Here’s 2 ways clever pro traders spot crypto and stock price reversals

July 16, 2021 Coin Telegraph

Many successful traders look for double bottom and W bottom reversal patterns on technical charts in order to spot powerful price reversals.

Trading in the direction of the trend is one of the best ways to be profitable. If traders learn to spot a new trend early, it provides an opportunity to buy with a good risk to reward ratio. In addition to identifying a trend, traders should also be able to recognize when it has reversed direction.

While several patterns signal a possible trend change, one of the easiest to spot is the double bottom pattern. This can help traders change their strategy when the trend reverses direction from bearish to bullish.

Let’s take a look at the double bottom pattern and identify some of the best ways to trade it.

What is a double bottom?

The double bottom pattern forms after a downtrend and consists of two low points that are roughly formed near a similar horizontal level, with a minor peak in between the troughs. When the price breaks out and closes above the minor peak after the formation of the second trough, the setup is complete. This is a reversal pattern, which results in an intermediate to a long-term trend change. As the pattern resembles the shape of a ‘W’, some also call it a W bottom.

*W Bottom pattern. Source:* *TradingView*

The above image shows the structure of the double bottom pattern. The asset has been in a downtrend but at a certain price level the bulls believe the asset is undervalued and start buying. This helps in the formation of the first bottom where demand exceeds supply and a relief rally begins.

However, most bears are still not convinced that a bottom is in and they initiate short positions again after a pullback. The price turns down but when it nears the level of the first bottom, the bulls again start accumulating, which arrests the decline and starts another relief rally. The second bottom within 3% of the level of the first bottom is usually considered valid. This is not a number set in stone and traders should use their discretion in real-life trading.

When the price rises above the resistance line, it signals a change in trend from down to up. The minimum target objective for the pattern can be arrived at by calculating the distance from the resistance line to the bottom and then adding the number on top of the resistance line.

Let’s view a few examples to better understand the concept.

*XTZ/USDT daily chart. Source:* *TradingView*

Tezos (XTZ) price was in a downtrend before hitting the first bottom at $1.78 on Nov. 4, 2020. From there, the XTZ/USDT pair started a relief rally that stalled at $2.96 on Nov. 25, 2020. At this level, the bears again fancied their chances and sold aggressively.

Although the pair broke below the $1.78 support and dipped to $1.57 on Dec. 23, 2020, the bears could not sustain the lower levels. The pair quickly recovered on the next day and started a recovery, forming the second bottom.

The bears aggressively defended the resistance line and tried to trap the eager bulls following the breakout. The bulls purchased the dips and the pair made a strong breakout on Feb. 5, which started the new uptrend.

The depth from the resistance line to the bottom is $1.18. Adding this value to the level of the resistance line at $2.96 gives a minimum pattern target at $4.14. However, in this case, the pair overshot the target objective and rallied to $5.64 on Feb. 14.

Double bottoms also show on the weekly timeframe

Along with the daily chart, the double bottom pattern also works well on the weekly chart. This is because when the reversal setup forms on the weekly chart, it results in a long-term trend change and the new uptrend generally sustains longer.

*ETH/USDT daily chart. Source:* *TradingView*

Ether (ETH) had been in a strong downtrend since topping out at $1,440 in January 2018. The demand exceeded supply when the price hit $81.70 in December 2018, resulting in the formation of the first bottom. Thereafter, the price recovered to $366.80 in June 2019 where bears again stepped in.

The subsequent decline formed the second bottom at $86 in March 2020. The duration between the two bottoms is very large, but in trading, no pattern is set in stone. As both levels were close to each other and the price action forms a clear W, traders can consider this as a double bottom.

The bulls pushed the price above the neckline in July 2020 but that did not start a new uptrend because the bears made one more attempt to trap the bulls. The price dipped below the breakout level but the bears could not sustain the lower levels. This showed that sentiment had changed from sell on rallies to buy on dips.

That completed the reversal and the ETH/USDT pair started a strong uptrend. Although the minimum target objective of the pattern was only $651.90, the pair rose to over $4,300 during the bull run.

This shows that the double bottom is an important reversal pattern, which sometimes leads to strong uptrends.

Some bottoms can be misleading

Many times, traders preempt a double bottom and buy before the price breaks out of the resistance line. That could sometimes result in losses because the pattern may eventually never complete.

*BTC/USDT daily chart. Source:* *TradingView*

Bitcoin (BTC) was in a downtrend since topping out at $19,798.68 in December 2017. The buyers stalled the decline at $6,000.01 on Feb. 6, 2018. Thereafter, the relief rally reached $11,786.01 on Feb. 20, 2018. This level proved to be a resistance and the price again dipped down to $6,430 on April 1, 2018.

This looked like a double bottom but the bulls could not push the price above the $11,786.01 resistance. This meant the double bottom pattern did not complete.

Although the $6,000 level held for a long time, the trend did not turn from down to up. Finally, the BTC/USDT pair plunged below the support and resumed the downtrend on Nov. 14, 2018.

Key takeaways

A double bottom is a key reversal pattern, which signals a change in trend but there are some important points to bear in mind.

Before the first bottom forms, the trend should be down because if there is no downtrend then there will not be a reversal. Traders should wait for the pattern to complete by breaking out of the resistance line before buying because many times the pattern fails in a downtrend.

When a long-term trend changes direction, it generally overshoots the pattern target of the setup. Hence, traders may use the target objective as a guideline but should not be in a hurry to close the position on that basis alone.

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

Is Bitcoin overbought or oversold? Use Bollinger Bands to find out!

July 8, 2021 Coin Telegraph

Coin Telegraph

Bollinger Bands are a powerful indicator that traders use to gain clarity when the markets are rallying, consolidating and correcting.

Trading is neither an exact science nor art. It is a mixture of both. There are scores of publicly available indicators and each claims to be the best. However, none of them are perfect or designed to be used in isolation.

