Crypto 101

Crypto Analyst Lingo

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Technical Analysis 101 Understanding the Language of the Pros header Crypto Heroes

For newcomers to the crypto markets, the vernacular can – at first – be rather daunting. But fear not: As with all skills, understanding the fundamental vocabulary is the first step to mastery. In that spirit, here’s a run-down of the most important terms you’ll run across as you delve deeper into crypto.

Market Valuation / Market Cap

The market value of an asset is the price you can expect to pay for it in the marketplace. Market value and market capitalization (market cap) are, for publicly-traded assets, closely connected. In the crypto markets, the market cap of an asset is, at its simplest level, obtained by multiplying the number of outstanding tokens by the current market value of a single token.

Example sentence:

“At a peak value of almost USD 20,000 in December 2017, Bitcoin’s market cap briefly reached over USD 300 billion.”

Bull/Bear Run

Simply put, bull means up; bear means down. The key here, though, is the length of time. Bull and bear runs are typically measured in days, weeks, and even months.

Example sentences:

“When’s the next bull-run?”

= When’s the next up-trend (implication, of course, being that we are currently in a bear market, ie. the market is in a downtrend).

“This bear-market is killing me”

= I’m sick of the long-term downward price movement.

Although bull and bear runs are typically long-term trends, “bull” and “bear” can also be used for short-term movements.

“Will the bulls come out on top today?”

= What will happen with the immediate price action (Will it go up?)

The term can also be used as an adjective, indicating general sentiment on a specific asset or on the market as a whole. For example:

“How bullish are you on Bitcoin?”

“I’m bearish for time being”

Bull Trap

This is a term used when, during a downward trend (bear market), a momentary upward movement of the price is just that: momentary. Traders shouldn’t see the upward movement as a sign that a trend reversal (see “Reversal” below) has taken place, and therefore traders should not enter the market, or buy-in. Instead they should recognize that the downward trend will continue.

Example sentence:

“Looks like another bull trap; don’t be fooled!”

Bear Trap

The opposite of a bull trap, a bear trap occurs when, during an upward trend (bull market), a momentary downward movement doesn’t represent a trend reversal but is, instead, just a temporary price drop.

Example sentence:

“Don’t panic sell, it’s likely just another bear trap”

Reversal

Any change in direction of price movement.

Example sentence:

“What are the chances we will see a reversal in the next month?”

Long / Short

These terms have become synonymous with “buy” and “sell.” A trader who is “going long” or “longing” an asset intends to buy the asset now because they believe its price will rise.

Example:

“I’m long on Ethereum but short on all other protocol tokens.”

The term can also be used to describe an open position.

Example:

“l am long Bitcoin”

= the trader currently owns Bitcoin and intends to hold it.

Conversely, a trader who is “going short” or “shorting” an asset intends to sell it now because they believe its price will fall. You may also hear the term “short-selling,” which is the same as shorting.

Long and short can also be used as synonyms for bullish and bearish.

Examples:

“Long Bitcoin, short the bankers”

(Crypto Twitter pundit Anthony Pompliano’s Twitter catchphrase)

Market Cycle

Market cycle refers to the broadly predictable up and down pattern of market prices that can be observed over a long enough time-frame. Market cycle is generally considered to be connected to business cycles and largely influenced by human psychology. An initial optimistic phase for a new venture or technology generally leads to excitement over the potential over making money. Speculators pile on board as asset prices climb, leading to the euphoria stage which generally coincides with the peak of the market cycle, in terms of price. From there, price action trends downwards through various stages of anxiety leading to panic and finally capitulation, when most participants give up on the asset. From there anger and depression usually correspond to the bottom or trough of the market cycle before (for some assets) new hope is born and prices begin to rise.

Examples:

“What stage of the market cycle are we in?”

(Knowing the answer to this question can help traders predict future price action).

“Could this finally be capitulation?”

= After a long bear market, capitulation is considered a necessary stage to go through before a recovery can begin.

TA

Technical Analysis. Refers to the probabilistic trends that can be deduced when looking at charts of asset prices over time. Data used in technical analysis include price, volume of trades (the number of assets/tokens traded), volume of buy-orders (people who have indicated interest in buying by placing an order for purchase on an exchange), and sell-orders (people who have indicated interest in selling by placing an order for sale on an exchange). Technical analysis can be used to predict future price movement.

Example:

“I’m still a beginner at TA but I’ve been following your charts and I have to say I disagree with your analysis.”

(Enthusiasts of technical analysis tend to publish custom charts of assets over a given time-frame in venues like tradingview.com and Twitter. The charts have technical indicators drawn onto them and are often critiqued by other traders.)

