Blockchain

How to increase profit with Ethereum CFD?

Ethereum CFD allows you to leverage profits based on the Ethereum price by a factor of 30, for example. This means that a “normal” price

Der Beitrag How to increase profit with Ethereum CFD? erschien zuerst auf ETHBLOG.

Published

3 years ago

March 5, 2018

Republished by Plato

Ethereum CFD allows you to leverage profits based on the Ethereum price by a factor of 30, for example. This means that a “normal” price gain of, for example, 1,000 EUR can be leveraged to a profit of 30,000 EUR without additional capital investment. You don’t think that’s possible? Then read on and find out how it works.

Anyone who has looked at Ethereum has seen the astonishing rate growth of this cryptocurrency over the past few months. At the beginning of the year 2017, the value of an ETH (it is the Ethereum unit called Ether) was still 6 EUR. By the end of 2017 it was around 580 EUR. A growth rate of 9700% (!). Whether this growth can be achieved again in such a short time remains to be seen. Ethereum will probably continue to grow in the long term, but such a growth in such a short time is rather unique and will probably not happen as soon.

Increased profits with Ethereum CFD

In our search for opportunities to achieve this growth in other ways, we looked at CFD (Contract for Difference) as well as at ICOs (Initial Coin Offerings). For some time now, Ethereum CFD have been able to be traded without a margin requirement, which allows for high leverage of profits at calculable risk. For example, from the mid of June 2017 until year end, the Ethereum share price has risen by 80%. Those who invested EUR 1,000 directly in ETH at the mid of June received a bonus of EUR 800. If you had instead opted for an Ethereum CFD, the additional CFD lever of 30 would have made it possible to earn an incredible 24,000 EUR (in both cases, for simplicity’s sake, it would have cost nothing).

A league similar to the ETH growth rate at the beginning of 2017 and competitive to many of the current ICOs. Reason enough that we will take a closer look at Ethereum CFD in the following, and look at their functionality, advantages and disadvantages.

Everything you need to know about CFD at a glance

For those in a hurry, below is a summary of all the key points on CFDs discussed in more detail in this article:

CFD is an agreement on the price development of an asset
This asset is referred to as an underlying
Such an underlying can be e.g. a stock, oil or Ethereum
CFDs can be traded, even if crypto exchanges are not available
No wallet required for CFDs
CFDs have a lever that can significantly increase the profit margin
A CFD lever can also increase the loss in the same way.
Trading in CFDs is regulated
Since the beginning of 2017, the BaFin in Germany has limited the possible loss to a maximum of your deposit amount
One of the best-known providers for trading Ethereum CFD is Plus500². There is no obligation to make additional funding and a 30-times leverage is offered.

²Affiliate link. 80.5 % of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money. Plus500UK Ltd authorized & regulated by the FCA (#509909). CFDs are complex instruments and are associated with the high risk of losing money quickly due to the leverage effect. Between 74 % and 89 % of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

At the beginning, another important hint: Just as with the cryptocurrencies themselves, CFDs are subject to high price fluctuations (volatility). In other words, you should only invest the money that you are prepared to lose in the worst case. Furthermore, this contribution does not constitute investment advice. It is only intended to show the mechanisms that are possible to increase a potential Ethereum price gain by a multiple (also called “leverage”). Ideally, you can become rich even faster than with the already high growth in value at Ethereum, but it is also possible to lose all invested money just as quickly. Therefore, wise and well-informed action is very important for both Ethereum and Ethereum CFD.

What is CFD?

CFD stands for Contract of Difference, i. e. an agreement between two parties on the performance of an asset. This means that a contract is concluded between two parties, a CFD provider and a CFD customer. It stipulates what happens if the market value of a certain asset either increases or decreases. The asset is often referred to as an underlying or basis asset. For example, shares or commodities such as gold or oil can be used as underlying. More and more often, cryptocurrencies such as Ethereum and Bitcoins are being offered as underlying assets.

