Biqutex Blog

While it's crucial to have a solid trading strategy, it's equally necessary to bear in mind that every plan requires ongoing monitoring and modification. In order to confirm trading signals and prevent false signals, the Volume Profile technique should be used in conjunction with other technical analysis tools, including as price action signals, trend indicators, and oscillators.

Biqutex Exchange

Biqutex is an innovative crypto derivatives exchange. Trade an extended list of instruments (Perpetuals Swaps, Futures, Options, Calendar Spreads etc.) with up to 125x leverage and deep liquidity!

USDC vs USDP: how do stablecoins work?

Biqutex — Tue, 14 Mar 2023 10:00:16 GMT

Cryptocurrencies, altcoins, stablecoins, and so many others that just confuses beginners. Today, we will be discussing stablecoins, understand how do stablecoins work, which stablecoin is safer, and finally what are stablecoins. Let’s get into it. What are Stablecoins?

Stablecoins are a type of cryptocurrency that is designed to have a relatively stable value, as opposed to other cryptocurrencies like Bitcoin or Ethereum that can be highly volatile. Stablecoins are tied to other assets that usually don't change in value much, such as regular money like US dollars, gold, or other cryptocurrencies. This is exactly why stablecoins are called “stable” due to their intention to maintain a steady value, avoiding significant price fluctuations. This stability makes stablecoins a potentially useful tool for various applications, such as payments, remittances, trading, and hedging against market volatility.

How can you actually use a stablecoin? Well, the same way you use other cryptocurrencies, such as for peer-to-peer transactions or as a store of value. However, because their value is tied to a stable asset, they can also be used to transfer value. For instance, when the sender wants to ensure that the recipient receives a consistent amount of value regardless of market conditions. Can you really consider stablecoins to be the most stable cryptocurrency? Let’s dive in more to discover!

What kind of Stablecoins are there

As traders and investors like diversity and options, different kinds of stablecoins were created and thought out. How different can actually stablecoin be as and were so many kinds actually created? Different types of stablecoins were created to meet different needs and to address different challenges. For example, some stablecoins were created to be more decentralized, while others were designed to provide greater transparency and security. Which are the best stablecoins types?Here are some common types of stablecoins:

Fiat-collateralized stablecoins: These stablecoins are backed by reserves of traditional currencies like USD, EUR, or JPY held in a bank account. They are also called reserve stablecoin. One example of a reserve stablecoin is Tether (USDT) which is backed by the US dollar in a 1:1 ratio, meaning that for every USDT token issued, there is a corresponding US dollar held in reserve.
Crypto-collateralized stablecoins: These stablecoins are backed by cryptocurrencies like Bitcoin or Ether held in a smart contract as collateral.
Commodity-collateralized stablecoins: These stablecoins are backed by physical assets like gold or silver held in reserve. Stablecoins backed by gold might also be named as “crypto gold”. When hearing the term crypto gold, know that is a term used to describe a cryptocurrency that is backed by or tied to gold. The same is for the term “crypto dollar”.
Non-collateralized stablecoins: These stabelcoins are not secured by anything other than an automatic mechanism that simply adjusts the amount of stabelcoins in circulation to control its value. Such stabelcoins are not popular and are generally not widely used.

Where do Stablecoins come from?

Now that we covered “how do stablecoins work” and why is it called “most stable cryptocurrency”, let’s understand where do they come from. Stablecoins come from a variety of sources, including individuals, companies, and organizations. In most cases, stablecoins are created by private companies that specialize in developing blockchain technology and digital currencies. These companies may create stablecoins as a means of providing stability to cryptocurrency markets or as a way to facilitate international money transfers without the volatility associated with traditional cryptocurrencies like Bitcoin.

Centralized Stablecoins - What does this mean?

Let’s take the example of how Paxos issues stablecoins, shall we? What is Paxos in the first place. Paxos is a regulated financial institution that offers a range of services, including stablecoin issuance. It was founded in 2012 and is headquartered in New York City. Paxos is best known for its stablecoin, Paxos Standard (PAX), which is designed to maintain a 1:1 ratio with the US dollar.Paxos issues stablecoins, like their Paxos Standard (PAX) token, by following a process that involves four steps:

Holding USD: Paxos holds a reserve of US dollars in a bank account.
Tokenization: When a user wants to purchase PAX, they send USD to Paxos, and Paxos issues PAX tokens to the user's digital wallet.
Redemption: When a user wants to redeem their PAX for USD, they send their PAX tokens back to Paxos, and Paxos sends the equivalent amount of USD to the user's bank account.

