What does that mean? Probably just that means that we can’t go up vertically and the crypto market still tends to overreact significantly on big price swings.

Speaking of this, last week Binance released a great article about cryptoassets market circles. The thing that I found most interesting was the empirical findings to prove the effect of HODLing on bitcoin price.

Here is a chart from the article, where the price of Bitcoin is compared to the market capitalization weighted for the actual on chain transactions occurred in that period, this is based on the UTXO market cap created by Pierre Rochard.

The advantage of this methodology is to exclude the non-active accounts (or HODLers) from the calculation of the market cap. And what we notice is that during the 2014 bear market, the price of Bitcoin fell by 75%, while UTXO Cap actually rose by 15%! In the same way, in 2018 the price drop was about 70%, while the UTXO cap only fell 5%.

The most significant conclusion we can get from this is that in every market circle there is a considerable share of investors not interested in trading but they just want to store their coins, being confident that the price will rise again.

That leads to another outcome. There is another share of investors, smaller but still significant, they are mostly traders and, since their goal is not holding long term, they will be focused mainly on short-term gains. Ready to react (or, often, to over-react) to short term price swings. They are the main driver of the short term price moves.

Also, if you consider that cryptocurrencies are still very illiquid assets, if you take out from the available-to-trade coins those that are stored by HODLers, this illiquid component is even stronger and effects the price even more.

Fewer coins to trade mean that even relatively small order quantities can move the price significantly!

As we can see also from the last days in Bitcoin market, that’s why optimism drives up parabolically and, on the contrary, that optimism can turn into pessimism very quickly causing a market tailspin.

That’s how we pass quickly from FOMO to REKT!

Emotions and feelings in trading can be very damaging, that’s why planning a trading strategy, even a simple one, and run it automatically can free you from a painful daily stress.

This is even more reflected in the Altcoins market. Altcoins often underperforms BTC in times of drowdown, when panic spreads their price usually dumps pretty hard, probably also because of its illiquid component we were talking before. But these dumps also create excellent buy opportunities!

When BTC price recovers, Altcoins catch up and during periods of low volatility in Bitcoin price they tend to overperform again.

We think that the worst of the bear market could be passed and it’s an excellent time to start accumulating with caution some altcoins for the next bull circle.

With coinrule, you can easily set up an automated trading strategy to accumulate your favorite altcoin. For example, we like Litecoin. It poster an impressive performance since the beginning of 2019.

For example, in a few quick steps you can define a strategy like this:

Every 6 hours, if Litecoin price has a price decrease of 2% buy 20 USD of Litecoin and do it five times.

Here is your automated trading strategy live!

Never rush into a trade, plan your trading idea, implement and run it with Coinrule.

For more market views and trading ideas, follow us on Twitter @CoinruleHQ

TRADE SAFE AND DO YOUR OWN RESEARCH – THIS ARTICLE DOES NOT CONSTITUTE ANY FORM OF INVESTMENT ADVICE!

The post How HODLing impacts cryptoassets price appeared first on Coinrule Trading Academy.

Nonetheless, every day people all around the world trade financial assets with only one simple goal: BUY LOW, SELL HIGH! And the number of people pursuing this ultimate object is growing fast, thanks to the rise of the new fascinating asset class of Cryptocurrencies. Why?

Because Cryptocurrencies represent the future of Finance and very likely they will disrupt most of the business industries as we know them. Apart from the innovative and revolutionary ideas backing the surge of Cryptocurrencies, this new asset class offers to traders very peculiar features compared to “traditional” financial assets. Modern Financial Markets can be analyzed from two opposite points of view: the Fundamental and Technical. Some traders use only the former, some only the latter, some others use a mix of these two approaches.

Cryptocurrencies are a totally new asset class, there are not enough models or frameworks that can help assign to them not even an estimate of a “real value”, it’s almost impossible to analyze them using classic Fundamental Analysis just because in most cases the economics behind them are too different from traditional companies, and even if there would be similarities in the level of public information about them, it would be often not fully reliable or too weak to formulate a complete assessment of them.

On the other hand, the very same Crypto asset can trade on many different venues and exchanges so that traders can have plenty of price-related data to analyze. Some could say that just from analyzing how a price moves in time, we can infer about the development of the balance of forces between Demand and Offer, which are the ultimate drivers of any price movement. And there comes the great useful implementation of Technical Analysis to trade crypto assets.

The importance of this aspect is often not underlined enough. Since most of the people that trade Cryptocurrencies are involving Technical Assets backed strategies, this makes the likelihood of the unfolding of a price pattern higher. Simply put, most of the time, price goes in one direction only because most of the traders think that it will go in that very direction. If the major part of the traders in one market will start to buy, the price will go up. DEMAND AND OFFER, seen in this way, trading isn’t that difficult, is it?

So what makes trading so difficult? The human nature, emotions and feelings can be the worst enemies for a trader. Every cryptocurrency trader can have a different reaction in front of the same price movement: fear, euphoria, greed and disillusion are feelings that a trader can experience even in the same day and that will have a pretty negative effect on his or her capabilities of taking rational decisions.

That’s why a trading bot has the potential of improving significantly your trading results if you are already an experienced trader, or it can provide an easy way to get into trading as a beginner.

“The market does not know if you are long or short and could not care less. You are the only one emotionally involved with your position. The market is just reacting to supply and demand and if you are cheering it one way, there is always somebody else cheering it just as hard that it will go the other way.” Marty Schwartz

This is Coinrule main goal, to make cryptocurrency trading more effective while easier. The markets run 24/7, all around the globe so it’s impossible to fully exploit its potentials without a trading algorithm that takes care of your positions, even when you sleep!

Follow us on

Twitter @CoinRuleHQ

Linkedin https://www.linkedin.com/company/coinrule/ Check out our FREE e-book on cryptocurrency trading – https://coinrule.io/Coinrule_CryptoGuide_1.pdf

The post WHY ALGORITHMS ARE SO IMPORTANT FOR TRADING CRYPTOCURRENCIES appeared first on Coinrule Trading Academy.

Today we are introducing a collection of Medium posts published by the Coinrule team over the past few months.

If you are starting to get curious about algorithmic trading and feel the need to automatise your strategy or even the simple buy/sell orders, then look no further, this is the read for you.

With topics like Cryptocurrency Bots, Decentralised Exchanges, How to Backtest your strategy, or what is the Perfect Trader Toolkit, we got you covered.

Table of Content:

1. Introduction

2. Cryptocurrency Bots Fighting Monopolies

3. Why Algorithms are so important for trading Cryptocurrencies

4. Trading as a Cryptocurrency Killer App

5. De-centralised Exchanges Are The Real Nasdaq

6. First Rule of Trading: Risk-management. Our backtesting tool

for your trading strategies

7. The Trading Toolbox

8. About Us

Download The Guide Now, and Happy Trading With Coinrule!

Sign up for a free trial: www.coinrule.io


Follow us on:


Twitter: @CoinRuleHQ
 Instagram: @CoinruleHQ

The post E-BOOK: CRYPTOCURRENCY TRADING 101 appeared first on Coinrule Trading Academy.