Assuming that you want to use CFDs to profit from an increase in the price of Ethereum: You would select those CFDs that have Ethereum as their underlying (other words: tied to the Ethereum price). If Ethereum’s share price actually rises from the set point in time, then – to put it simply – the Ethereum CFD customer receives the value by which Ethereum has risen since the purchase of the CFD and additionally receives a substantial markup, the so-called lever on top.

Profit vs. loss

The following graphic illustrates this. Similar to stocks or cryptocurrencies, CFDs are bought at a certain point in time. If you then decide to sell the CFDs in the future within a profit phase, the difference between the purchase price and the selling price is the profit of the underlying asset. This is similar to selling stocks or cryptocurrencies that have risen in value since they were bought.

However, if you wanted to profit from rising prices when buying the CFD and the price of the underlying asset falls, you as the CFD customer remain seated on the difference since the CFD was purchased. Similar to stocks or crypto currencies that are sold at a loss. See graphic below.

Unlike stocks or crypto currencies, the profit or loss margin can be many times higher. The reason for this is the so-called leverage. It will be explained in more detail in the further course of this article and which is actually an important instrument for trading CFDs.

Short vs. long

The case in the previous example of profiting from a rising price trend is called “going long” for CFDs. If the price has risen since the CFD was bought, you are in the profit zone. But if it falls below the purchase value, you are in the loss zone.

Unlike stocks or crypto currencies, CFDs have the possibility of profiting from falling prices and earning a lot from them. This means that you earn money if the underlying asset has lost value since the CFDs were purchased. If you want to profit from a falling price performance of the underlying asset for CFDs, this is called “going short”.

Unless otherwise stated, for the sake of simplicity we will always assume “long” in the rest of this article. So we want to profit from rising prices in order to make it easier for the beginning.

Leverage and margin

Up to now, this ominous lever of CFDs has been mentioned frequently, increasing the profit of CFDs many times. But how does it actually work? To explain the mechanism of the lever, I have to extend a bit further and start with the so-called margin.

What’s the margin?

Imagine, the value for 1 ETH is currently 250 EUR at a crypto exchange. If you want to buy 1 ETH, you would have to pay 250 EUR for it. Sure thing. Now it becomes interesting: If you buy an Ethereum CFD instead, you don’t have to pay 250 EUR to get the equivalent of 1 ETH. Instead, only a fraction of this is required. For example, only 3.33% of the underlying is needed at Plus500² in order to be able to trade 1 ETH as a CFD. That means, you only have to deposit 8,33 EUR to trade the value of 1 ETH (250 EUR). That fraction, which you have to pay for an unit of an underlying asset is usually given in percent and is called margin.

What’s the leverage?

Assuming that you would have 1,000 EUR to invest in ETH. At a rate of 250 EUR per ETH you would receive exactly 4 Ethers. If you would instead invest this 1,000 EUR in Ethereum CFDs instead, you would receive CFDs worth 120 Ethers (1,000 EUR / 8.33 EUR per CFD). This would be equivalent to 30,000 EUR! In other words, you would receive the equivalent of Ethers worth 30,000 EUR for 1,000 EUR. You would have a 30x leverage, because for 250 EUR you don’t get the equivalent of 1 ETH but of 30 ETH (250 EUR / 8,33 EUR). Leverage and margin therefore belong together and are always dependent on the price of the underlying asset and the CFD provider.

Effect of leverage

Further assuming that the exchange rate of 1 ETH will now rise by 50 EUR to 300 EUR. Then you would have made a profit of 200 EUR (4 ETH x 50 EUR) on the classic purchase. But if you had bought Ethereum CFDs instead, this would have been a profit of 6,000 EUR (120 ETH x 50 EUR), thanks to the lever.

Unfortunately, there is always shadow where there is light. In the case of the CFD lever in long mode, the shadow is that the lever also makes itself noticeable when there are price losses. In this case in the opposite direction, namely into the loss zone.

Let’s assume again that the price of 1 ETH falls by 50 EUR to 200 EUR. Then you would have made a loss of 200 EUR (4 ETH x 50 EUR) on the classic purchase of 4 ETH. But if you had bought an Ethereum CFD instead, this would be a loss of 6,000 EUR (120 ETH x 50 EUR). This is significantly higher than your original deposit of 1,000 EUR.