💡

This method of releasing new stabelcoins is available to those who need a large amount, such as 100,000 USD

This process ensures that PAX tokens are backed by a reserve of USD and can be redeemed for USD at any time, making them a reliable and transparent stablecoin option. All top-stablecoins work in a similar way when they keep collateral in the form of dollars in their bank accounts.

Stablecoins can also be created by individuals or groups who seek to develop their own digital currencies for specific purposes or use cases. For example, a company might create a stablecoin as a way to pay their employees.

Top Stablecoins most stable stablecoins

So which are the best stablecoins and why are they considered to rule the top list? Firstly there are many factors such as:

1. Stability: The primary purpose of stablecoins is to maintain a stable value and the ones able to maintain a stable value is considered among the top ones. We will discuss the most stable stablecoins below.

2. Trustworthiness: This usually has to do with regulation, the reputation of the company issuing the stabelcoins, verification, and the availability of collateral.

3. Liquidity: Investors and traders want to be able to buy and sell stablecoins easily and the ones that are widely accepted by many exchanges and have high trading volumes are considered more liquid.

4. Security: This factor is important not only for stablecoins but every tradable asset. as Imagine you invest a big amount of money in an asset, you want to make sure it is highly secured from hacks and other risks.

The ones that have robust security measures top the list indeed.Here are some of the top stablecoins, along with a brief summary of each and why they are considered among the best stablecoins.

Top stabelcoin companies

Tether (USDT): USDT is tied to the US dollar, with each USDT representing one dollar 1:1 basis. It is issued by a Hong Kong-based company Tether. USDT was launched in 2014 with the purpose to to combine the unrestricted nature of cryptocurrencies which can be sent between users without a trusted third-party intermediary with the stable value of the US dollar. It is the most widely used stablecoin and is popular because it has a high market capitalization, is accepted by many exchanges, and has been around for a long time.
USD Coin (USDC): yet again tied to the US dollar, with each USDC representing one dollar. The stablecoin was originally launched on a limited basis in September 2018. The stablecoin is issued by Circle Internet Financial Ltd. (Boston-based) and Coinbase. Circle is a fintech company that offers payment and treasury infrastructure for internet businesses, while Coinbase is a cryptocurrency exchange platform. Together, they created the Centre Consortium, which oversees the USDC stablecoin. It has gained popularity because it is highly transparent and audited which adds a high value to it.
Binance USD (BUSD): Binance USD is a stablecoin that is also pegged to the US dollar, with each BUSD representing one dollar. BUSD is issued by Binance and Paxos. To ensure that there are enough US dollars to back all of the BUSD in circulation, Binance and Paxos have teamed up with some of the world’s largest banks.Together, they have established a reserve that is used to back all of the BUSD tokens in circulation. As a cryptocurrency custodian, Paxos is responsible for holding the USD reserves that are used to back the BUSD tokens. Binance, on the other hand, is responsible for managing the BUSD token. Stablecoin has a significant impact on transactions, payments, settlement, and decentralized finance (DeFi).

💡

Binance has been cheating with BUSD: they have regulated stackablecoins from Paxos ERC-20, yet they run BUSD on BEP-20 and BEP-2 networks, which are unregulated.

4. Dai (DAI): Dai is a stablecoin on the Ethereum blockchain pegged to the US dollar. Dai is a decentralized stablecoin meaning unlike centralized stablecoins, Dai is not backed by US dollars in a bank account. Instead, the provisioning on the Maker platform is used. The Maker platform, also known as MakerDAO, is a decentralized finance (DeFi) platform built on the Ethereum blockchain. It is a system for creating and managing stablecoins. But how does it work if it is not backed by any asset?The Maker platform uses a mechanism called a collateralized debt position (CDP) to create Dai. For example, users can deposit ether (ETH) as collateral into a CDP and then generate Dai stablecoin based on the value of their collateral. The Dai stablecoins can then be used for transactions on the Ethereum network. Dai was launched 2019 and has been gaining significant popularity.

