Most people who use blockchain technology are unaware of the following

This is a continuous educational highlight from the fundamentals for Blockchain users, especially the newcomers who are already eager to study the origin and significant language and word. I’m writing this from a place of understanding for the Blockchain technology. Please understand the fundamentals of the Blockchain register to understand the nature of this technology. Let’s learn together, and the features below will tell you everything you need to know:

Learn with me: ATH and ATL
ATH: The All-Time High is the highest price ever reached by a cryptocurrency. The reaching of a new ATH by a cryptocurrency denotes a positive signal.
ATL: The All-Time Low is the lowest price ever reached by a cryptocurrency.

Correlated words
Drawdown
The phrase “drawdown” in finance refers to the change in price of a financial instrument or a portfolio of investments over a specific time frame. It is determined as the difference between the highest value (also known as the peak or maximum drawdown) and the lowest value (also known as the trough or minimum drawdown) during that time period.
Drawdowns are typically represented as percentages, however they can also be specified in terms of the unit of fiat money or cryptocurrency that is being taken into consideration.

The formula for calculating a percentage drawdown is as follows:

Drawdown% (DD) = ((Pmax — Pmin) / Pmax) * 100

In this case, Pmax corresponds to the maximum recorded in the period under consideration, while Pmin is the minimum in the same timeframe.

For example, if in a bear market, the peak value of crypto corresponded to €100 and the price fell to a minimum of €50, the drawdown would be 50%. The calculation of drawdown is used in trading to measure the volatility of an asset and the associated risk, in order to compare its performance with other types of investment.

Floor price
The expression ‘floor price’ is used in auctions, including auctions, and indicates the minimum price at which an asset can be bought. In other words, the floor price is the starting price in an auction, whereby lower bids are not accepted.

Bitcoin Dominance
‘Bitcoin dominance’ is a term used to refer to the percentage of total market capitalization that Bitcoin holds within the overall cryptocurrency market.

It is calculated by dividing the market capitalization of BTC by the total market capitalization of all cryptocurrencies. For example, if the market capitalization of Bitcoin is $500 billion and the total market capitalization of all cryptocurrencies is $1 trillion, Bitcoin dominance would be 50%.

This is a widely observed metric in the cryptocurrency industry, as it provides an indication of the relative strength of Bitcoin compared to other cryptocurrencies. High Bitcoin dominance indicates that BTC is the dominant player in the market and that other cryptocurrencies are struggling to gain ground. Conversely, low dominance indicates that other cryptocurrencies are gaining popularity and market share.

One of the main reasons for BTC’s high dominance is the advantage of being the first cryptocurrency created: this longevity has allowed it to build a strong network effect.

However, the cryptocurrency market is constantly evolving and dominance can change rapidly. As new cryptocurrencies emerge and gain popularity, they can begin to undermine Bitcoin’s dominance. For example, in 2017 Bitcoin dominance had reached 95%, but by the beginning of 2018, it had dropped to around 33% due to the popularity of other cryptocurrencies, such as Ethereum.

Pair
In the context of trading, the term ‘pair’ refers to two different currencies that are traded against each other on an exchange market.

An example of a pair is BTC/EUR, also spelled BTC-EUR or BTCEUR, which represents the financial relationship between Bitcoin and the Euro. The price of the pair, or exchange rate, tells traders how many units of the quoted currency (the second one, Euro) are needed to buy one unit of the base currency (the first one, Bitcoin). The base currency is bought or sold, while the quoted currency is used as a reference for the pair price.

Price action
Price action is a technical term for the price movements of an asset over time. These can be observed using simple linear or candlestick charts. Price action trading is based on the idea that focusing only on price, support, resistance level, and trendlines can reveal signals that would otherwise be difficult to detect with an approach based on indicators and fundamental analysis.

Relative Strength
The analysis of a relative strength chart allows the price performance of two separate cryptocurrencies to be compared.

It is a technical analysis tool that allows you to quantitatively compare the price trend of one crypto to the price trend of a second cryptocurrency (denominator) over a defined time interval.