Check conditions of CFD provider to clarify limitation of loss

Until recently, it was quite possible to lose more than you had originally deposited. Until the beginning of 2017, there was a so-called obligation to make additional payments. This means that after you have only deposited 1,000 EUR into the CFD, another 5,000 EUR would have been charged. That’s because the total loss would have been 6,000 EUR. The CFD provider was allowed to claim the 5,000 EUR from you as an additional payment.

However, this practice was banned by the BaFin at least in Germany at the beginning of 2017. Additionally, many CFD providers from abroad also do not charge you more than your initial deposit. Take a look into their conditions before you start. That is, you are just standing straight up to the maximum amount of money you started with. In our example, this is only up to a maximum of 1,000 EUR. This limitation is likely to make CFDs significantly more attractive in the future, as the risk is much more predictable. With CFD providers from abroad, however, it is important to ensure that they explicitly waive the obligation to make additional contributions.

Conclusion

With a CFD lever, you have the opportunity to trade huge value for the underlying asset with only a fraction of the capital, so that you can participate in the profits as much as you can lose them.

If you have gotten a taste for Ethereum CFD and would like to try them, I can recommend the provider Plus500². Our blog receives a commission if you trade here, so you can support us this way if you want.

So if you have some money left over, you should consider investing in Ethereum CFD as well as Ethereum. It is much more transparent to leverage your Ethereum profit with CFDs than with ICOs, for example.

» Buy Ethereum now at Plus500²

At this stage, again the important hint: Just as with the cryptocurrencies themselves, CFDs are subject to high price fluctuations (volatility). In other words, you should only invest the money that you are prepared to lose in the worst case. Furthermore, this contribution does not constitute investment advice. It is only intended to show the mechanisms that are possible to increase a possible Ethereum price profit many times over (also called “leverage”). Ideally, you can thus become rich even faster than with the already high growth in value at Ethereum. However, it is also possible to lose all invested money just as quickly. Therefore, wise and well-informed action is very important for both Ethereum and CFDs.

May large profits be with you 😉

¹Affiliate link

Note: The content on ethblog.de is for information purposes only and does not constitute investment advice or any other recommendation within the meaning of the Securities Trading Act.

Stephan Niedermeier

Stephan is member and co-founder of Coinauten, a network of experts on cryptocurrency and blockchain technology. He has already founded several successful technology companies and is a Blockchain investor from the very beginning. Stephan advises investors and companies on strategic and technological issues.
Twitter – LinkedIn – http://niedermeier.io

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Source: https://ethblog.de/en/how-to-increase-profit-with-ethereum-cfd/

Blockchain

How NFTs, DeFi and Web 3.0 are intertwined

Published

2 hours ago

April 10, 2021

Republished by Plato

While blockchain itself provides the technology constructs to facilitate exchange, ownership and trust in the network, it is in the digitization of value elements where asset tokenization is essential. Tokenization is the process of converting the assets and rights to a property into a digital representation, or token, on a blockchain network.

Distinguishing between cryptocurrency and tokenized assets is important in understanding exchange vehicles, valuation models and fungibility across the various value networks that are emerging and posing interoperability challenges. These are not just technical challenges, but also business challenges around equitable swaps.

Asset tokenization can lead to the creation of a business model that fuels fractional ownership, the ability to own an instance of a large asset. While discussing asset tokenization in a previous article, I also mentioned the value of an instance economy in democratizing finance, commerce and global access, as well as in creating a broader global marketplace at a scale never before seen.

With digital assets and their fungibility in a blockchain ecosystem, there are various drivers of valuation. These include: 1) tokens based on crypto economic models that are driven by supply and demand, and the utility of the network; 2) nonfungible tokens, or NFTs, which have an intrinsic value such as identification, diplomas and healthcare records — essentially, tokens that are simple proof validations of the existence, authenticity and ownership of digital assets; and 3) fungible tokens that are valued on various bases, such as the sum total of economic activity in the network (cryptocurrency), its utility (smart contracts and transaction network processing), assigned values (stable coins and security tokens), and so on.