In summary, these stablecoins are considered among the top as are also widely accepted by many exchanges and are seen as trustworthy due to their backing assets and regulatory oversight.

Be smarter, be better, study, read and grow with us!

Biqutex Exchange

Biqutex is an innovative crypto derivatives exchange. Trade an extended list of instruments (Perpetuals Swaps, Futures, Options, Calendar Spreads etc.) with up to 125x leverage and deep liquidity!

What is Futures Trading with Leverage?

Beginner's Daily Risk Management for Futures Trading

Biqutex — Fri, 10 Mar 2023 00:00:37 GMT

Due to the expansion of the crypto market, more products and tools are available for traders to explore. Let’s take an example of Futures Trading which is a type of crypto derivative (financial instrument) that can be used to get exposure to the price movement of an asset without actually owning it. Sounds complicated? Let’s break down the “trading futures for dummies” as well as discuss the risk management in futures trading.

Sounds safe enough? Not completely! Every type of trading can include risks and losses that need to be taken into consideration. Let’s uncover the risk management in futures trading and try to simplify it. Day trading risk management is an essential aspect of successful trading, as it helps traders to mitigate potential losses and protect their investments. Here are some tips on crypto day trading rules and risk management for Futures Trading

💡

From the author: I crossed out all the useless and general rules that don't help anything. I paid for not following these rules with my nerves and money, you can follow my example, or you can immediately try to use them in practice.

Avoid Using the Entire Deposit

To effectively balance trading and risk management, it is important to avoid using the entire deposit for many reasons. Doing so puts your entire account at risk. If the trade goes against you, you will lose all the money in your account. It is important to manage risk and use proper money management techniques to protect your account from large losses. Here are some reasons why using the entire deposit on one trade is risky:

No trade is guaranteed: Even if you have a high probability trade setup, there is no guarantee that the trade will be profitable. Markets can be unpredictable and sometimes unexpected events can cause a trade to go against you.
Emotional decision-making: When you have all your money on one trade, you may be more likely to make emotional decisions. This can lead to impulsive trading decisions that are not based on a sound analysis of the market.

It all works in such a way that you think "here it is, my future profit, it's time to put 100% on the long with a leverage of x30, because the profit is guaranteed. And in the end what are you left with? A small downward movement and here you have already lost part of the deposit. But you will lose even more money if you open a position, the market will change and being in a good place to open a position you will have no deposit and you will not be able to open another order. Stupid, isn't it?

You don't have to think that you have to break everything down into some complicated percentages, just use only a part of the deposit for transactions, not the entire deposit. Half or less than half, so you will always be able to trade.

Leverage and Risk

As you know leverage is a tool used by traders to increase their potential profits by using borrowed funds to make larger trades. Day trading risk management comes up first when dealing with leverage. The volume of leverage can significantly impact both profits and losses. Even small price movements in the wrong direction can lead to significant losses.

For example: let's say a trader wants to buy a futures contract that costs $100,000. If the trader uses no leverage, he will need to have $100,000 in full to buy the contract.** If the price of the contract increases by 10%, the trader's profit would be $10,000 (10% of $100,000).

However, if the trader uses 100x leverage, he will need to put only $1,000 of his own funds to buy the contract and will borrow the remaining $99,000 from their broker.

If the price of the contract increases by 10%, the trader's profit will be $10,000. However, if the price of the contract decreases by 1%, the trader's loss would also be $1,000, wiping out their entire trading account.

In practice, leverage x10 is often enough, although many people like to "play roulette" and open a small position at x100. But what is the point in that? This is not trading.

Illustration of the dependence of leverage on the value of the asset and its liquidation

When you open a position, you are always notified at what price your position will be liquidated. Keep that in mind when you plan to open a position.

We talked about how futures trading works in this article. It is a must-read!

When it comes to trading, leverage and margin are two important concepts that you need to understand. In this article, we’ll take a closer look at both of these concepts and how they can be used when trading Perpetual Futures on Biqutex.

Biqutex BlogBiqutex

How to fix your position

Trading and risk management

Сan go very well together if done right! In trading, it is important to have a plan in place to manage potential losses and fix mistakes when they occur.