The most commonly used denominator is Bitcoin: it is in fact the cryptocurrency with the highest market capitalisation and is considered as the reference index for the cryptocurrency market.

This means that if an upward (or bullish) trend is identified on a relative strength chart, the performance of the cryptocurrency being analyzed has outperformed the denominator price.

Conversely, if a downward (or bearish) movement is identified, the price of the crypto has underperformed the value of the reference index.

Breakout
A breakout occurs when the price of an asset exceeds a resistance and support level, thereby increasing trading volumes and volatility.

Breakouts may follow periods of low volatility, when there has been stationary price behavior, i.e. when the value of the security moves within the limits imposed by support and resistance.

In general, the longer the price ‘bounces’ between these levels, i.e. remains in the ranging phase, the stronger the impact of an eventual breakout could be.

Depending on the price trend following the breakout, we can be faced with two possibilities:

Continuation breakout: price respects the direction of the breakout, upwards for resistances and downwards for supports, without undergoing any reversal;
Reversal breakout: The price trend that caused the breakout is not maintained; instead, it reverses. The breakout in this situation may turn into a Bull Trap or a Bear Trap.
False breakouts (also known as fakeouts) occur when the price of an asset soon follows “breaking” support or resistance and then drops back to the previous level. Investors may be misled into buying or selling, which could result in losses, as a result of this brief breakout.

In fact, traders pay particular attention to breakouts, trying to predict the price movements that might follow.

Technical analysis methods can be used to predict “breakouts” in order to at least pinpoint the support or resistance areas involved; however, breakouts could only happen if they were accompanied by sufficient trade volumes, therefore this is not a sufficient criterion to predict them.

Relative Strength
The analysis of a relative strength chart allows the price performance of two separate cryptocurrencies to be compared.

It is a technical analysis tool that enables you to objectively analyze the price trends of two cryptocurrencies (denominators) over a predetermined period of time.

The most popular denominator is Bitcoin, which has the biggest market capitalization of any cryptocurrency and is regarded as the market’s benchmark index.

This means that if an upward (or bullish) trend is identified on a relative strength chart, the performance of the cryptocurrency being analyzed has outperformed the denominator price.

Conversely, if a downward (or bearish) movement is identified, the price of the crypto has underperformed the value of the reference index.

Bull Run
A bull run is a market phase characterized by a favorable (or bullish) tendency, that is, a time in which prices generally increase. Bull markets, a market condition that lasts for several months or even years, can develop from bull runs over the long term. Because a bull assaults by raising its horns from the bottom up, the term “bull” refers to a bullish trend in the financial markets. This represents growing prices on a chart metaphorically.
It is typically helpful to use the technical analysis tools at our disposal to determine whether we are in a bull run.
Higher trading volumes, or a growth in the number of purchases and sells, and, more importantly, supports and resistances at increasingly higher price levels, are typical characteristics of market bullish periods.

Additionally, bull runs are typically accompanied by an upbeat and hopeful mood, which encourages investors to invest and make purchases. Enthusiasm also fuels the formation of a large number of blockchain-based initiatives and projects in the cryptocurrency sector.
Some mathematical models, including stock-to-flow, link Bitcoin bull runs to mining reward halving. But this event, which is due to happen every four years, is merely a connected event and not the origin of bull runs.

Rally
When referring to a quick and sharp increase in the value of a market index or financial instrument, the term “rally” is used in the context of financial markets. A big boost in asset demand is typically what sparks a rally.
Market movers, such as the introduction of a new product, economic data points (like inflation), or the overthrow of a government, can also have an impact on investor interest. A rally may extend for several months due to investor interest.

Following the brief price increase, the trend may reverse or there may be a period of stability. In the latter scenario, the financial rise may quickly develop into a bull trap or a phony bullish movement that doesn’t alter the market trend overall.

The durability of a financial rally, therefore, depends strictly on the motives behind it.