In this article, I address the complex issue of the hyperbolic and rapid rise of NFTs, after a similarly meteoric rise of decentralized finance, or DeFi, creating amazing innovations — with immense promise of democratization, new business models and global marketplaces with global access — all fueled by the basic premise of decentralization and fundamental constructs of tokenization and wallets. While NFTs may be characterized as one-of-a-kind cryptographic tokens with some intrinsic value to a holder or to a market (art, collectibles), the NFT movement is indicative of a larger token revolution that will not only fuel massive innovation and growth in Web 3.0 protocols but also test the resolve of the DeFi movement, along with its ability to intersect and provide platforms and an exchange vehicle for all token types.

Growth in Web 3.0 protocols

The first two generations of web protocols were largely about disseminating information and connecting people. They fueled a massive growth in information and collaboration, and did wonders for connecting the world. However, those web protocols were never designed to move things of value. Also, as the Web 2.0 era reached its fullest potential, vulnerabilities such as “fake news” and the “batched relay” of the movement of assets via a series of intermediaries emerged. Threats to the commerce and financial infrastructure of the system risk destabilizing it.

Web 3.0 promises to safeguard all things we value: information, truth and digital assets — both fungible and nonfungible. Whereas Web 2.0 was driven by the advent of social, mobile and the cloud, Web 3.0 is largely built on three new layers of technological innovation: edge computing, decentralized data networks and artificial intelligence.

The growth of NFTs has not only empowered the ability for artists, skilled professionals and entrepreneurs to encapsulate innovation in a tokenized form but has also fueled the democratization of the platform as one of the promises of blockchain technology. The underlying infrastructure includes decentralized storage technologies, efficient consensus protocols, off-chain computing, and oracle networks to provide connectivity and validation to existing systems.

Collectively, the Web 3.0 set of technologies envisions a connected, trustless, accountable network for efficiently delivering value, thus crafting an infrastructure for things of worth. NFTs represent both transferable entities and nontransferable tokens that we value. The latter include things such as our identification, healthcare records and passports, things that represent us and allow us to participate in the digital economy with our own unique, digital identities.

As we dare to envision a shift toward a world with decentralized control, governance based on distributed technology that challenges every business model, and governance structure built upon centralized business frameworks, we do have to ponder some things. Not only the shift itself, but the motivation, incentive and monetization elements that fuel and power the economic infrastructure to move things that have value — thereby keeping up with our changing perception and subsequent realization of that value.

Intersecting with finance — DeFi

DeFi is the movement in the blockchain applications space that leverages decentralized network technology to disrupt and force a transformation of old financial products into trustless, transparent protocols, facilitating digital value creation and dissemination with few to no intermediaries. It is widely understood and accepted that — due to new synergies and co-creation via new digital interactions and value-exchange mechanisms — blockchain technology lays the foundation for a trusted digital transactional network that, as a disintermediated platform, fuels the growth of marketplaces and secondary markets.

While DeFi aims to deliver the promise of finance democratization, NFTs test the resolve of DeFi by delivering a competitive yet inclusive asset class, plus avenues to provide a medium of exchange, fungibility by other fungible asset classes, and liquidity to a traditionally illiquid market.

Asset classes resulting from DeFi protocols and NFTs avail themselves of the advantages of fractional ownership of the assets, blurring the lines between asset classes and using constructs like digital wallets as a receptacle for them. This is all supported by underlying layers of Web 3.0 that provide security and availability via decentralization, as well as trust and immutability via consensus, extending these principles to basic computer infrastructure like storage and interconnect.