Here are some steps you can take to fix your position when trading:

Take-Profit Orders: A take-profit (TP) order is an order that automatically closes your position if the price of the asset reaches a certain level. By setting a TP order, you can lock in your profits if the trade goes in your favor.
Set Stop Loss Orders: A stop loss (SL) order is an order that automatically closes your position if the price of the asset reaches a certain level. We will talk about SL orders in more detail below. It is essentially an order that is triggered at the price at which you are still willing to take a loss. I will write more about this and the risks below.
Adjust Position Size: If you still do not want to set a stop-loss or are afraid that the position can be liquidated - you can close a part of the position by fixing the loss, or adjust the amount of leverage used.

Always set stop losses and do not neglect it

How they are designed, what they are, how they save money and help you earn - we wrote in this article.

Order Types: Market, Limit, Stop Orders and Others

There are several basic types of orders on exchanges - Market, Limit and Stop Orders. Any of these orders can be for Buy or Sell. The main differences between them are related to the terms of execution, as well as your side in the trade (taker or maker) and, accordingly, the commission rate.

Biqutex BlogBiqutex

Risk of the Deal

Effective risk management in day trading is crucial as discussed. In addition to all of the above, you need to remember the mathematics and the importance of basic statistics in making deals.

Risk-to-reward ratio, have you ever heard of it? When we open an order, we must understand in advance where we think the price will go and how much we will earn from it.

💡

When we open a position, we look at the ratio of risk to profit: our expected return should be at least 3 times greater than our possible loss if we were wrong.

In practice, this means that we must place a Stop Loss order at least so that the loss was three times lower than the expected Take Profit. Let traders do not always set Take Profit, but you should set Stop Losses automatically without thinking about them.

So it turns out: opening a position for 1000 USD, I can risk the entire position only if the profit should be at least 3000 USD. Thus, according to mathematical statistics, even if you are wrong 50% of the time - you will make money.

On the tradingview chart you can always select a tool in the "Prediction" section and set it on the chart, seeing the indicators of your planned trade

Psychology

Risk management day in trading can be very challenging not only because you never know exactly what turn the market will take but also it is emotionally hard. When you open a position and it shows a loss of -70% it is necessary to keep sober mind and follow the strategy you chose when opening the position.

Sometimes it happens that in a moment you want to close a position and relax. At this point, you need to postpone trading, distract yourself with other things, and then calmly assess the market conditions and understand whether it is worthwhile to exit a position or a temporary loss due to a local price fluctuation. Make sure to balance trading and risk management.

Biqutex Exchange

Biqutex is an innovative crypto derivatives exchange. Trade an extended list of instruments (Perpetuals Swaps, Futures, Options, Calendar Spreads etc.) with up to 125x leverage and deep liquidity!

What scalping is: how it works and what newcomers should do

The Keltner Channel: easy way to scalp on a sideways trend

Biqutex — Mon, 06 Mar 2023 02:23:27 GMT

Keltner Channel - this is one of the simplest indicators, which can be considered for trading within a sideways trend, because it is important to work with him that there were no sharp jumps in price, which can eliminate your position.

🔥

Just in case, we remind you to be careful and be ready for risk on the cryptocurrency market. Do you know what will happen tomorrow? We don't know either. So be careful.

Keltner channel trading strategy

Sometimes they are called this, sometimes called a Keltner channel, which marks the upper and lower boundary of the price based on the volatility of the assets.

The corridor formed by the Keltner Bands marks the area in which the price can change. It is accepted that the upper boundary is a resistance level and the lower one is a support level.

This is what the Keltner strips look like: there can be as many of them as you want to set up yourself.

Keltner channel settings for scalping

Since the Keltner indicator is suitable mainly for a sideways trend - we will consider it for scalping, as in scalping we are ready to make many deals and work on a small timeframe.

We will choose 5 minutes as the main timeframe. It's enough to start scalping.

The first thing to do - add 4 indicators "Keltner Channel" on the chart. Then go to the settings and set the values:

Indicator: Length 22, Mult 1
Indicator: Length 22, Mult 2
Indicator: Length 22, Mult 3
Indicator: Length 22, Mult 5

Length - in a sense smooths out fluctuations and averages the values.