Technical and fundamental analytical tools, such as price charts and consideration of micro- or macro-economic elements like a company’s balance sheet or a state’s finances, can be used to identify financial rallies.

Fakeout
A fakeout is a market situation in which a movement or signal foreshadows a certain trend that will later be rejected or falsified.

After a false breakthrough of a support or resistance level has led investors to sell or buy an asset, respectively, a fakeout may take place. In this case, the fakeout is a false breakout: the price only momentarily crosses the level, reversing almost immediately; this then causes financial losses or missed gains for those who do not recognize it.

Any financial market, from forex to cryptocurrencies, is susceptible to fakeouts. Fakeouts typically indicate that there is not enough volume in the market for the trend to solidify or alter.
Fakeouts and Bull Traps and Bear Traps should not be confused, despite the fact that they might have some similarities.

Fakeouts generally indicate any disappointment in a trader’s expectations, not only bullish or bearish. Moreover, in fakeout situations, investors usually act in advance of price movements, before they occur, based on forecasts; on the other hand, during Bull Traps and Bear Traps, the change in trend is already in place and observable.

There is no perfect method for identifying a fake out. To identify them from true breakouts, however, many investors rely on technical analysis tools like volume analysis, moving averages, or oscillators.

Mutual Funds
Mutual funds are financial instruments with collective participation, i.e. in which the capital provided by several savers is used and invested as if it were a single asset. The amount of money made available by each individual investor is called a mutual fund share or participation share.

Mutual funds are usually managed by an intermediary, i.e. a figure who puts the investor in contact with the financial market, also referred to as an ‘asset management company‘. To open an investment fund, it is therefore necessary to turn to dedicated financial intermediaries, generally represented by the bank or private advisors, bank branches, and online platforms. Once the most suitable asset management company for your needs has been identified, a fee, called an entry or management fee, will need to be paid to access the mutual fund.

Compared to other financial products, mutual funds fall into several asset classes, as capital can be invested in several different instruments.
This characteristic is essential to diversify your investment portfolio in order to try to amortize risk.

Depending on their knowledge and objectives, each investor must consider the type of mutual fund best suited to their needs. The first distinction can be made by analyzing the financial instrument in which you invest.

In equity funds, for example, the collective capital is invested in shares. It should be remembered that, compared to other types of investments, the equity market exposes the shares more to market trends, increasing the possible risk.

Bond funds, as the name might suggest, invest units in bonds.

If you want to further diversify your portfolio, not limiting yourself to investing exclusively in stocks or bonds, you can also consider balanced funds. They are forms of investment that allow you to invest your capital in both bonds and stocks. The percentage of units dedicated to shares and that on bonds varies from fund to fund.

In addition to the financial instruments invested in, mutual funds can also be categorized on the basis of their objectives and time horizon.

Contrary to what you might expect, mutual funds are not necessarily long-term financial instruments. There are some types of funds, such as money funds, in which capital is invested in short-term investments with the aim of preserving the value of money, acting as de facto substitutes for the classic bank deposit.

For more experienced and risk-oriented investors, there is a non-traditional, speculative type of mutual fund, i.e. one that is based on making money based on the difference in prices at certain times in the market. These funds are called hedge funds, or speculative funds, and have absolute return as their main objective, an investment strategy that aims to generate profit regardless of market trends.

Market Mover
A market mover is an occurrence that has the potential to affect a market’s performance by moving the prices of the financial instruments traded there.
There are many other factors that can affect the market, including people or organizations, macroeconomic data, unforeseen events, and political speeches.
All financial markets, including those for stocks and cryptocurrencies, are in fact influenced by outside forces.

But what are the main market movers?
We can distinguish three types of market movers:

Economic indicators: statistical data used to describe the economic performance of a country or company.
An economic indicator, for example, might refer to the Gross Domestic Product (GDP) of a country, or unemployment data.
Financial indicators: elements describing the performance of a company or market.
The consumer price index (CPI), for example, is a financial indicator that describes the US inflation rate and has a great influence on central bank decisions.
Geopolitical factors: events such as the collapse of a government, the victory of a particular party in elections or the issuing of new laws are capable of affecting the price trend of a market.
Not to add, real people or exceptionally powerful businesses, such as significant cryptocurrency exchanges or market leaders in this sector, can also have a significant influence on the markets.