One of the more popular indicators widely used by several traders is Bollinger Bands, an indicator that can be used to spot price peaks, lows, and opportunities for shorting during exhausted rallies and buying during sharp pullbacks.

Let’s learn three simple methods to use this indicator in trading.

What are Bollinger Bands?

John Bollinger created and copyrighted the Bollinger Bands in the 1980s. The indicator consists of a middle band, which is a simple moving average whose default is set at 20-periods and two outer bands set at two standard deviations below and above the middle band.

Its most basic use is to identify whether the price is high or low on a relative basis. If the price is above the upper band, the asset is perceived to be overbought. On the other hand, if the price dips below the lower band, the coin is believed to be oversold.

However, many traders make the mistake of assuming that the asset price will drop when it reaches the upper band, or that a rally will start when the price hits the lower band.

This generally happens only when the price is stuck in a range. As with any other indicator, assumptions can easily lead to huge losses in a trending market so looking for confluence from a number of metrics is still a good pratice to employ.

Let’s look at a few ways traders use the Bollinger Bands.

Bollinger Bands can spot volatility squeezes

According to John Bollinger, assets switch between phases of low volatility and high volatility. Therefore, after periods of low volatility, traders may expect the volatility to shoot up, which could result in trending moves.

*XRP/USDT daily chart. Source:* *TradingView*

The above chart shows how XRP’s volatility dropped sharply between mid-September to mid-November 2020, marked as an ellipse on the chart. After about two months of this low volatile phase, the volatility shot up and the XRP/USDT pair offered an excellent trading opportunity.

*BNB/USDT daily chart. Source:* *TradingView*

In the above example, Binance Coin (BNB) was in a downtrend and the volatility tightened between the end-September to mid-November 2018, marked as an ellipse on the chart. Here, the volatility expanded to the downside and the BNB/USDT pair resumed its downtrend.

A volatility squeeze does not predict the direction of the next breakout. Sometimes, the market makers nudge the price above the upper band and below the lower band, trapping the novice traders. Therefore, traders may avoid pre-empting the direction and wait for the price to either break above the resistance or below the support of the range before establishing a position.

*ETC/USDT daily chart. Source:* *TradingView*

The above chart shows how the overly eager bulls and bears can become trapped. On Oct. 22, 2020, the bulls pushed the price above the upper band but could not clear the resistance at $5.77. After a few days on Nov. 3, 2020, the price pulled below the lower band but did not break the support at $4.58.

Ethereum Classic (ETC) broke above $5.77 on Nov. 18, 2020, but it was not a perfect trade as the price did not start a strong uptrend. The market makers went hunting for buyers’ stops and also tried to trap the bears with the sharp drop on Dec. 23, 2020.

However, the price quickly climbed back above the lower band on Dec. 24, 2020, and the ETC/USDT pair soon started a strong up-move.

Therefore, instead of relying only on the signal from the Bollinger Bands, traders should also look for confirmation from other supportive indicators or use the support and resistance lines.

Bollinger Bands can signal when to buy during a pullback

A pullback in an uptrend is usually a buying opportunity as the main trend tends to reassert itself. When the middle band slopes up and the price trades in the area between the middle band and the upper band, it is a sign of an uptrend. In this scenario, traders may wait for the bounce off the middle band to initiate long positions.

*LTC/USDT daily chart. Source:* *TradingView*

Litecoin’s (LTC) chart shows the start of an uptrend in mid-February 2019 as the middle band turned up and the price traded between the middle band and the upper band. After that happens, traders may attempt to buy the rebound off the middle band and keep the stop-loss just below the swing low.

There were five possible entry opportunities for a conservative trader. Four of them turned out to be winners but one would have hit the stops. This shows how no strategy is perfect, hence a stop-loss should always be used to limit the risk.

*SOL/USDT daily chart. Source:* *TradingView*

Solana (SOL) turned down from above the upper band on Sep. 1, 2020, and broke below the middle band on Sep. 3, 2020. Since then, the price largely remained inside the lower band, which turned down on Oct. 2, 2020. That confirmed the downtrend and gave an opportunity to traders to short on Oct. 13, 2020, as the downtrend resumed, following a move to the middle band.

Two Bollinger Bands can be used to track strong uptrends

One of the most profitable ways to trade is to buy and hold during strong uptrends. However, this is easier said than done because several traders sell too early out of fear and others keep waiting for the dip.

This is where the double Bollinger Bands can come in handy. Its use has been popularized by Kathy Lien, the managing director of FX Strategy for BK Asset Management.

To construct the setup, traders use the default value for the first Bollinger Bands. For the second Bollinger Bands, keep the value of the moving averages the same at 20-day SMA but reduce the value of the standard deviation of the outer bands to 1.

As shown above, in an uptrend, the aim is to buy when the price trades between the upper band of the first and second Bollinger Bands.

There are several entry opportunities possible and a trader would wait for the price to close between the upper bands for three successive days before buying because this can help to avoid unexpected whipsaws.

Traders can keep the initial stop-loss below the middle band but quickly trail it higher to reduce the risk and protect profits. One of the possible exit strategies would be to sell on a close below the upper band of the Bollinger Bands with one standard deviation.

The chart above shows how the strategy is used. Traders may have entered on Dec. 19, 2020, and remained in the trade until the stops hit on Jan. 11, 2020. Another buying opportunity arose on Feb. 7, which finally hit the stops on Feb. 23.

This strategy should be avoided when the price is oscillating in a range and to improve the odds, traders could only open new positions when the price breaks out of a stiff overhead resistance.

Key takeaways

The Bollinger Bands can be a good tool to aid traders in identifying a trend early by spotting the volatility squeeze, which is usually followed by an expansion in volatility and a trending phase.

Even if a trader missed buying early, the Bollinger Bands can be used to join the trend during pullbacks with a low-risk entry opportunity.