ATH / ATL

The all-time high (ATH) of an asset is quite simply the highest market price it has ever achieved. The less commonly used all-time low (ATL) is the opposite.

Examples:

“Bitcoin’s ATH is nearly $20,000”

“Will we see a new ATH in 2019?”

Support / Resistance

Support is a term used by technical analysis traders that refers to the price-level at which an asset is likely to stop dropping, at least in a given time-frame. Support is seen to be generated for a price level in a number of ways, but the most common are:

1. Previous support: if an asset has already fallen to a given price level and bounced off that level, future drops are more likely to stop at that level. The more often an asset’s price bounces off a given support level, the stronger that support is.

2. Previous resistance: where an asset has previously risen in price, the upward trend can be said to meet resistance if the rise stops temporarily. That pause in the upward trend is known as resistance, and is later deemed to be a level of support for assets that are in a downward trend.

Examples:

“If the price breaks through support, we can expect a long-term bear trend.”

“If the price breaks through resistance, we’ll likely break the all-time high within a week.”

(When an asset’s price breaks support or resistance, it’s likely to continue in that direction).

“The next level of support isn’t until $X.”

(When a given support level has been broken, traders look to the next support level as a target for the continued drop).

Bag Holder

This is someone who holds assets, the current value of which are below the value they were originally purchased at.

Examples:

“What’s your biggest bag?”

= Of your losing crypto assets, which one do you have the most of (calculated at purchase price).

“My bags are heavy”

=I have a lot of assets that I’m significantly losing on.

Altcoin

Any crypto asset that is not Bitcoin.

Example:

“Will there be another alt-season?”

Explanation: Crypto market cycles can be said to alternate between Bitcoin’s value rising faster than the aggregate value of altcoins, and vice versa. When altcoins are doing well relative to Bitcoin, it’s “alt-season.”

DApps

Decentralized Applications. Software applications that, like Bitcoin, run by consensus on a distributed network of computers.

Dead Cat Bounce

A temporary recovery in prices after a huge drop.

Example:

“Looks like a dead cat bounce. I’m not buying.”

Technical Analysis 101 Understanding the Language of the Pros Crypto Heroes

Buy the Dip

The philosophy of buying assets when their price drops temporarily during an extended bull run.

Example:

“These people think they’re buying the dip, but really they are just gonna get rekt.”

REKT

Wrecked. Meaning the value of your holdings has decreased dramatically.

“I was happy to see people shorting Bitcoin get REKT when it pumped over the weekend.”

Pump/Pumping

When the price of an asset is going up dramatically over a short period of time due to extreme buying pressure (many people purchasing).

Example:

“ETH saw a huge pump last night.”

Dump/Dumping

When the price of an asset is decreasing rapidly over a short period of time due to extreme selling pressure (many people selling).

Example:

“The market has been dumping hard since last night.”

Dump can also mean “the act of selling.”

Example:

“I’m gonna dump all my coins before Consensus 2019” (Consensus is perhaps the most well-known crypto conference)

Pump and Dump

Price manipulation by whales or collectives. The idea is to market-buy (place purchase orders at market value on an exchange) into a low-volume asset so that the price of the asset increases. This attracts the attention of other buyers who, seeing the upward movement, buy into the asset due to FOMO (fear of missing out). The whale or collective will then sell the asset at a profit, resulting in its price dropping to a point that is typically below the starting point before the initial pump.

DYOR

Do your own research – A disclaimer that Youtubers, podcasters, and anyone else publicly giving financial advice uses to make it clear that they are not violating laws which state that it’s illegal to give paid financial advice unless you are a certified and licensed financial analyst.

Example:

“This is not financial advice. I’m not a trader. This is just my opinion. Do your own research.”

FOMO

Fear of Missing Out; the psychological feeling that often drives people to purchase assets while the assets are on a bull-run.

Examples:

“The FOMO got to me and I ended up buying the peak”

= I ended up buying near the all-time high

“Don’t let the FOMO get the better of you.”

FUD

Fear, Uncertainty, and Doubt; generally referring to news or rumors that indicate or imply something bad about an asset. FUD can be said to influence an asset’s price downwards. It can also be a driving force for people to panic sell, especially when an asset is in a downward trend.

Examples:

“I’m going to ignore the FUD and hold through this down-turn.”

“The FUD got to me and I sold into the bear trap.”

Whale

A large holder of an asset.

Example:

“Looks like a whale moved some coins onto Binance. Could mean we are in for a dump.”

Moon

A super pump, or extreme upward movement of an asset’s price.

Example:

“When moon?”

(When will the asset price go up dramatically?)

Shitcoin

A coin with little or no potential value or use. Could also refer to a coin that was generated as a scam.

Example:

“This bear market won’t end until all the shitcoins have been purged.”


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