryptocurrency trading then you can read our Kraken exchange review.

Huobi Pro

Like Kraken, Huobi is actually a physical Bitcoin exchange that is now offering crypto margin trading. Huobi launched their services in 2013 in China and now have their head offices in Singapore. They have now also opened up a subsidiary in the USA.

Much like BitMEX has done with their perpetual futures, Huobi has created their own form of financial derivative and margin product. This is the Huobi DM and it has only recently been launched as a separate exchange service.

The Huobi DM Trading Interface with Quarterly Contracts

Like a perpetual future or spread betting product, the Huobi DM is an instrument that will give you leveraged exposure to the underlying asset. However, unlike the perpetual futures contracts, these have expiration dates and can be settled weekly, bi-weekly and quarterly.

In terms of the leverage that you are allowed to go up to with these contracts, they offer 1X, 5X, 10X and 20X. So, with a max leverage of 20X they are not as high as BitMEX or Deribit but is greater than on Kraken.

Huobi will also operate a Maintenance Margin Rate. This is used as an indicator to assess the risk of the position moving too quickly into loss making for Huobi. Below is a simple formula which shows how it is calculated on the exchange.

MMR = (Equity Balance / Used Margin) * 100% - Adjustment Factor

The margin call coefficient or “Adjustment Factor” will vary according to the risk of the position and the individual instrument. When the Maintenance Margin Rate falls below 0 then Huobi will initialize a liquidation on your position.

There is much more to Huobi than their margin trading and they have a plethora of other products. We won’t go into any of that detail over here but you can get more information in our Huobi Exchange review.

Poloniex

Another exchange that is offering lending services to their traders is that of Poloniex. They are a US based exchange that were launched in 2014. They have also been in the news recently as they were acquired by Circle Financial.

Not only can you borrow funds to trade on margin at Poloniex but you can also elect to be on the other side as the one who is offering funds up. In other words, you can be the margin provider and earn the fees that come with someone borrowing crypto from you.

In terms of the leverage limits, these are the lowest on offer among the exchanges currently. For example, the max that they will allow on BTC is 2.5X which implies an initial margin of 40%.

BTC Lending platform on Poloniex exchange

What is worth pointing out though is that unlike BitMEX, Huobi and Deribit, Poloniex requires full KYC to be done before you can start trading with them. While this may not be a deal breaker for some traders, there are many others who value their privacy and don’t feel comfortable sharing this.

There is further bad news for those Poloniex traders that are based in the United States. They have only just recently stopped offering their BTC lending and margin features for these traders.

This is probably because of the rules that have been put in place post purchase by Circle. However, this option should still be available for those traders who are based in other jurisdictions.

Apart from the unfortunate news for US traders and the low leverage levels, Poloniex is a pretty advanced exchange with large coin coverage. If you would like more information on their platform and trading products then you can read our Poloniex review.

Margin Trading Top Tips

If you have decided that you want to progress to trading on margin, then you need to make sure that you know what you are using risk management best practices when placing your trades. Here are some pro tips that you can use in order to make the most of your margin trading:

• Start Small: There is no reason to jump in with 50 – 100X leverage when you are first starting your trading. You have to ease into it with lower leverage levels which don’t have so much drawdown risk. If you get wiped out and liquidated on highly leveraged position then it is likely to affect your confidence negatively going forward.
• Avoid Excessive Leverage: Tying in with the point above, there is not really ever a need to go over 50X leverage on any of these exchanges. In fact, there have been studies done that have showed that using excessive leverage on assets such as Bitcoin are less optimal and can lead to premature liquidation. Remember, even if a trade goes in the direction that you were hoping short term fluctuations with large leverage could quickly kick you out of the trade.
• Use Stop Losses: In the event that a trade does end up going in the opposite direction then you need to adequate stop losses in place. All of these exchanges listed above have stop loss functionality in their orders and there is really no excuse not to use them. If you are using technical analysis to inform your trading then you should place these stops at levels that indicate a reversal of trend. Some exchanges have stop losses set to guaranteed by default. Some require you to pay more for the privilege (which we highly suggest)
• Invest only what you can afford: This one is pretty obvious but is still often overlook especially for the newer traders. You should have a defined amount of funds that you would like to stake on an exchange, a trading strategy and even a particular trade. Never chase losses and don’t let your emotions get in the way of your margin trading.

Many of these tips will of course relate to cryptocurrency trading in general. It is also about knowing what you do know, knowing what you don’t and learning what you don’t know. If you have a general respect for margin trading then you should be fine.