The indicator can also come in handy for trading a strong trending phase where corrections are shallow.

There are many different ways to use the Bollinger Bands and this article just provided a few guidelines that traders can explore.

Crypto ownership has nothing to do with distrust in fiat: BIS study

July 2, 2021 Coin Telegraph

Adoption

Cryptocurrency owners are “generally more educated than the average,” according to a new study by the Bank for International Settlements.

The Bank for International Settlements (BIS), a global financial institution owned by some of the world’s biggest central banks, is trying to dispel the theory that cryptocurrency ownership is linked to distrust in traditional finance.

On Thursday, the BIS published a paper on the socioeconomic drivers of cryptocurrency investments in the United States. Employing representative data from the U.S. Survey of Consumer Payment Choice, BIS argued distrust in fiat currencies like the U.S. dollar has nothing to do with investor motivation to hold cryptocurrencies like Bitcoin (BTC), stating:

“Demand for cryptocurrencies is not driven by distrust in cash or the financial industry, given that there are no differences in the perceived security of cash and offline and online banking. We can thus preliminarily disprove the hypothesis that cryptocurrencies are sought as an alternative to fiat currencies or regulated finance.”

The authority stressed that cryptocurrencies are not sought as an alternative to fiat currencies or regulated finance but instead are a “niche digital speculation object.” BIS noted that from a policy perspective, the overall takeaway of the analysis is that investors' objectives are the “same as those for other asset classes, so should be the regulation.”

The BIS paper also outlines major correlations between crypto investment choices and the level of education and income, suggesting that cryptocurrency owners are “generally more educated than the average.” Ether (ETH) and XRP investors showed the highest education level in the BIS’ analysis, while those owning Litecoin (LTC) were the least educated, with Bitcoin owners ranking in the middle.

*Education average by crypto owner. Source: BIS*

The new report brings significant relevance that cryptocurrencies like Bitcoin pose no threat to traditional finance tools as crypto demand is not driven by distrust in cash. A number of global authorities and institutions previously expressed concerns about Bitcoin’s ability to capitalize on global distrust in traditional finance.

In late December, Morgan Stanley Investment’s Ruchir Sharma argued that the U.S. dollar’s reign will likely end due to global distrust in traditional finance, while Bitcoin would capitalize on the lack of confidence.

4 ways investors use support and resistance levels to make better trades

June 28, 2021 Coin Telegraph

Coin Telegraph

Properly identifying support and resistance levels can be the difference between a winning trade and significant losses.

Trading should just be a simple process of buying low and selling high but for many investors the process is more akin to rocket science. One of the most basic and easy-to-understand strategies that can help accomplish this is to identify an asset’s support and resistance levels.

Once traders can spot the support and resistance levels, they can improve their entry and exit timing in the market. Support and resistances are also helpful during bullish, bearish and range-bound markets.

Let’s take a moment to understand the basics.

What are supports?

Support is formed at a level where the demand from the buyers absorbs the supply from sellers, preventing the price from declining further. At this level, the bullish traders are inclined to buy as they believe the price is attractive enough and may not decline further.

On the other hand, the bears stop selling because they believe the market has fallen enough and may be due for a rebound. When both these situations occur, a support is formed.

*EOS/USD daily chart. Source:* *TradingView*

The above chart is a good example of a strong support. Every time EOS price drops to the $2.33 level, buyers emerge and the selling reduces. This causes demand to exceed supply, resulting in a rebound.

Although horizontal supports are considered to be more reliable, they are not the only way supports are formed. During uptrends, trendlines act as supports.

Litecoin (LTC) started its bull run in December of 2020. Thereafter, the price rebounded off the trendline on several occasions. This happened because when the price neared the trendline, the bulls purchased, believing that the LTC/USDT pair had reached attractive levels to buy.

At the same time, the counter-trend traders stopped selling, assuming that the near-term may be oversold. Both these occurring at the same time caused the correction to end and the uptrend to resume.

What are resistance levels?

Resistance can be considered as the opposite of support because it is the level where supply exceeds demand, halting the up-move.

The resistance is formed when buyers who have purchased at lower levels start to book profits and the aggressive bears start shorting as they believe the rally is extended and ready for a pullback. When supply exceeds demand, the rally stalls and reverses.

The support or resistance does not need to be a single level. The above chart shows how the area between $10,500 to $11,000 acted as the resistance zone. Whenever the price reached this zone, short-term traders booked profits and aggressive bears shorted the BTC/USDT pair. Between August 2019 and July 2020, the pair turned down from the resistance zone on five occasions.

Similar to support, the resistance line or zone does not need to always be horizontal.

During the decline from May 6, 2018, to July 4, 2018, Ether (ETH) rallied to the resistance line, also called the downtrend line, but turned down from there. This is because traders who had a bearish outlook used the rallies to initiate fresh short positions as they anticipated lower levels.

At the same time, aggressive bulls who purchased on sharp dips closed their positions near the resistance line. Hence, the line acted as a wall and the price turned down from it.

Identifying support and resistance during consolidation phases

When the support and resistance are clearly defined as in the EOS/USD pair above, traders can buy on a rebound off the support and wait for the price to rally near the resistance to close the position. The stop-loss for the trade can be kept just below the support of the range.

Several times, professional traders may try to hunt these stops by pulling the price below the support of the range. Therefore, traders may buy on the way up and also wait for the price to close decisively below the support before dumping their positions.

Trading supports in an uptrend

When an asset takes support on an uptrend line three times, traders may expect the line to hold. Hence, long positions can be taken on a bounce off the uptrend line. The stops for the trade can be kept just below the trendline.

However, in an uptrend, the break below the trendline does not necessarily mean that the trend has reversed. Many times, the trend just takes a break before resuming again.

