Here is a list of five important crypto terms you can find in the CMC dictionary!
1 – Limitation order
Simply put, a limit order is an instruction used to buy or sell at a specific price. When it comes to buy limit orders, the order will be executed at the point where the limit price is reached or lower, while for sell orders, the order is executed when the price is reached or exceeded. will go Traders often use this method. Act on your estimates – for example, if one thinks ETH’s bottom is coming soon, place your limit order to buy loads of ETH at a lower target, to get a bigger deal. can set Specified price or less. It is important to note though that the filing of an order is not necessarily guaranteed, and limit orders will not be executed unless the price meets the order eligibility.
If the asset does not reach the specified price, the order is not filled. So what does it mean if you’re even 1c off your estimate – your order won’t be placed and you could lose out. This is sometimes a good thing, but it can also be a bad thing if your decision is wrong, so use limit orders wisely!
2 – S&P 500
You may have heard about it a lot – the S&P 500 is a stock market index that measures the 500 largest-cap firms in the United States. It is essentially an aggregate representation of market performance through the risks and returns of large firms. Large cap stocks of listed firms total about 14.6 billion or more. This is why it is used by investors as a benchmark against which all other assets are measured in various industries. The S&P 500 is a float-adjusted index that measures the value of publicly traded stocks, excluding stocks controlled by government agencies or other government organizations. . Fluctuations in the share price of each of the S&P 500 firms affects the total value of the index, although businesses toward the top of the list are more affected than businesses at the bottom.
If you’re wondering whether or not this is a safe bet, an organization must meet the following criteria to be included in the S&P 500:
- Be a publicly traded firm in the United States.
- A market cap of $14.6 billion or more.
- Able to manage short term loans easily.
- Have a public float of at least 10% of the outstanding shares.
- Perform well in terms of revenue in the most recent quarter and show positive earnings for the last four quarters.
Companies in the S&P 500 must operate in public markets and regularly publish financial performance data to the public. Some very stable companies hold positions on this list, such as Amazon, Tesla, Microsoft, and more. It is also widely regarded as a safe investment. While the gains may not be huge, you can imagine that the 500 largest companies are more than likely to continue growing for a long time.
3 – Death Cross
Sounds dramatic from what we know… A death cross refers to a price pattern that forms when a slower moving average crosses a faster moving average in an upward direction. The most popular moving averages used by day traders are the 50-day moving average and the 200-day moving average. A slow moving average has to cross below a fast moving average to form a death cross on trading charts. Other examples of death crosses can be seen in 5-day and 15-day moving averages, however, longer periods are more reliable and provide stronger signals for an asset/stock/cryptocurrency. A lock order is the best time to exit the market before an overall bearish trend begins. The Death Cross has three main stages:
- An asset’s price action either stabilizes or falls sharply after following an upward trend for a long period of time. A period of consolidation is often an indication that an uptrend is losing momentum and a trend reversal can be expected. During this phase, the 50-day moving average remains above the 200-day moving average.
- The second phase defines the exact moment when the 50-day moving average falls and crosses the 200-day moving average. This forms a death cross and is considered a bearish trend.
- The third stage is the falling of the asset price as the price action lowers and a downtrend develops. After this phase, the price continues to trade below the 50-day moving average in most cases.
A death cross usually forms when the price is falling, however, it is not a definitive indication that the bull market is over. There have been many instances when a death cross appeared, but the price only fell slightly, recovered, and then broke the previous all-time highs! This is why financial analysts are divided when it comes to determining moving averages to identify death crosses.
Some use the classic 200-day moving average and 50-day moving average, while others consider the crossover of the 100-day moving average over the 30-day moving average as a death cross and the start of a potential bearish trend. Consider it as a confidence indicator. As with every technical indicator, using only the death cross is not a good strategy.
Financial analysts suggest the use of technical indicators to understand price and volume activity from different angles before making a solid buying or selling decision. Technical indicators such as Accumulation/Distribution Indicator, On Balance Volume (OBV), Relative Strength Index (RSI), Moving Average Convergence Divergence (MACD), and Stochastic Oscillator.
4 – Halving
A halving (or halving) is a deflationary blockchain event where block subsidies or rewards received for validating transactions are halved. This is important in that it reduces the rate of circulating supply, and thus increases scarcity by creating fewer and fewer units of the coin/token. These events are programmed directly into the code and announced to everyone in advance, it is public information.
For example, Bitcoin rewards are programmed to decrease more or less every four years. Block rewards are currently 6.25 BTCs per block (900 BTCs per day), down from 12.5 BTCs (1800 BTCs) since 2020. Rewards will thus continue to decrease every four years until the last bitcoin is mined in approximately 2140. The advantage of making emission schedules more predictable, as rotation times can be estimated at any time. This can allow the determination of token valuations with precision. It is a design feature of almost all cryptocurrencies that are not pre-mined that staking or mining rewards decrease over time.
New projects are often designed to circulate only the minimum viable supply at launch, to increase initial cost. Bitcoin’s halving in 2020 was the third after mining declines in 2016 and 2012. Increase due to increasing shortages and tight supply by miners. Other notable segments include altcoins Bitcoin Cash and Litecoin. Bitcoin’s next halving is scheduled for March 2024 and will see mining rewards drop to just 3.125 BTC per block.
5 – Oversold / Overbooted
Oversold is a term used to indicate that an asset such as Bitcoin is trading at a price below its true value. Oversold is the opposite of overbought. Therefore, whether an asset is moving in oversold territory is subjective as analysts use different analysis tools. The reversal period is not known in case of oversold.
However, technical indicators measure the oversold status of a cryptocurrency asset. Additionally, indicators provide an estimate of when the situation is likely to reverse. In most cases, the reversal date is based on “what if” scenarios. For example, analysts may observe that a reversal will only occur if a certain price level, often called a support level, is reached. Common technical indicators used to identify an oversold condition include the Relative Strength Index (RSI) and Bollinger Bands.
The RSI indicator uses a momentum oscillator to measure momentum and price volatility. On the other hand, Bollinger bands consist of lower, middle and upper bands. The middle band enters the moving average of an asset while the lower and upper bands record the standard deviation of price with respect to the middle band. An oversold condition occurs when values move towards the upper band. In addition to technical indicators, an oversold condition can also be revealed using fundamental analysis. Basic indicators depend on current and past prices.
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