Conclusion

Cryptocurrency margin trading is a great way for you to make returns on funds that are not your own. This is actually what banks do when you deposit your money with in their accounts. They use the funds to generate higher returns for their own pocket.

Of course, you are not a bank and banks are backed by the government agencies.

However, this does not mean that the financials of it should not apply. As long as you have an appropriate crypto trading strategy and have the right risk management protocols in place then margin trading could be an attractive option.

It of course goes without saying that you should always Do Your Own Research (DYOR). This is especially true for a highly leveraged crypto margin products.

Featured Image via Fotolia

The post Crypto Margin Trading: Complete Guide To Leverage appeared first on Coin Bureau.

This volatility is being seen as one of the largest hindrances to the mass adoption of crypto. One cannot expect to replace fiat currency if your alternative is not seen as a “store of value”.

So what can be done?

While cryptocurrency volatility is driven by numerous factors, one of the biggest contributors is lack of risk management products and hedging instruments.

Yes, we have some Futures products but these are centralised, standardised, complicated and only cover a limited number of crypto assets.

A protocol level solution is required…

MARKET Protocol Overview

MARKET Protocol is a decentralised derivative protocol that allows users to program their own derivatives through the use of smart contracts and blockchain technology. It will provide users with a mechanism to hedge price risk for numerous different assets.

It will also give one the opportunity to trade volatility in the underlying asset. Not only will users be able to leverage their positions but they can do so without the risks posed by counterparty default.

In essence, MARKET Protocol is developing a decentralised exchange (DEX) protocol that will allow people to trade derivative products. You can think of it as a derivative counterpart to the 0x (ZRX) protocol.

Interview with Seth Rubin (CEO)

After reading the whitepaper we were quite intrigued by the project. We decided to reach out to the team with a bunch of questions on the technology, project, their latest DEX and the broader crypto derivatives ecosystem.

MARKET Protocol CEO, Seth Rubin, was happy to answer our questions in depth.

Project Overview, Crypto Markets and the DEXs

MARKET Protocol CEO, Seth Rubin. Image via GitHub

How did the MARKET Protocol idea come about? How long have you guys been working on it?

Together my cofounders and I have run and managed a number of market making and algorithmic trading desks. Collins Brown and I have been working together for much of the last 13 years, and our CTO and third cofounder, Phil Elsasser, has been working with us for the last 7 of those.

We originally entered crypto in 2015 with a focus on trading crypto assets, but in 2016 we became more interested in the underlying blockchain technology itself. We began learning about decentralized exchanges and what we could do with them, and this led us down the path that eventually became MARKET Protocol.

We started working full-time on MARKET Protocol in June of 2017 after we realized we could replace custodians and clearing firms with a blockchain solution that could also address the problem of volatility in the crypto space.

You are trying to develop a DEX protocol for derivative contracts. You have listed a number of problems with centralized exchanges. If you had to choose one main issue you have with these exchanges, what would it be?

The fundamental issue with centralized exchanges is custody of funds. Coming from the traditional finance world, we were shocked to see how custody of funds was handled in the crypto space.

The main manifestation of this problem is the best practice of not leaving funds on an exchange, due to the risk of theft by hackers or the exchange itself. Additionally, derivatives traders on centralized exchanges like BitMEX and OKEx are constantly exposed to risks such as auto-deleveraging and socialized losses.

The most interesting thing about decentralized exchanges is that there is no centralized custody of funds, this is a very powerful user protection that prevents the abuse of user funds.

The markets are obviously in a pretty bad state at the moment. Are you concerned with the potential for a big drop in trading / hedging activity and hence less incentive to operate a DEX?

Price volatility is really limiting the adoption of crypto assets in general, no matter how you view them, as a store of value, medium of exchange, unit of account, or in the context of token applications.

Crypto assets are currently too volatile to be used in any of these capacities. This is an opportunity for MARKET Protocol, since price volatility is the main problem that we are addressing. With MARKET Protocol, you can hold and use a token without worrying about a decline in its price, effectively separating the price volatility from the utility of the token.

Throughout this bear market we’ve seen a huge amount of interest in hedging and shorting crypto assets, however users currently have very limited access to these types of trading opportunities. This is the problem that we are addressing with MARKET Protocol and our decentralized exchange, MPX.

Your protocol will allow other developers to create their own DEXs. Can you take us through some of the most exciting projects that you are already working with? How far along are they on their products?