As seen in the chart above, the ETH/USDT pair took support on the uptrend line on several occasions. However, when the pair broke below the uptrend line, it did not start a new downtrend. The price consolidated in a range for a few days before resuming the up-move.

Traders may close their long positions if the price dips and sustains below the uptrend line but new short positions should be avoided. If the price resumes its uptrend after consolidation, traders may again look for buying opportunities.

Resistance flips to support

When the price breaks out of a resistance, the bulls try to flip the previous resistance into support. If that happens, a new uptrend begins or resumes. If this happens several times, it may offer a good buying opportunity.

Bitcoin was stuck between the $10,500 to $11,000 zone from August 2019 to July 2020. After the breakout from the resistance zone, the price again dropped below $10,500, but the bulls bought the dip aggressively, flipping the level into support. This offered a good buying opportunity to traders as the new uptrend was just getting started.

Support flips to resistance

*DOT/USDT daily chart. Source:* *TradingView*

Polkadot’s (DOT) chart above shows how the zone between $28.90 to $26.50 was acting as a support zone from Feb. 14 to May 18 of this year. However, once the bears pulled the price below the support zone, the zone flipped over into resistance and has not allowed the price to break above it since then. This is an instance where a support zone turned into a resistance.

Key takeaways

While analyzing any coin, traders must look for support and resistance levels as they can act as good entry and exit opportunities.

In an uptrend, traders should look to buy at support levels and in a downtrend, traders should look to short at the resistance line.

Support and resistance levels are not set in stone and professional traders will try to hunt for stop orders. Hence, traders should keep the stops such that they do not get run down by the market makers.

Nigerian secondary school will accept crypto payments despite regulatory uncertainty

June 25, 2021 Coin Telegraph

Adoption

"We believe one day digital money will gain more acceptance than paper money,” said school director Sabi’u Musa Haruna.

A private secondary school based near the Nigerian city of Kano has announced it will be accepting payments for school fees in cryptocurrency amid the country’s central bank banning financial institutions providing services to crypto exchanges.

According to a Thursday report from local news outlet Kano Focus, the director of the New Oxford Science Academy in the Kano suburb of Chiranchi will allow students to pay for tuition fees in crypto. Sabi’u Musa Haruna, who started working at the school in 2017, urged the Nigerian government to embrace and regulate cryptocurrency, but seemed to imply he would not wait with this latest move.

“We’ve decided to accept cryptocurrency as school fees, because the world today is tilting towards the system,” said Haruna. “We believe one day digital money will gain more acceptance than paper money.”

Haruna cited the examples of countries like El Salvador and Tanzania expanding payment options for crypto users. The Latin American nation will begin to accept Bitcoin (BTC) as legal tender across the country starting on Sept. 7 following the passage of a pro-crypto bill. Across the glo Tanzania’s central bank announced today it had begun working on directives from the government that could eventually overturn the country’s ban on crypto.

The school director did not explicitly say which tokens would be accepted for payment. However, public interest for Bitcoin in Nigeria has often been stronger than that in other countries — according to data from Google Trends, the African country ranks first among searches for BTC, with Austria, Turkey, and Switzerland in a close race for second.

In February, the Central Bank of Nigeria announced in a circular that it had banned regulated financial institutions in the country from providing services to crypto exchanges. Though the policy warned of "severe regulatory sanctions" for any bank that failed to close accounts belonging to exchanges, governor Godwin Emefiele clarified in March that the ban was intended to “prohibit transactions on cryptocurrencies in the banking sector” rather than discourage individuals from dealing in digital assets.

Many lawmakers and people connected to Nigeria’s central bank have been pushing pro-crypto messages in the months following the ban. Emefiele said in May that “digital currency will come to life even in Nigeria” while the central bank later announced plans to launch a CBDC by 2022.

Elon Musk agrees to speak with Twitter CEO Jack Dorsey at Bitcoin event

June 25, 2021 Coin Telegraph

bitcoin news

Dorsey offered to let Musk share all his curiosities about crypto and otherwise at the July 21 event.

Tesla CEO and Dogecoin enthusiast Elon Musk may be speaking at an event aimed at educating institutional investors on Bitcoin.

In a Twitter discussion with Jack Dorsey overnight, Musk agreed to speak at The ₿ Word, a July 21 virtual event hosted by the Crypto Council for Innovation and featuring major players in the crypto space.

“As more companies and institutions get into the mix, we all want to help protect and spread what makes #bitcoin open development so perfect,” said Dorsey. “This day is focused on education and actions to do just that.”

Musk responded to Dorsey with a sexual innuendo — he has seemingly never been shy about sharing such material — before agreeing to virtually sit down with him and discuss Bitcoin at the event.

Featured speakers at the event include Dorsey; Wood; Blockstream founder Adam Back; Michael Morell, former acting and deputy director of the United States Central Intelligence Agency; and John Newbery, director of Brink — a nonprofit focused on supporting Bitcoin (BTC) development. The organizers have said the event is intended to “destigmatize mainstream narratives about Bitcoin.”

In March, Musk made waves in the crypto space — and may have largely contributed to a BTC price surge — when he announced Tesla had added $1.5 billion worth of Bitcoin to its balance sheet and would start to accept the crypto asset as a form of payment for the electric vehicles. However, in May the Tesla CEO posted a tweet highlighting his concerns about Bitcoin’s energy usage and saying the company would no longer consider Bitcoin payments.

It’s unclear what effect a discussion with Dorsey or other major crypto players may have on Bitcoin policy at Tesla or for Musk personally. The Tesla CEO said earlier this month he would reconsider adding Bitcoin transactions at the firm “when there’s confirmation of reasonable (~50%) clean energy usage by miners with positive future trend.”

At the time of publication, the price of Bitcoin $32,805, having fallen 3.5% in the last 24 hours.

NFT art galleries: Future of digital artwork or another crypto fad?