Mult - multiplier, to put it simply - it creates the width of the corridor of price movement.

💡

A little tip: in the last 4 indicators you can adjust the color of the support and resistance line.

After setting up, you should get the following channels. You can adjust the color yourself as you like.

By setting these values, we designate for ourselves the indicators that will help us make trades. This is why we set different multipliers by creating decision zones. The last fourth indicator we set with multiplier 5 to determine for ourselves the level of stop loss: its crossing is possible, but in most cases it is unpredictable when there is a sharp jump or drop in price.

Never forget that in addition to using the indicator, you need to know other things about scalping: its work, its rules and how to use it.

For example, the time between 9:30 AM to 11:30 AM and 2 PM to 4 PM Eastern Standard Time (EST) on weekdays is often the most active for trading

Keltner channel trading strategy

Now let's talk about the logic of transactions. Each of the corridors will be a price target in relation to which trades are made. You can open shorts when the price reaches a peak and open longs when the price falls to the lower levels. You cannot buy and sell within the same corridor - it is a violation of strategy.

The middle line in the indicator is the "zero" mark for us.

How to short on Keltner bands

To go short, we wait for the price of the asset to enter zones 2, 3 or 4. We need to get the highest price inside our channel. But, as always, we must not be greedy and be able to average the price of the asset and our risks: for example, we can use 50% of the deposit to buy the asset in zone 2 and wait for the price to enter zone 3 or 4 and then buy the remaining amount. Don't forget that the price may not get there, but you will level out the risks this way.

Then the logic is simple: wait until the positions bought in zone 2 sink to level 1. Or positions bought in zones 3 or 4 sink to level 1 or 2. This is basically elementary logic: if you opened a short, then you must close it at a price lower than the opening. That's what these zones are for.

💡

Here it is definitely not worth playing with the risk, trying to buy at level 1 in order to drain the position at -1. Most likely it will be a mistake.

How to long on Keltner bands

Exactly the same logic, except it is a long: you have to sell the position for more than you bought it, then you will make a profit.

Wait for the price to move to -2, -3, -4 levels and then buy, averaging the price and splitting your orders into several pieces.

You bought a long in the -4 zone? Great, now you can make a profit even if you decide to sell long in the -3 zone.

Best keltner channel settings

The best settings are the ones you choose for yourself. Trading is a risky business, and experience comes with time. We've shown you how to use the indicator.

One of the ways to become a good trader is to practice a lot. You don't have to make real trades to do this, you can start working in the demo mode or test your hypotheses on TradingView in the "Market Simulator" section. In the same way you can try and use your settings for the Keltner channel.

Would you like to try it? Sign up, turn on the indicator and try trading small amounts of money!

Biqutex Exchange

Biqutex is an innovative crypto derivatives exchange. Trade an extended list of instruments (Perpetuals Swaps, Futures, Options, Calendar Spreads etc.) with up to 125x leverage and deep liquidity!

Top 5 classic indicators that you should know

What scalping is: how it works and what newcomers should do

Biqutex — Mon, 27 Feb 2023 11:10:58 GMT

Crypto scalper in trading are traders who buy and sell cryptocurrencies within a very short period of time, typically seconds to minutes, with the goal of making small profits on every trade. Scalping crypto works by taking advantage of price fluctuations in the market caused by volatility and supply-demand dynamics. The scalper will monitor the market for these fluctuations and quickly execute trades to profit from the price difference. Scalping in cryptocurrency can be very profitable but also carries a higher level of risk, as the scalper is making a large number of trades in a short period of time.

Best time frame for scalping crypto

Crypto scalper typically look for high volatility and tight spreads, which are often present during high-volume trading periods such as the opening and closing of major stock exchanges. For example, the time between 9:30 AM to 11:30 AM and 2 PM to 4 PM Eastern Standard Time (EST) on weekdays is often the most active for Bitcoin trading. Scalping meaning crypto is the same as stock scalping.

💡

The best timeframe for scalping is 5-10 minutes.

The more traders currently trading and the higher the trading volume, the better it is for scalping in cryptocurrency.

Three of the best crypto scalping strategies

The strategies are related to the instruments you are trading.

