Connect with us
[crypto-donation-box]

Blockchain

Bitcoin’s shortage on exchanges is a good thing

Republished by Plato

Published

on

The demand and supply have been holding up the economics of traditional finance and the crypto market has also been abiding by it. Bitcoin, which managed to return over 300% in 2020, has been recognized as a store of value by many investors as they continue to include a high number of Bitcoin in their investment portfolios.

As the BTC market rallied, investors wanted to hold on to their Bitcoins and not leave them on the exchanges. This created a narrative regarding a shortage of supply on the exchanges. Since the massive fall in March 2020, the percentage balance on exchanges fell by 21%, while the price continued to rally. The chart below highlighted this inverse relation.

Even though the value presented is negative it may end up having a positive impact on the value of the entire crypto market as noted in 2017.

Before the last bull run, the percent balance on exchanges had fallen by 15% and the value of Bitcoin had been close to $10k. Following the drop in supply on exchanges, the Bitcoin value was driven close to its ATH of $20k, at the time. This shortage was described to act as a loaded spring and as a similar trend forms in the market once again, it may cause a subsequent squeeze of BTC’s price.

This theory was also supported by the changing volume trends in the market. When the price had crashed in March 2020, there was a change in the number and size of the BTC exchange withdrawals.

While in the early 2019 period, accumulation was dominated by withdrawals between 10-100 Bitcoins, by March 2020 the size of these withdrawals had increased between 100-1000 Bitcoins.

Such a structural change was a sign that the market may be filled with big players holding large bags of the digital asset. These large withdrawals can only indicate the positive sentiment in investor attitude regarding the future of the crypto market. Clubbed with the shortage, this could spell more bullishness for Bitcoin in 2021.

Source: https://ambcrypto.com/bitcoins-shortage-on-exchanges-is-a-good-thing

Blockchain

Here’s how Bitcoin’s intraday volatility complicates leverage trading

Republished by Plato

Published

on

The crypto sector is in a bull market, and frequent evidence comes from anonymous traders who post their five-, six- and seven-figure investment returns as screenshots on Crypto Twitter.

This condition creates a FOMO-like situation where everyone gets greedy. The temptation to boost potential earnings by twenty times or more is often irresistible for most novice traders.

Today, almost every cryptocurrency exchange offers leveraged trading using derivatives. To enter these markets, a trader has to first deposit collateral (margin), which is usually a stablecoin or Bitcoin (BTC). However, unlike spot (regular) trading, the trader cannot withdraw from a futures market position until it has been closed.

These instruments have benefits and can improve a trader’s outcomes. However, those who often rely on incorrect information when trading futures contracts end up with heavy losses rather than profits.

The basics of derivatives

These leveraged futures contracts are synthetic, and it is even possible to short or place a bet on the downside. Leverage is the most appealing aspect of futures contracts, but it is worth noting that these instruments have long been used in stock markets, commodities, indexes, and foreign exchange (FX).

In traditional finance, traders measure daily price change by calculating the average closing price changes. This measure is widely used in every asset class, and it’s called volatility. However, for various reasons, this metric isn’t helpful for cryptocurrencies and can harm leverage traders.

Bitcoin 60-day USD volatility. Source: BuyBitcoinWorldwide

To be brief, the higher the volatility, the more often an asset price presents wild oscillations. Contrary to the expectation, moving up by 7% to 10% every day represents a low volatility indicator. This happens because the deviation from the mean is small, while random fluctuations between a negative 3% to a positive 3% present a much wider range.

Markets with very low volatility are perfect for leverage

Knowing the general range of how an asset oscillates is extremely important when opening leverage positions. Take the British Pound Sterling (GBP), for example, and one will notice that its volatility is usually below 1% as surprise aggressive daily price changes are unusual.

GBP currency 60-day USD volatility. Source: BuyBitcoinWorldwide

FX markets are relatively stable markets when compared with stocks and commodities. Therefore, some regulated brokers offer even 200x leverage, meaning a 0.5% move against the position would cause a forced liquidation.

For a cryptocurrency trader, the Swiss Franc’s (CHF) daily change versus the U.S. dollar would likely be seen as a stablecoin.