Commercialization of Web 3.0 protocols, which manifest as fungible utility tokens, further blurs the lines with diverse financial innovation products introduced by DeFi (such as base assets and derivatives), products that are also tokenized. So, while decentralization is the underlying theme — and the wallet and the token are fundamental constructs — these blurring lines are quite profound.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Nitin Gaur is the founder and director of IBM Digital Asset Labs, where he devises industry standards and use cases and works toward making blockchain for the enterprise a reality. He previously served as chief technology officer of IBM World Wire and of IBM Mobile Payments and Enterprise Mobile Solutions, and he founded IBM Blockchain Labs where he led the effort in establishing the blockchain practice for the enterprise. Nitin is also an IBM Distinguished Engineer and an IBM Master Inventor with a rich patent portfolio. Additionally, he serves as research and portfolio manager for Portal Asset Management, a multi-manager fund specializing in digital assets and DeFi investment strategies.

Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://cointelegraph.com/news/how-nfts-defi-and-web-3-0-are-intertwined

Blockchain

Has the rally ended for altcoins like LINK, ADA, and NPXS?

Published

2 hours ago

April 10, 2021

Republished by Plato

With most altcoins rallying at the current point in the market cycle where Bitcoin is making a comeback, there are a few altcoins that may have ended their price rally. Among these, LINK ranks in the top 10 cryptocurrencies based on market capitalization.

LINK’s oracles may have filled the void left from the removal of XRP from Grayscale’s fund. However, that does not seem to have had an impact that would last long enough to boost the price on spot exchanges. The asset is currently trading at the $32 level, down from its ATH. Though there is anticipation that the price will rally to its ATH, the dropping trade volume across exchanges signals otherwise.

After being added to Grayscale’s fund, LINK’s price went up steadily, however, a boost from institutional demand may not be enough to boost the asset’s price. 93% HODLers are profitable before the asset takes a dip in the current cycle

The altcoin rally may have ended for LINK, ADA and NPXS

Grayscale LINK Holdings || Source: Bybt

LINK’s institutional demand has had only a partial impact on price, and the trend reversal depends on the HODLers profitability at the current price level and the rally of altcoins led by ETH. Historically, Bitcoin’s rally has had a negative impact on LINK’s price and that remains to be seen as Bitcoin traders above $60000 once again this weekend.

Another top altcoin, Cardano has offered HODLers an ROI of over 440% in 2020. This altcoin has been considered to be the one to HODL in the long term based on on-chain analysis and trader sentiments. In the current cycle, 65% HODLers are profitable at the price level of $1.23. This is one of the top altcoins in which the concentration by large holders is low, below 50%, currently at 24%.

Additionally, at this point in the rally, there is a significant drop in ADA’s trade volume across exchanges. This drop in liquidity may lead to a drop in price over the following week. Though large transactions in the past week have been above $30 Billion, the volume is dropping consistently.

ADA price chart || Source: Messari

Unlike ADA and LINK, in the case of NPXS, the price is back to the same level as a month ago. The 24-hour trade volume has taken a plunge with a near 100% drop in 24 hours, and this is a unique position in NPXS’s price cycle. Moreover, the on-chain sentiment is bearish and this may be the ideal time to buy altcoins like these that are consolidating. The confidence is consistently high in top markets on spot exchanges, and the dropping trade volume is a sign of consolidation.

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Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://ambcrypto.com/has-the-rally-ended-for-altcoins-like-link-ada-and-npxs

Blockchain

Kraken Daily Market Report for April 09 2021

Published

2 hours ago

April 10, 2021

Republished by Plato

Overview

Total spot trading volume at $1.02 billion, down from the 30-day average of $1.34 billion.
Total futures notional at $417.0 million.
The top five traded coins were, respectively, Bitcoin, Tether, Ethereum, Ripple, and Polkadot.
Strong returns from Waves (+23%), Basic Attention Token (+17%), Keep (+13%), and Filecoin (+12%).