June 20, 2021 Coin Telegraph

Analysis

Physical NFT art galleries are popping up all over, but why? And does the public appreciate them, regardless of their crypto knowledge?

As nonfungible token (NFT) art continues to develop as an industry, a new trend is quickly emerging: physical NFT galleries featuring digital, nonfungible pieces of unique artwork. Most recently, the largest Bitcoin (BTC) event in history — the Bitcoin 2021 conference — featured a peer-to-peer pop-up NFT art gallery with artwork from over 30 different crypto artists.

Teodora Atanasova, VIP relations manager and founding team member of Nexo — the company that backed the Bitcoin Art Gallery — told Cointelegraph that over 100 pieces of art were sold during the two-day conference: "This demonstrates the impact physical NFT galleries can have on both the traditional art world and the crypto industry." She added: "We need to bring crypto to people's eyes and touch."

Popular crypto-friendly cities like Miami are not the only places where NFT art galleries are appearing. Earlier this month, an NFT art gallery pop-up took place in Dallas, TX for the first time. The event was hosted by Artist Uprising, a Dallas-based talent agency for creatives, and featured several individual art pieces by breakout NFT artists who have collectively grossed over $1 million in online digital art sales in the last month alone.

Merrick Porchéddu, CEO of Artist Uprising, told Cointelegraph that the event attracted over 200 attendees, with NFT sales still ongoing in open auctions:

"Many prints were sold, along with two fine art canvases. The 'Making of NFT Gallery IRL' documentary was also filmed (which will hopefully explain so much behind what NFT art is all about and why it is here to stay). Also, we now have three districts wanting to bring our NFT gallery to their spaces."

*"So Happy We Met" NFT artwork by Magdiel Lopez. Source: Artist Uprising*

Understanding the need for physical NFT art galleries

Yet while physical NFT art galleries are a notable step for the crypto industry, some art aficionados, or traditionalists, may question the importance of, or even the necessity of, NFT art galleries in the real world.

For instance, an article in The Art Newspaper quotes Saskia Draxler, co-owner of German art gallery Galerie Nagel Draxler, who noted that the digital artist Beeple — who auctioned off a piece of NFT art at auction house Christie’s for over $69 million — will most likely not impact art history. She added that "NFTs will not replace physical art any more than NFTs from a Nike sneaker will replace real sneakers."

While this is just one opinion, some believe that the confusion around NFTs and the need for physical galleries may stem from a lack of understanding. Carrie Eldridge, founder and CEO of ATO Platform — an asset management service providing royalties to artists, galleries and nonprofits — told Cointelegraph that there are many pragmatists and conservatives who are not ready to embrace NFTs as a legitimate medium. "They also don’t believe that NFTs provide a solution to challenges that have plagued artists for generations, like value tracking, royalty collection, collector analytics, value appreciation for collectors and insurance companies and many more complex issues," she said.

Although this may be the case, Eldridge noted that it’s important to consider perspectives from both traditional collectors and the crypto community when it comes to NFT art: "At ATO we are enthusiastic about the innovation and at the same time, are vigilant and protective of the art industry and those who have toiled for decades to make it what it is today."

While Eldridge brings up a valid argument, it’s important to point out the reason that physical NFT galleries have appeared in the first place. While some may think that these venues opened simply as a result of lifted COVID-19 restrictions, industry experts beg to differ.

For example, Marc Billings, founder of Blackdove — the company that launched Miami’s first NFT art gallery earlier in June — told Cointelegraph that NFT art galleries are no different than traditional galleries in form and function. However, he noted that traditional art galleries have failed to meet the needs of the NFT artist, both in terms of technology and collector interest, thereby opening the door to dedicated NFT galleries. Billings said:

"NFT artwork more closely resembles a moving painting than a traditional work of video work, which has been missed by the more conservative art world. Artists and curators are starved for wall space to showcase their works and voices that the NFT gallery is uniquely positioned to handle."

In addition to digital NFT artwork being displayed in real-world spaces, NFT artists have also started to create physical pieces that are associated with their digital creations. Not only do physical NFT art galleries allow these pieces to be displayed, but they also help attract interest from the mainstream.

For instance, NFT artist Taylor Good — also known as "Warhodl" — told Cointelegraph that by creating physical soup cans tied to digital NFTs, his pop-up at Bitcoin 2021 attracted collectors who were new to the NFT space.

*Bitcoin original can NFT artwork by Warhodl. Source: Warhodl*

Echoing Good, crypto artist Sergey Gordienko — also known as "Do What You Love Artist" — told Cointelegraph that he is offering physical pieces of NFT art to traditional collectors along with their digital versions. "I think this brings additional value to the physical art piece," he said.

Bitcoin artwork by Do What You Love Artist. Source: Sergey Gordienko

NFT art and the importance of blockchain

While it’s important to recognize the necessity of physical NFT galleries, Billings also pointed out that blockchain technology plays an important role in the overall ecosystem: "Blockchain allows the hard work of the various members of the community to be recognized and compensated accordingly."

Indeed, blockchain is one of the most important features behind NFTs in general, as it has created an entirely new financial model for these assets. This has enabled creatives to achieve a larger portion of profits, as value is exchanged across a blockchain network. In addition, proof of ownership is achieved for collectors because all transactions are conducted and recorded on the blockchain.

Good explained that NFT art has allowed him to receive profits in real time, instead of waiting for galleries to accept, price and then sell the item:

"The age-old issue as an artist is knowing your worth, asking for it, and actually receiving your worth. While NFT’s are simply a utility of the blockchain, the creative world is lucky to be one of the first vehicles or use cases, because what NFTs essentially are is a direct value exchange."

Moreover, the decentralized finance (DeFi) protocol Aave is currently working on developing a platform to use NFTs as collateral. Jordan Lazaro Gustave, chief operating officer of Aave, told Cointelegraph that the company views NFTs as a store of value, typically in the form of artwork. He noted that Aave plans to use NFT art as collateral, similar to the way a bank would offer a credit line to someone wanting to purchase a piece of fine art.