Swiss Franc (CHF) USD prices. Source: Investing.com

However, the 3.4% daily Bitcoin volatility hides a more dangerous price fluctuation. While measuring daily closing prices for traditional markets makes sense, cryptocurrencies trade non-stop. This difference potentially creates much wider movements within the same day, although the daily closing often masquerades it.

Bitcoin price low-high-close USD prices. Source: CoinMarketCap

The average change between the Bitcoin intraday high and low of the past 180 days is 6.5%. As shown above, these ‘intraday moves’ surpassed 10% on 25 occasions. Meaning, in reality, BTC price oscillations are much larger than expected for a 3.2% daily volatility asset.

20x leverage seems crazy considering Bitcoin’s daily moves

To put things into perspective, a 5% move in the wrong direction is enough to liquidate any 20x leveraged Bitcoin position. This data is clear evidence that traders should really consider risk and volatility when leverage-trading cryptocurrencies.

Fast profits are nice, but what is more important is being able to survive the usual daily price swings to hold on to those unrealized gains.

Although there’s not a magical number to set the best leverage for every trader, one must account for the effect of volatility when calculating liquidation risks. Those aiming to keep positions open for more than a couple of days, aiming for 15x or lower leverage, seem to be ‘reasonable.’

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

Here’s how Bitcoin’s intraday volatility complicates leverage trading

Source

Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://blockchainconsultants.io/heres-how-bitcoins-intraday-volatility-complicates-leverage-trading/?utm_source=rss&utm_medium=rss&utm_campaign=heres-how-bitcoins-intraday-volatility-complicates-leverage-trading

Continue Reading

Blockchain

YFI, VeChain, Litecoin Price Analysis: 16 May

Republished by Plato

Published

on

YFI’s technicals suggested that the cryptocurrency possessed bullish strength to sustain its rally. VeChain was projected to move sideways within a fixed channel. Lastly, Litecoin traded within $330-$300 – an area that needed to be defended against bearish pressure.

YFI

Source: YFI/USD, TradingView

Year-to-date gains of 210% may be modest when compared to some other alts in the market, but a rise above $55,000 indicated bullish progress for YFI– one that could see sharper gains over the coming months. A breakout above $55,000 had already fueled a 50% jump in value to above $83,000, but a broader market pullback complicated matters. Unable to fully take advantage of its rally, YFI noted choppy movement over the past few days.

Healthy volumes and buying pressure have allowed the price to trade above $63,000-65,000 support. OBV’s uptrend attested to buying activity in the market. Awesome Oscillator’s green bars also conformed with OBV’s stance. There was some resistance around $83,000 and a break above this could see another price swing. Conversely, a breakdown could see losses towards $48,000 or $43,000.

VeChain [VET]

Source: VET/USD, TradingView

An ADX reading of 20 showed a weak directional market as VeChain traded between $0.203 and $0.1666. Low volatility was also evident from the constricted nature of Bollinger Bands. Considering its technicals, VET would likely continue to see some rangebound movement over the coming days.

A rise above $0.203 could spur some additional buying but gains would likely be capped at $0.254-resistance.Having said that, a breakout from $0.254 could see a shift of market dynamics towards the bullish side and volumes must be observed for such an outcome.

Litecoin [LTC]

Source: LTC/USD, TradingView

On the daily chart, Litecoin traded within a buy zone of $330-$300. The current area needed to be defended from a sell-off towards the 50-SMA (not shown) around $266. While the 4-hour chart did register a series of bullish candlesticks, bearish sentiment still prevailed on the daily timeframe.

The Squeeze Momentum Indicator highlighted bearish momentum and a dip below half-line would present a sell signal. This would also lead to a breakdown towards the 50-SMA. RSI floated around neutral-50 but did point north at the time of writing. If the present buy area is retained, a comeback above $330 would become a possibility, however, broader market cues would likely dictate LTC’s trajectory.