We have partnered with a few DEXs so far, the most well know of which is DDEX, a top Ethereum-based DEX and the also the top 0x relayer by volume. By implementing MARKET Protocol, DDEX will be able to offer new and unique trading relationships, for example, price exposure to cross-chain and off-chain assets.

One of the things we focused on from the beginning was making sure that we mapped to 0x endpoints so that relayers can easily implement MARKET Protocol. This is a part of our strategy to encourage applications and exchanges to build on MARKET Protocol, but we’ve also built and released our own decentralized exchange to show what can be built with the protocol.

Right now we’re focused on releasing a production version of MPX alongside the mainnet launch of MARKET Protocol, then at that point we can focus more on supporting our partners and their projects.

The regulatory framework around DEX’s is not immediately clear. For example, we have seen the penalties issued to EtherDelta by the SEC. Have you thought about the regulatory implications for the node or order book operators?

Regulatory implications will be different for different teams, depending on where they are located and how they are implementing MARKET Protocol. We don’t control who implements or how they implement, but the protocol itself is designed in a neutral way so that someone can implement it along with their own solutions for KYC, AML, and registration compliance.

We expect developers to remain compliant with the regulatory requirements of their applicable jurisdictions. This is somewhat complicated by the fact that many regulators are only beginning to provide guidance on how existing regulations apply to crypto, although we expect that this will be cleared up in the next couple of years.

In the meantime, it is important that developers carefully consider the regulations that are applicable to their projects.

The trust in stablecoins such as Tether are at rock bottom levels. There are a lot of other USD backed and fully regulated stablecoins that have recently hit the market (Gemini Dollar, USDC etc). You guys have rather chosen to make use of decentralized stablecoins as the reference coins in your contracts. Why is this?

We have built MARKET Protocol in such a way that any ERC-20 token can be selected as the collateral for a contract, including regulated U.S. dollar-backed stablecoins and also decentralized stablecoins like DAI.

We have a preference for decentralized stablecoins because they more closely align with the ethos of decentralization that is at the heart of both MARKET Protocol and MPX, however it is up to the individual contract’s creator to define which token will be used as collateral.

Each exchange or application built on MARKET Protocol can choose which contracts to list, so we expect to see the market consolidate around a number of preferred stablecoins used as collateral for MARKET Protocol contracts.

MPX Platform

Launch of first MARKET Protocol DEX. Image source: Market Protocol

MPX, your first Dapp, is officially in beta and on the Rinkeby testnet. How is the testing going? Has it garnered a lot of interest?

The feedback we’ve received from our users has been tremendous and supports what we already knew: users want more and better trading opportunities, including both on-chain and off-chain assets.

We’ve validated some of our initial product design choices and have gained valuable insight into how we can continue to improve our user experience, which is something we’re very focused on. Now we’re hard at work incorporating the feedback we’ve received into our updated beta, which we’ll release later this month.

You currently have 6 BETA derivatives on MPX. Is there a plan to include more at a later stage?

During our beta we are supporting six contracts, which we chose to demonstrate the range of contracts that can be created with MARKET Protocol, but in the future we will offer many more. Right now we are gathering feedback from our community and beta testers to understand which assets they want to trade and also which collateral tokens they prefer.

When could we see a live rollout of the MPX platform?

We are planning on releasing a production version of MPX alongside the mainnet launch of MARKET Protocol in Q2 of 2019.

MARKET Protocol Technology

You have developed on top of the Ethereum blockchain. Are you concerned about the scaling issues that the network has recently been facing? What technology are the Ethereum core developers working on that you are most excited about?

We understand the scaling issues that Ethereum is facing, but we are confident that they will be solved. One solution we are particularly excited about is Plasma. By moving transactions off chain, Plasma implementations will increase Ethereum’s total transactional capacity.

This will help decrease on-chain congestion until other scaling solutions can be implemented. In the meantime, we are not too concerned about fees, because high fees crowd out low value transactions, not high value transactions. For example, it doesn’t make sense to pay $5 for each move in a game, but it does make sense to pay $5 to hedge $1000 using MARKET Protocol.

In your whitepaper you talk about partnerships with Oracilize.It and Block1IQ. What sort of input could these oracles provide to your smart contracts?

For each MARKET Protocol contract there is a defined collateral token and also an underlying reference asset. Gains and losses on positions are calculated in the collateral token, but they are derived from the reference asset.

The protocol uses oracles to obtain price data for these reference assets, so that the protocol can calculate their change in value denominated in the collateral token. Our alpha product released earlier this year was written to Oraclize.It, which allowed us to fetch price data from a number of different sources.