While Lazaro Gustave couldn’t reveal the full details of the platform in development, he noted that traditionally in the DeFi space, fungible assets like stablecoins are used as collateral. However, he pointed out that NFTs are nonfungible, and that Aave has developed a way to use NFTs as collateral at scale.

Will NFT art galleries be an ongoing trend?

While the benefits provided by physical NFT galleries are evident, it’s unclear whether these dedicated spaces will continue to emerge across the world — or will die down as the NFT art hype fades.

Porchéddu explained that while he initially thought NFT art was a bubble that was going to pop soon, he now believes it is a trend that will morph and stay, adding: "People are getting incredibly innovative and approaching this in a unique way where they're providing solutions to problems."

Billings further remarked that there is no traditional gallery that can keep up with the technological innovation coming from the NFT art space. Echoing Billings, Eldridge commented that NFT art is not a revolution but an evolution of an old standing art form: digital art. He said:

"The reason why digital art has not caught on earlier in previous decades is because of the inability to track it. An NFT is merely a 'pointer' toward where the artwork is saved/stored, along with the aim of adding value by confirming it is limited or scarce. NFTs are essential to explore, and there are many enthusiasts who are embracing this innovation."

Not sure if the bulls are back? Here’s how the golden cross spots trend reversals

June 17, 2021 Coin Telegraph

Coin Telegraph

This key moving average convergence is a strong signal that the market is shifting from bearish to bullish.

The most important aspect in trading is to correctly identify the long-term trend. Once this is done, the rest of the steps are not very difficult because all a trader needs to do is look for buying opportunities in an uptrend and selling opportunities in a downtrend.

In reality, many traders complicate the process by waiting for lower levels to buy in a bull market and missing a large portion of the rally. Then, when the trend reverses and the price starts falling, the same traders start buying, which usually results in losses.

To avoid this pitfall, traders can incorporate the use of key moving average convergence patterns in order to have a better gauge of market momentum and the direction of the trend. In last week’s article, we reviewed the Death Cross, and this week we will look at the golden cross pattern. This setup can help keep traders at bay in a downtrend and give them a green signal to start buying when the trend turns bullish.

Let’s investigate this pattern and learn how to use it when trading.

What is a golden cross and how does it form?

A golden cross is a setup that signals a possible change in a bearish downtrend. It is formed when a faster period moving average, usually the 50-day simple moving average, crosses above the longer-term moving average, generally the 200-day SMA.

*BTC/USD daily chart. Source:* *TradingView*

In a downtrend, both the 50-day SMA and the 200-day SMA are sloping down. However, when the price reaches an attractive valuation, long-term investors start accumulating, which arrests the pace of the decline. As more investors start buying, the trend starts to turn up.

A sustained up-move results in the 50-day SMA changing its direction from down to up. However, the 200-day SMA is slower to respond, hence when it is either falling or has flattened out, the 50-day SMA rises above it, forming the golden cross.

When a golden cross forms, it is a sign that the downtrend has ended and a new uptrend could have begun.

However, like every setup, the golden cross is not foolproof. It gives false signals several times but with a few filters, traders may reduce the whipsaws.

A profitable golden cross

Bitcoin (BTC) bottomed out at $3,858 on March 13, 2020, and the most recent golden cross formed on May 21, 2020, when the price closed at $9,061.96. That means, the BTC/USD pair had already moved 134% from the lows by the time the golden cross confirmed a change in trend.

Inexperienced traders may have felt the price has run up too fast and would have waited for a deep correction to happen before buying. However, when a trend changes, it rarely gives an opportunity to buy at much lower levels as was the case here.

The rally never looked back and it hit an all-time high at $64,899 on April 14, 2021, a massive 616% gain from the level where the golden cross formed. This shows that the trader who just bought and held after the formation of the golden cross would have earned huge returns.

However, every golden cross does not provide such outsized returns and sometimes traders fall victim to whipsaws.

A failed golden cross

Bitcoin dropped from a local high at $13,868.44 on June 26, 2019, to a local low at $6,430 on Dec. 18, 2019. The golden cross formed on Feb. 18, 2020, when the pair closed at $10,188.04.

However, traders who bought after the golden cross formed may have suffered quick losses as the pair plummeted to $3,858 just a few days later. This shows how traders may sometimes get caught on the wrong foot by just buying after the golden cross.

Filters can when the golden cross throws a false signal

Traders could avoid buying if the golden cross forms when the 200-day SMA is still sloping down. They can wait for the 200-day SMA to flatten out or turn up before buying as that may reduce the whipsaws.

*EOS/USDT daily chart. Source:* *TradingView*

As an example, EOS formed a golden cross pattern on Feb. 8, 2020 when the price was at $4.76. This price cleared the filter as the 200-day SMA had flattened out. However, had traders taken the trade, it would have turned into a loss as the EOS/USDT pair topped out at $5.49 on Feb. 17, 2020, and then plunged sharply to $1.35 on March 13, 2020.

The second golden cross on Aug. 22, 2020, did not clear the filter as the 200-day SMA was sloping down when the pattern formed. This would have kept the bulls from getting sucked into this trade.

The third golden cross on Dec. 12, 2020, cleared the filter but it would have hit the stop-loss as it breached the strong support at $2.20 on Dec. 23, 2020. Finally, the fourth golden cross that formed on Feb. 08, 2021, turned out to be profitable.

The above example shows that when the price is stuck in a range, the golden cross does not act as the ideal indicator. Therefore, traders may add another filter to buy only after the price breaks out of the range. This may reduce the whipsaws further and help traders buy only in uptrends.