Sign Up For Our Newsletter


Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://ambcrypto.com/yfi-vechain-litecoin-price-analysis-16-may

Continue Reading

Blockchain

U.S. City to accept crypto payment for utility bills

TL;DR Breakdown Williston to accept crypto payment for utility bills. More tech adoption to be recorded by Williston. Williston, a city in North Dakota, USA, has announced plans to begin accepting crypto payment for utility bills from residents. It becomes the first city in North Dakota to adopt crypto payment. Hercules Cummings, Williston City Finance […]

Republished by Plato

Published

on

TL;DR Breakdown

  • Williston to accept crypto payment for utility bills.
  • More tech adoption to be recorded by Williston.

Williston, a city in North Dakota, USA, has announced plans to begin accepting crypto payment for utility bills from residents. It becomes the first city in North Dakota to adopt crypto payment.

Hercules Cummings, Williston City Finance director, said they have partnered with BitPay, one of the largest crypto payment service providers in the U.S., to help them convert the coins from crypto to fiat in real-time.

Crypto payment steps for Williston

Firstly, the city council said it would monitor how residents respond to crypto payments as only utility bills are going to be paid with crypto.

The city said if residents respond positively to making payment for utility bills with crypto, it would be expanded. They would begin accepting crypto payment for landfills, permits, and licenses.

Residents who intend to pay utility bills are to visit website of the city of Williston, enter their account information to receive an emailed BitPay invoice, and choose their digital wallet and the crypto in which they want to pay.

Rebate citizens can enjoy using crypto to pay utility bills is reduced commission as Exchanges only charge 1 percent for every transaction, unlike other payment services, which can charge up to 3 per cent.

How North Dakota keeps embracing new tech

The city finance director said that his city is only responding to a growing trend and technological changes.

He revealed that crypto represents an innovation for the city’s finance department and a significant step to take the lead in the state and nationwide. Cummings also said that it is just one out of many things that will be rolling out of the finance department.

Williston is the third government entity in the U.S. to embrace cryptocurrencies as adoption takes a fast pace in the country. Wyoming is one of those states, which registered Ripple as an entity and has several crypto-friendly laws.

Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://www.cryptopolitan.com/u-s-city-to-begin-accepting-crypto-payment/

Continue Reading
Blockchain5 days ago

Billionaire Druckenmiller says ledger-based system could replace USD worldwide

Blockchain4 days ago

First Spot: Coinbase’s App Surpassed TikTok, Instagram, and Facebook on iOS in the US

Blockchain4 days ago

Raze Network Kicks Off Testnet Phase With UI Community Voting

Blockchain4 days ago

dotmoovs Raises $840,000 From Strategic Investors and Partners

Blockchain5 days ago

Uniswap flips Bitcoin on daily revenue… and it’s more impressive than you think

Blockchain5 days ago

How did Internet Computer (ICP) become a top-10 cryptocurrency overnight?

Blockchain5 days ago

Casper Network’s CSPR Spot Trading Now Open on OKEx

Blockchain4 days ago

When dollars meet the hype: The biggest NFT hits from celebrities

Blockchain4 days ago

PARSIQ Integrated Into Polkadot For Smart Triggers Across the Relay Chain

Blockchain3 days ago

US Investment Bank Cowen to Offer Crypto Custody Services

Blockchain4 days ago

DeFi lending platform Aave reveals “private pool” for institutions

Blockchain5 days ago

From cypherpunk to state contracts: the changing face of blockchain

Blockchain5 days ago

TA: Ethereum Overcame Odds With New High, Here’s Why ETH Could Test $4.5K

Blockchain4 days ago

MoneyGram to Enable Users to Buy Bitcoin and Withdraw it From Birck-and-Mortar Locations

Blockchain4 days ago

Griff Green: Doge-loving hippy hacker steals crypto before bad guys can

Blockchain4 days ago

Here are the Top DeFi Tokens With The Largest Price Jumps This Week

Blockchain4 days ago

As Elon Musk’s SpaceX Literally Sends Dogecoin To The Moon, Justin Sun Craves For Tron to Tag Along

Blockchain4 days ago

Gaming Giant Kinguin Taps Immutable X for NFT Offering

Blockchain4 days ago

Can Elon Musk’s ‘damage control’ measures help revive Dogecoin’s price?

Blockchain4 days ago

Ethernity Chain Immortalizes Tony Hawk’s Last 540 Skate Trick With NFT

Trending