Sometimes these entities are called Crypto Whales: individuals or organizations that hold a large amount of cryptocurrencies and are able, by selling or buying large sums, to move the price of that market even heavily.

Bear Trap
A Bear Trap is a false bearish signal within a bullish trending market. Basically, this price drop leads investors to believe that the market is undergoing a reversal from bullish to bearish (a bearish trend phase). Investors, in order to minimize their losses, are led to exit the market immediately, selling their assets.

However, after a brief descent, the market continues in a bullish trend, causing investors to miss out on potential gains.

The Bear Market, a market phase distinguished by a usually negative tendency, is responsible for the term “bear trap.”
The Bull Trap, a bullish trap in a bearish trending market, should not be confused with the Bear Trap, which is a trap in all financial markets, including those for cryptocurrencies and conventional instruments.

It is not possible to accurately predict market movements, but in general, there are some recurring causes that can generate a Bear Trap.

These traps can be caused by trades of the same type made simultaneously (or within a short period of time) by a group of investors. Due to the rule of supply and demand, an asset’s price will decrease if multiple dealers sell it. This movement could generate a Bear Trap and push other traders out of the market.

How can a bear trap be identified? Although there isn’t a 100% accurate statistical method or mathematical formula, a comprehensive technical study of the market might be helpful. For instance, you can look at an asset’s trading volume, which is the total of the amounts sold and bought during a specific time period, to try and spot a bear trap. When a market is clearly entering a bearish phase, most institutional investors will try to exit the market by selling their securities. As a result, an increase in trading volumes will be observed. If, on the other hand, the trading volumes of an asset remain unchanged, we are probably facing a Bear Trap.

The financial market, however, is impossible to predict: it is important for every investor not to be overwhelmed by their emotions, and to carry out an analysis based solely on factual data before each trade.

Bull Trap
A Bull Trap is a false bullish signal in a bearish market. In practice, this rise in price may suggest that the asset is entering a bullish phase (characterized by a positive trend), prompting investors to buy. The market, after an even sustained ascent, however, returns to a bearish trend, ‘trapping’ within it investors who were hoping to profit.

It is no accident that the phrase “Bull Trap” specifically refers to the Bull Market, a financial market with a strong upward trend.

The Bear Trap, which gets its name from the Bear Market, is the reverse of the Bull Trap. The key distinction between a Bear Trap and a Bull Trap is the type of false signal used and the market trend that is taken into account. In a Bear Trap, the bullish market experiences a downward trend reversal that causes investors to sell assets, robbing them of the opportunity to make future gains.

How can a bulltrap be identified? While there is no perfect strategy, it is generally vital to do a thorough technical study of the market and have the ability to spot bull traps based on previous events. For instance, they can be located by carefully examining the asset’s trading volume, which is the total of the amounts sold and acquired during a specific time period. When an asset is actually in a bullish phase, institutional or expert investors are more likely to enter the market in a timely manner, leading to an increase in volumes. If, on the other hand, volumes remain unchanged or change little during the price rise, this could be a trap.

If you are still uncertain whether you’re facing a Bull Trap or not, you can consider another indicator: momentum. This value analyses the change in a market’s prices over a certain time frame and helps determine which trend it might follow in the future. In a nutshell, it is a technical indicator that helps you understand whether the asset price will go up or down. This means that if the price of an asset rises but the momentum remains unchanged, we could be facing a Bull Trap. Usually, in a clearly bullish market, the value of momentum indicators increases along with the price.

There are other technical analysis tools that may or may not confirm the presence of a Bull Trap. In any case, the golden rule to avoid it is not to get carried away by your emotions: When an asset’s value increases unexpectedly, it’s important to analyze the market objectively and avoid acting rashly out of FOMO (Fear of Missing Out).