Range trading

Range trading is a technique used by many traders to identify the upper and lower boundaries of a price range. This range is typically defined by support and resistance levels, which are the prices where buyers and sellers are most likely to enter or exit the market. By identifying these levels, traders can anticipate price movements and make trades based on the direction of the trend.

The first step in range trading is to identify the support and resistance levels. This can be done using technical analysis tools, such as trend lines, moving averages, and oscillators. These tools can help traders identify key levels where prices are likely to rebound or break through.

Once the support and resistance levels are identified, traders can start looking for trading opportunities within the range. This can be done by buying at the support level and selling at the resistance level.

The point of scalping is to buy assets at support and sell them at resistance

Traders can also use other indicators, such as the Relative Strength Index (RSI) or the Moving Average Convergence Divergence (MACD) to confirm the trend and make more informed trading decisions. We will write about these indicators below.

👇

What idnikators are worth using and how they work, we told in our material. Of course, we also told you about the MACD indicator.

What are trend lines and how do they work?

Arbitrage Strategy

The easiest to understand, but not the easiest to implement. It often happens that prices on different exchanges differ for the same assets. This means that with proper preparation and speed you can manage to buy cryptocurrency on one exchange and sell it on another. It is very important to take into account slippage, exchange fees and the time you will spend on this transaction. Chances are you may not make it in time, so calculate your risks!

Cryptocurrency arbitrage scheme

This view is engaged mainly with the help of special software. It automatically tracks asset prices and can make transactions. We, of course, do not recommend and do not guarantee you earnings, but you can explore the topic in more detail and find the necessary software.

Bid-Ask Spread

The book order reflects the number of Ask and Bid orders. It also reflects the mood of traders at that moment when you look at it. Sometimes there is an imbalance in the order book: there can be many times more sell orders than buy orders.

Traders use this as one of the indicators for deciding whether to enter or exit a trade. For example: the illustration shows that the demand to sell exceeds the demand to buy. The number of Bids is much greater than the number of Ask, which could mean that the value of the asset may go down.

Ask - the price at which the trader is ready to sell the asset. Bid - the price at which the trader is ready to buy the asset.

Best indicator for scalping

Scalping trading strategies mostly use these instruments:

Moving Average
This strategy involves using moving averages to determine the direction of the trend, and then entering and exiting trades based on the price action near these moving averages.
Bollinger Band
This strategy uses Bollinger Bands to identify overbought or oversold conditions and enter trades based on these conditions.
Trendlines
This strategy involves drawing trendlines on the chart and entering trades when price breaks through the trendline.
Breakout
This strategy involves identifying key levels of support and resistance and entering trades when price breaks through these levels.
Momentum
This strategy involves using momentum indicators to identify trend strength and entering trades in the direction of the trend.

👇

About the material in which you will find MACD, Bollinger Bands, we wrote above and left a link. But that's not all: we wrote about trend lines and what to do in case of a breakout in this material

In this new material we have covered the basics of using trend lines and written a guide on how to use trend lines. Maybe you will become a professional trader if you start with it.

These were the best scalping strategy crypto. But strategies are defined not only by the tools but also by the applicable rules:

Payoff-ratio
We always recommend a profit to risk ratio of at least 3 to 1, but experienced traders trade at a 1:1 risk. It's just that why take the risk at a 1:1 ratio?
Hit rate-ratio of profitable trades to losing trades.
Experienced traders have it as high as 50-60%. If you are a beginner, 10-20% is fine.
Basic rules
Do not trade with the whole deposit, do not use a leverage of more than x3 if you are a beginner, take your time.

💁‍♂️

Of course, everything is learned in practice, you can always do as you see fit. If your deposit is small and you are not afraid of losing it - just try and practice.

The main thing to remember is that we pay for everything: time, effort, money, health. In trading we pay money for knowledge: before you become a professional trader you will make mistakes hundreds of times.

Best crypto coin for scalping

If you're reading this, you obviously haven't yet become a professional trader. Then there's another rule for you: "don't trade coins that are not in the top 10". You can check the top coins on Coinmarketcap.

Top Coins for February 22, 2023 at coinmarketcap.com

The best crypto to scalp is the one that works 'by the rules'. These are the established coins that bring no surprises. They are quite difficult to collapse or have a big impact on their value.