When a cryptocurrency is in a downtrend, traders may wait for the golden cross to occur before starting their purchases. This could keep traders out of trouble in a falling market.

After the golden cross sustains and a new uptrend is confirmed, traders may look for buying opportunities. Among the many possibilities, one that was highlighted in an earlier article to buy on dips to the 20-day EMA or the 50-day SMA could come in handy.

Key takeaways

A golden cross can confirm that a downtrend has ended and a new uptrend could have begun. Until a golden cross forms, long-term investors may avoid cherry-picking as that may result in losses in a downtrend.

However, like every other pattern, the golden cross is not perfect. It may result in whipsaws if the coin enters a consolidation during the bottoming formation. Therefore, traders must take precautions to avoid being sucked into bull traps.

Once the uptrend is established after the golden cross, traders may look for buying opportunities and stay with the trend till a reversal is signaled.

Here’s how Bitcoin’s impending death cross could be a contrarian buy signal

June 13, 2021 Coin Telegraph

Bitcoin Price

Bitcoin traders are sitting on their hands after spotting a death cross on the daily chart but could this be a buy signal for contrarian investors?

Bitcoin’s (BTC) succession of sharp corrections from its all-time high at $64,900 has turned investor sentiment negative, at least for the short-term. While some analysts believe the bottom may have been hit, others are warning of a further fall due to the “Death Cross” pattern that, at the time of writing, is on the verge of completion.

For new traders, the name death cross itself brings a lot of negativity and a feeling of impending doom. This sentiment can trigger selling panics, especially if the market has already been going through a bear phase prior to the pattern being spotted.

However, is a death cross something to be feared or is it a crystal ball that gives traders insight on when a plunge is imminent?

Let’s find out with the help of a few examples.

What is a death cross and how accurate is it?

The death cross forms when a faster period moving average, usually the 50-day simple moving average, crosses below the longer-term moving average, generally the 200-day SMA.

*LTC/USD daily chart. Source:* *TradingView*

The crossover is bearish as it shows that the uptrend has reversed direction. Large institutional investors generally do not buy in a falling market until a bottom is confirmed. Due to this, buying dries up and investors holding positions rush to the exit due to panic, exacerbating the decline.

Before looking at a few death cross examples in the crypto markets, let’s see how the pattern has affected the S&P 500 index between 1929 to 2019. According to Dorsey, Wright & Associates, LLC, the average fall after the formation of the death cross is 12.57% and the median fall is much lesser at 7.75%.

However, if only the post-1950 period is considered, the average fall is less than 10.37% and the median is at 5.38%.

While those figures are not startling, especially for volatility-accustomed crypto traders, the bearish convergence of these two moving averages should not be taken lightly.

History shows that the death cross has resulted in a few instances of massive declines in the U.S. stock market indices.

After the death cross on June 19, 1930, the S&P 500 plummeted 78.84% before bottoming out on Sep. 15, 1932. The next terrible death cross came with a 53.44% correction that occurred from Dec. 19, 2007, to June 17, 2009.

This shows how in select instances, the death cross has been able to predict a sharp correction. However, two sharp declines of over 50% in a 90-year history suggests the pattern is not reliable enough to instil instant fear in traders.

Recent Bitcoin death crosses

As cryptocurrencies are still a nascent market, the available data is limited. Let’s review a few instances of the death cross and how it has affected Bitcoin.

The most recent death cross occurred on March 26, 2020, when the BTC/USD pair closed at $6,758.18. However, this death cross turned out to be an excellent contrarian buy signal as the pair had already formed a bottom2 weeks back at $3,858 on March 13.

Before that, the pair had formed a death cross on Oct. 26, 2019, when the price closed at $9,259.78. By then, the pair had already corrected 33% from the high at $13,868.44 made on June 26, 2019.

After the cross, the pair bottomed out at $6,430 on Dec. 18, 2019, suffering a further 30% fall. From the high of $13,868.44 to the low at $6,430, the total decline was roughly 53%.

In another scenario, Bitcoin’s roaring bull market topped out at $19,891.99 on Dec. 17, 2017, and the death cross formed on March 30, 2018, when the pair closed at $6,848.01. By then, the pair had already corrected over 65% from the then all-time high.

Thereafter, the selling continued and the bear market bottom formed at $3,128.89 on Dec. 15, 2018. This meant a further fall of about 54% from the death cross and a total drawdown of 84% from the all-time high.

The above instances show how the death cross occurs late in the bear market cycle and investors who wait for the pattern to form give a lot of profits back to the market. At the same time, initiating bearish bets may work for short-term traders but could prove detrimental for long-term investors.

Key takeaways

The examples show how the death cross is a lagging pattern, which forms when a large part of the decline has already occurred. Typically, long-term investors don’t need to panic if they spot the death cross on the daily charts but it is a signal to be more attentive to and perhaps prepare one’s portfolio for positioning for a variety of unanticipated outcomes.

Death crosses can also, at times, be used as a contrarian signal so when they are spotted traders should look for other indications of the chart to spot a possible bottom.

Here’s 5 ways investors can use the MACD indicator to make better trades

June 11, 2021 Coin Telegraph

Coin Telegraph

Traders use the MACD indicator to identify turning points, facilitate entries on pullbacks and capture the larger part of a move until the trend starts to reverse course.

The Moving Average Convergence Divergence, also called the MACD, is a trend-following momentum indicator used widely by traders. Although the MACD is a lagging indicator, it can be very useful in identifying possible trend changes.

The MACD oscillates above and below a zero line, also known as the centerline. The shorter moving average is subtracted from a longer moving average to arrive at the value of the MACD. A signal line, which is the exponential moving average of the MACD completes the indicator.

The blue line is the MACD and the red line is the signal line. When the blue line crosses above the red line, it is a signal to buy and when the blue line falls below the red line, it is a trigger to sell. A cross above the centerline is also a buy signal.