Futures Contract
A pre-approved contract between two parties to process a transaction when the value of a cryptocurrency reaches a specific price. It differs from a limit order since the purchaser and the seller are already nominated and bound.

Volatility
Volatility refers to the percentage change in the price of a financial instrument over a certain timeline. In finance, it corresponds to an index that measures the uncertainty of the performance of an asset or any asset to which a price is assigned. The term was later adopted in the cryptocurrency market to describe the unstable performance of certain virtual currencies. For example, Bitcoin is highly volatile. Since it is not controlled by institutions, its price depends solely on the supply and demand of actors within the market. Stablecoins are cryptocurrencies that aspire to avoid volatility through different kinds of pegging methods.

Pump&Dump
The “pump and dump” scheme is a type of scam in which an investor or a group of investors aggressively promote a cryptocurrency that they hold. They do this to artificially inflate its price and then liquidate all their holdings in order to make a profit. Once the promoters of the scam sell (dump) their cryptos, the price of the cryptocurrency sinks, and all those who are still investing in it lose their money.

Bid and Ask
Order books are used in both traditional and cryptocurrency exchanges to settle trades. A list of all open sell (ASK) and purchase (BID) orders is known as an order book, and it provides a snapshot of supply and demand in a market.

The sell orders (ASKs) represent supply because they are the price offered to buyers of the asset.

The buy-side items (BIDs) represent the demand because they are the price users are willing to pay to purchase the asset.

The Best ASK is the lowest price at which an asset is sold. The Best BID is the highest price at which an asset is asked to buy.

Oracle
A third-party information provider verifies and authenticates data sources external to a blockchain, usually via APIs, and then feeds the collected information to smart contracts.

FOMO
FOMO stands for Fear Of Missing Out, a form of social anxiety characterized by the desire to constantly participate in other people’s activities, and by the fear of being excluded from any event or social context. In the crypto world, it refers to the social anxiety that creates a snowball effect in the sales or purchases of a specific cryptocurrency, consequently enhancing a market drop or growth.

ETF
ETF is an acronym that stands for Exchange Traded Fund. ETFs replicate the performance of a benchmark, i.e. a reference index containing various financial securities, by reproducing its performance. By definition, each ETF is passively managed because it attempts to faithfully reproduce the value of the benchmark index simply by holding the underlying financial products, or derivative contracts. By contrast, a traditional investment fund seeks to outperform the reference index by actively trading securities in the market. Compared to index funds, ETFs have lower costs and management fees, but require the payment of a commission to an intermediary for each transaction made.

ETFs fall under the classification of ETPs (Exchange Traded Products), a category that also includes ETNs (Exchange Traded Notes) and ETCs (Exchange Traded Commodities). Although they are all part of the category of financial instruments that replicate the performance of a reference index, ETNs, and ETCs are not funds but debt instruments. Exchange-traded commodities, specifically, replicate the performance of commodities (including, for example, gold or silver).

Investing in ETFs means diversifying your portfolio, i.e. automatically distributing your capital among different securities and/or market sectors, thus reducing risk. An ETF portfolio can include bond ETFs, which by definition replicate the performance of bond indices, equity ETFs, which benchmark equities, and commodity or real estate ETFs.

Bitcoin ETFs are funds that replicate the performance of BTC. By investing in this type of ETF, investors can take advantage of Bitcoin’s trend, without buying it directly: there is therefore no need to open a wallet or rely on crypto exchanges.

Choosing a BTC ETF also means more security from a legal point of view, as these financial products are more thoroughly regulated than cryptocurrencies in general. In states where it is illegal to hold cryptocurrencies, investing in Bitcoin ETFs could allow investors to gain exposure to BTC without violating any regulations.

Summary,
Learning ahead will help you earn as there is no cap on the quantity of research that can be done in a classroom setting. Please inspire me, special reader.