Unknown coins are often subject to pumppings and dumps, scams and too unpredictable a price movement. That said, the standard rules of technical analysis and any others may not work for them.

Biqutex Exchange

Biqutex is an innovative crypto derivatives exchange. Trade an extended list of instruments (Perpetuals Swaps, Futures, Options, Calendar Spreads etc.) with up to 125x leverage and deep liquidity!

Top 5 classic indicators that you should know

Biqutex — Wed, 22 Feb 2023 02:00:17 GMT

Trading seems like a fairly simple activity, you buy the assets low and try to sell them high when the right time is around the corner. Some people hold on to their assets and stake them for passive income but how do they actually know the “right” timing for their actions? Is this really possible to be accurate and risk-free? The answer can be very long, let’s dive into it by discussing trading chart indicators and strategies that can assist you big time!

Indicators and Strategies: What does it mean and how are they used?

Trading indicators are a group of technical “indexes” that traders can use to forecast the potential movements in various markets. Most technical indicators are helpful for predicting price changes and identifying patterns in specific markets. Traders rely on these indicators to navigate through the patterns and decide on the best possible strategy for bigger profits.

These tools are also used to define the proportion between supply and demand, but keep in mind that using one indicator might not help you reach your expectations. The more indicators you use the higher the probability of making profits and accurate analysis.

You might want to make sure is not to choose indicators that are contradictory, this will result in losses and increased risks. This is the reason many traders use more than one indicator to create their strategies.

Talking of which, a trading strategy is the set-out specifications on what trades to execute, when to enter or exit a trade, how much capital to invest, and all the key factors that one plans out before a trade. For instance, when you travel you make a list of specifications you need to consider such as the price of the hotel, food, buses, and everything. Nearly like that people plan out their trading with many factors and the key points to minimize risks and maximize success.

There are many types of trading strategies people use but let’s dive into indicators for now as they play a huge part in conducting the strategies.

Here are the top 5 classic indicators you can rely on when trading!

Moving Average Crypto

The following indicator is broadly used by many day traders and analysts due to its effectiveness in identifying specific momentum trends. There are 3 types of moving averages (Simple, Exponential, Weighted) As “Simple” is the mostly used one let’s stay on this type. This type is also called SMA (Simple Moving Average).

This indicator is easy to calculate as it represents the average price of an asset, let’s say Bitcoin in a given period of time. SMA 50 for instance is the average price of the previous 50 days. Why is SMA used? Well, to limit an asset’s volatility to a certain time frame. As well as help as identify trends.

If you are a long-time trader, you might focus on higher SMAs, and for short-term trading perhaps focus on recent volatility and lower SMAs.

Simple Moving Average: the average price for the selected timeframe on the chart is 177.94.

Relative Strength Index (RSI)

Even if you are a beginner trader you might have heard or know about RSI. This indicator has been in the industry for more than 40 years now. It ranges between 0 and 100. Generally, if the RSI goes above 70 it is a hint that the specific asset is a bit overvalued and a pullback might be approaching. Not good!

At the same time if drops below 30 it can mean that the asset is undervalued. Yes, that’s right, this might be the time for you to buy! Traders usually combine RSI with other indicators and go with the strength Index to measure market sentiment. However, it's important to note that the Relative Strength Index is a lagging indicator, meaning that it is based on past performance and that it can remain overbought or oversold for extended periods of time.

RSI is mainly used as a momentum swing that measures the speed and change of price movements, but it might not represent a general rule of the market behavior long term.

Relative Strength Index or RSI: When the indicator becomes more than 70 - the asset is overvalued and its value may fall. When the indicator is less than 30, it is possible that the value will grow.

Moving Average Convergence / Divergence (MACD)

Now our stop will be the moving average convergence/ divergence or MACD in short! MACD uses two exponential moving averages but unlike SMA which takes all the prices included in a timeframe into account MACD focuses on the most recent ones. Exponential moving average places a greater weight on recent prices in an attempt to make it more responsive to new information. This feature helps traders to find the bullish and bearish trends a bit more accurately! The name moving average convergence divergence can be confusing right?