April 09, 2021 $1.02B traded across all markets today Crypto, EUR, USD, JPY, CAD, GBP, CHF, AUD
XBT $57928. ↓0.21% $379.8M	USDT $0.9996 ↓0.02% $197.7M	ETH $2060.0 ↓1.0% $115.3M	XRP $1.0285 ↓2.9% $70.9M	DOT $40.512 ↓2.1% $27.6M
ADA $1.2002 ↓1.6% $24.8M	WAVES $16.972 ↑23% $20.9M	USDC $1.0000 ↑0.02% $20.8M	FIL $173.42 ↑12% $20.7M	LTC $219.62 ↓3.0% $16.3M
XTZ $6.6226 ↑7.5% $13.4M	LINK $31.279 ↓4.6% $12.5M	BAT $1.5112 ↑17% $11.8M	TRX $0.1153 ↓6.5% $11.7M	SC $0.0296 ↑0.6% $10.9M
MANA $1.0222 ↑2.9% $10.6M	XMR $275.91 ↑2.1% $9.67M	BCH $630.11 ↓2.1% $7.69M	XDG $0.0611 ↓1.1% $7.48M	XLM $0.4833 ↓4.4% $7.44M
OMG $10.224 ↑0.04% $7.33M	KSM $448.87 ↓2.6% $7.11M	EOS $6.1909 ↓4.1% $6.45M	ALGO $1.3699 ↑1.3% $6.04M	STORJ $2.5171 ↓3.8% $5.37M
ATOM $20.952 ↑2.0% $4.96M	FLOW $35.168 ↓0.5% $4.69M	UNI $29.463 ↓2.5% $4.36M	NANO $5.6553 ↓0.07% $3.24M	QTUM $15.518 ↓7.3% $3.24M
KEEP $0.7752 ↑13% $3.09M	ZEC $192.44 ↑4.2% $2.58M	OCEAN $1.7433 ↓4.4% $2.54M	ICX $2.6261 ↑5.7% $2.36M	LSK $7.0662 ↑2.8% $2.36M
KAVA $6.9189 ↓4.9% $2.33M	OXT $0.8013 ↑1.0% $2.17M	DASH $264.69 ↓1.1% $2.14M	CRV $2.9409 ↓4.2% $1.96M	DAI $1.0001 ↓0.01% $1.95M
COMP $451.87 ↓0.8% $1.89M	YFI $45278. ↓4.2% $1.66M	GRT $1.7240 ↓1.7% $1.64M	REP $55.361 ↑9.9% $1.56M	ANT $12.048 ↓0.6% $1.5M
AAVE $358.40 ↓3.3% $1.47M	REPV2 $55.869 ↑9.2% $1.19M	KNC $3.3166 ↓0.15% $1.15M	SNX $19.258 ↓3.3% $1.1M	ETC $18.662 ↓4.8% $875K
EWT $17.223 ↓4.9% $867K	MLN $96.553 ↑5.3% $704K	PAXG $1747.8 ↓0.9% $655K	BAL $51.559 ↓4.0% $387K	GNO $169.66 ↑1.3% $134K
TBTC $60244. ↑1.2% $26.7K

#####################. Trading Volume by Asset. ##########################################

Trading Volume by Asset

The figures below break down the trading volume of the largest, mid-size, and smallest assets. Cryptos are in purple, fiats are in blue. For each asset, the chart contains the daily trading volume in USD, and the percentage of the total trading volume. The percentages for fiats and cryptos are treated separately, so that they both add up to 100%.

Figure 1: Largest trading assets: trading volume (measured in USD) and its percentage of the total trading volume (April 10 2021)

Figure 2: Mid-size trading assets: (measured in USD) (April 10 2021)

Figure 3: Smallest trading assets: (measured in USD) (April 10 2021)

#####################. Spread %. ##########################################

Spread %

Spread percentage is the width of the bid/ask spread divided by the bid/ask midpoint. The values are generated by taking the median spread percentage over each minute, then the average of the medians over the day.

Figure 4: Average spread % by pair (April 10 2021)

.

#########. Returns and Volume ############################################

Returns and Volume

Figure 5: Returns of the four highest volume pairs (April 10 2021)

Figure 6: Volume of the major currencies and an average line that fits the data to a sinusoidal curve to show the daily volume highs and lows (April 10 2021)

###########. Daily Returns. #################################################

Daily Returns %

Figure 7: Returns over USD and XBT. Relative volume and return size is indicated by the size of the font. (April 10 2021)

###########. Disclaimer #################################################

The values generated in this report are from public market data distributed from Kraken WebSockets api. The total volumes and returns are calculated over the reporting day using UTC time.