Let’s have a look at how to use the indicator for better entries and exits from a variety of positions. Afterward, we’ll investigate how the MACD is analyzed during pullbacks and in an uptrend. Lastly, we'll take a brief look at the importance of divergences on the MACD.

Adapting the indicator to crypto market volatility

Compared to legacy markets, cryptocurrencies witness large movements in a short time. Therefore, the entries and exits should be quick to capture a large part of the move but without too many whipsaw trades.

When a new uptrend starts, it generally remains in force for a few weeks or months. However, every bull phase has its share of corrections. Traders should aim to stay with the trend and not get stopped out by every minor pullback along the way.

The goal should be to enter the position early as the new uptrend starts and remain with the position until a trend reversal is signaled. However, that is easier said than done. If the indicator gives too many signals, there will be several unwanted trades which will incur large commissions and be emotionally draining.

On the other hand, if the time frames are chosen to give fewer signals, a large part of the trend could be missed as the indicator will be slow in identifying reversals.

This problem was addressed by MACD creator Gerald Appel in his book, Technical Analysis: Power Tools for active investors.

Appel highlights how two MACD indicators can be used during strong trends, with the more sensitive one being used for entries and the less sensitive one being used for exits.

Are two MACDs better than one?

The default value used for the MACD indicator by most charting software is the 12- to 26-day combination. However, for the subsequent examples, let’s use one MACD with the 19- to 39-day combination which is less sensitive and will be used for generating sell signals. The second one will be more sensitive, using the 6- to 19-day MACD combination which will be used for buy signals.

Bitcoin (BTC) was trading in a small range in September 2020 and during that period, both MACD indicators were largely flat. In October, as the BTC/USDT pair started an uptrend, the MACD gave a buy signal when the indicator crossed above the centerline in mid-October of 2020.

After entering the trade, watch how the MACD came close to the signal line on four occasions (marked as ellipses on the chart) on the sensitive 6- to 19-day MACD combination. This could have resulted in an early exit, leaving a large part of the gains on the table as the uptrend was only getting started.

On the other hand, notice how the less sensitive 19- to 39-day combination remained steady during the uptrend. This could have made it easier for the trader to stay in the trade till the MACD dropped below the signal line on Nov. 26, 2020, triggering a sell signal.

In another example, Binance Coin (BNB) crossed over the centerline on July 7, 2020, triggering a buy signal. However, the sensitive MACD quickly turned down and dipped below the signal line on July 6, as the BNB/USDT pair entered a minor correction.

Comparatively, the less sensitive MACD remained above the signal line until Aug. 12, 2020, capturing a larger portion of the trend.

Traders who find it difficult to keep track of two MACD indicators can also use the default 12- to 26-day combination. Litecoin’s (LTC) journey from about $75 to $413.49 generated five buy and sell signals. All the trades generated good entry (marked as ellipses) and exit (marked with arrows) signals.

How the MACD can signal corrections

Traders can also use the MACD to buy pullbacks. During corrections in an uptrend, the MACD drops to the signal line but as the price resumes its uptrend the MACD rebounds off the signal line. This formation, which looks similar to a hook, can give a good entry opportunity.

*ADA/USDT daily chart. Source:* *TradingView*

In the example above, Cardano (ADA) crossed over the centerline on Jan. 8, 2020, signaling a buy. However, as the up-move stalled, the MACD dropped close to the signal line on Jan. 26, 2020 but did not break below it. As the price recovered, the MACD broke away from the signal line and resumed its move higher.

This gave an opportunity to traders who may have missed buying the cross above the centerline. The sell signal was generated on Feb. 16 just as the ADA/USDT pair was starting a deep correction.

MACD divergences can also signal a trend change

Bitcoin’s price continued to make higher highs between Feb. 21, 2021, and April 14 but the MACD indicator made lower highs during the period, forming a bearish divergence. This was a sign that the momentum was weakening.

Traders should become cautious when a bearish divergence forms and avoid taking long trades during such a period. The long bearish divergence in this case culminated with a massive fall.

Litecoin shows how the MACD formed a bullish divergence during a strong downtrend from July to December 2019. Traders who bought the crossover above the centerline may have been whipsawed in September and again in November.

This shows that traders should wait for the price action to show signs of changing its trend before acting on the MACD divergences.

A few important takeaways

The MACD indicator captures the trend and also can be used to gauge an asset's momentum. Depending on the market conditions and the asset being analyzed, traders may vary the period setting of the MACD. If a coin is a fast mover, a more sensitive MACD could be used. With slow movers, the default setting or a less sensitive MACD may be used. Traders can also use a combination of a less sensitive and more sensitive MACD indicator for better results.

However, there is no perfect indicator that works all the time. Even with the above permutations and combinations, trades will move opposite to expectations.

Traders should deploy money management principles to cut losses quickly and protect the paper gains when the trade moves as per the assumption.

Education

What is a double bottom?

Double bottoms also show on the weekly timeframe

Some bottoms can be misleading

Key takeaways

What are Bollinger Bands?

Bollinger Bands can spot volatility squeezes

Bollinger Bands can signal when to buy during a pullback

Two Bollinger Bands can be used to track strong uptrends

Key takeaways

What are supports?

What are resistance levels?

Identifying support and resistance during consolidation phases

Trading supports in an uptrend

Resistance flips to support

Support flips to resistance

Key takeaways

Understanding the need for physical NFT art galleries

NFT art and the importance of blockchain

Will NFT art galleries be an ongoing trend?

What is a golden cross and how does it form?

A profitable golden cross

A failed golden cross

Filters can when the golden cross throws a false signal

Key takeaways

What is a death cross and how accurate is it?

Recent Bitcoin death crosses

Key takeaways

Adapting the indicator to crypto market volatility

Are two MACDs better than one?

How the MACD can signal corrections

MACD divergences can also signal a trend change

A few important takeaways

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