One partnership we are particularly excited about is ChainLink, which is a very popular decentralized oracle. In the future, we could use decentralized oracles to bring other external data on-chain, for example, sports data.

Partnership with Chainlink to provide Oracle support

Let’s talk about the derivative contract specifics. It seems that the contracts require a cap and a floor which makes it look like an option spread. Will there be scope for other types of derivative instruments to be constructed? For example, those that do not cap upside?

We didn’t set out to create any particular type of derivative. We started out with the goal of addressing a number of problems, from custody and clearing firms, to volatility. We developed MARKET Protocol contracts to solve these problems, while providing the benefits of derivatives to everyone.

In their current form, MARKET Protocol contracts provide guaranteed solvency and known downside, but at the cost of capped upside for someone who is long. However, this can be addressed by stripping together a series of contracts to replicate uncapped payoff structures, similar to a futures roll, and we expect to see exchanges and applications obfuscate this process so that it’s easy for traders to get this type of exposure.

In the whitepaper, you claim that current derivative settlement disputes are settled via a centralized process. You want to move to a decentralized mechanism though. Have you thought more about how this will look? What sort of technology would it make use of?

Upon expiration, a MARKET Protocol contract automatically settles using price data from its selected oracle. The problem is if the oracle returns an incorrect price, or even just no price at all.

We address this by including a time delay between the initial execution or expiration of the contract and the point in time when users can withdraw their funds. If a quorum of users initiate a settlement dispute, then the contract enters a disputed state, and a backup oracle or group of oracles will be used to get a final settlement value.

We are exploring a number of other ways to adjudicate settlement disputes, for example, by relying on MKT token holders to crowdsource the disputed value or by leveraging another project specializing in dispute resolution.

MKT Tokens

Let’s take a look at the MKT tokens. Are you still planning to raise a pre-sale? Do you have a bit more of a timeline as to when this is likely to take place?

We are still evaluating the best way to distribute MKT tokens. We are also planning on using MKT tokens as a mechanism to enhance liquidity across the protocol, beginning with MPX, to encourage the growth of the MARKET Protocol ecosystem.

Your whitepaper states that these tokens will confer voting rights for potential protocol improvements. Can you elaborate on this a bit more? What governance protocols is it likely to resemble?

MARKET Protocol is an open and decentralized protocol that will be governed by MKT holders, ensuring that the voices of the end users and the projects building on the protocol are both represented in the ongoing stewardship and development of the protocol.

The goal is a governance system that balances the voices of these two groups, however decentralized protocol governance is very much an unsolved problem in this space. There are a number of projects in an experimental phase, but it is going to take some time for viable solutions to emerge.

Looking Forward

MARKET Protocol Roadmap

What trends do you think we are likely to see in 2019 in the cryptocurrency markets?

Currently the overall crypto markets are correlated with the price movement of Bitcoin, but in 2019 we expect to see prices start to move more independently. Many teams were focused on building in 2018, so next year there will be more projects that go live and have real usage.

It’s going to be a really exciting time for the whole crypto space. More projects and users will translate into a greater need for risk management solutions, as well as more opportunities for traders, both of which MARKET Protocol can address.

As you continue rolling out updates, what most excites you about MARKET Protocol and the potential for decentralized derivatives?

The most exciting thing we’ve seen, and something that gives us a lot of confidence going forward, is the user feedback we’ve received so far, and also the huge amount of support we’ve received from our community, both of which indicate the need for the type of product we’re creating, as well as the quality of our team that is tirelessly working to make it better.

We see derivatives as a cornerstone of modern finance and essential for the blockchain space as a whole to grow and scale. And by decentralizing derivatives, we can enable safe, solvent, and trustless trading of any asset. We are working hard to make this a reality!

Our team is really excited to see what our community builds using MARKET Protocol, and how those projects change the world. In the meantime, the best way for us to predict the future is to build it, and that is the idea that guides us as we continue to prepare for the mainnet launch of MARKET Protocol and MPX.

Conclusion

While volatility is a by-product of most nascent financial markets, there have always been tools that could be used as a countermeasure to this volatility.

What MARKET protocol has done is combined the power of the decentralised blockchain with the risk management functionality of a financial derivative. They hope to give users the ability to manage their own individual risk without the need of a large centralised exchange or standardised contract.

It will be interesting to see how the roll-out of the MPX platform goes and what MARKET Protocol has in store for 2019. If you want to follow the latest updates on the project then you can head over to their website where they post their latest updates.

Cover Image via Fotolia & MARKET Protocol

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