So what do convergence and divergence mean and how are they used? ‘Convergence’ means that two moving averages are coming together, while ‘divergence’ means that they’re moving away from each other. If moving averages are converging, it means momentum is decreasing, whereas if the moving averages are diverging, momentum is increasing. Using moving average convergence divergence or let’s say using MACD indicator ease your life for good!

MACD trading is mainly used to identify aspects of a market’s overall trend. Most notably these aspects are momentum, as well as trend direction and duration. MACD trading is loved due to its simplicity and flexibility. Many traders get good results by using MACD strategies.

MACD or Moving Average Convergence / Divergence

By using zero line as a reference MACD can measure momentum or trend strength If the MACD line crosses ABOVE the zero line, this signals an UPTREND

If the MACD line crosses BELOW the zero line, this signals a DOWNTREND

MACD strategies can be effectively combined with other indicators. Using MACD indicator can get you ready to face different situations.

💡

If you're reading this, you'll probably find the article about trends, how to draw trend lines, and how they help you trade. Just open the second tab, and when you finish this material, go to "Trend lines in technical analysis".

Bollinger Bands

Developed by John Bollinger this indicator is mainly used for as a price “envelope” What? Yes, price envelopes define upper and lower price range levels which this indicator is aimed for! Bollinger bands meaning is easier than you think. The name suggests this indicator is conducted with 2 main “bands”: upper and lower.

They are used in pairs, and in conjunction with a moving average. How do they actually work in theory? Here are some hints:

When the bands separate by an unusually large amount, volatility increases and any existing trend may be ending.
When the bands tighten during a period of low volatility, it raises the likelihood of a sharp price move in either direction. Bollinger bands chart is rather easy to understand.
Prices have a tendency to bounce within the bands' envelope, touching one band then moving to the other band. You can use these swings to help identify potential profit targets.

Bollinger Bands on the chart indicate a "price corridor" in which the price is likely to be located.

Bollinger bands chart is straightforward to get the hang of. Traders find it convenient and flexible! Bollinger trading can also provide a measure of volatility for a particular security.

Parabolic SAR

SAR indicator was introduced to the world in 1978 by Welles Wilder and has been a big help for investors since then. Parabolic SAR is a versatile indicator with unique properties. It is a trend-following indicator that focuses on the fact of where a specific trend ends. Why do we need to know this? The name SAR means Stop and Reverse and as it suggests the indicator stops and reverses when the trend itself reverses. The indicator utilizes a system of dots imposed onto a price chart.

When the dots' position changes from one side of the asset's price to the other, the parabolic indicator generates buy or sell signals. For instance, when the dots shift from above the price to below the price, a purchase signal is generated, and when they shift from below the price to above the price, a sell signal is generated, this is how SAR indicator works in general.

Many traders use Parabolic SAR for their exit strategies while others combine it with other indicators and create day trading strategies.

This is what the Stop and Reverse (SAR) indicator looks like on the TradingView chart.

In the end, these indicators can help you create your success in trading but they won’t be enough as you also need a good strategy based on comparing different results and signals. Well, let’s not forget about good trading discipline and constant education, which you can find with us on any topic that matters!

Biqutex Exchange

Biqutex is an innovative crypto derivatives exchange. Trade an extended list of instruments (Perpetuals Swaps, Futures, Options, Calendar Spreads etc.) with up to 125x leverage and deep liquidity!

Trend lines in technical analysis: step by step guide for trading

Biqutex — Wed, 08 Feb 2023 01:00:23 GMT

Trading trendline are a popular tool used by traders to identify trends and make predictions about the direction of the market. These lines are used to connect a series of price points on a chart, creating a visual representation of the direction of the trend. In this article, we will explore what trend lines are: uptrend line, downtrend line, sideways line, how they work, and the different types of trend lines available.

What are trend lines and how do they work?

A trend in trading refers to the direction that the market is moving in. This can be either upward, downward, or sideways. Trend lines are used to identify these trends and predict their future direction. Сrypto trend lines are no different from trendlines in stocks and work on the same principle.

This is what an uptrend, a sideways trend and a downtrend look like

Trendline crypto are a simple yet powerful tool that can help traders make informed decisions about when to buy or sell a particular asset.

Trend lines work by connecting a series of price points on a chart. These lines can be drawn in different ways, depending on the type of trend line being used. For example, a simple trend line is drawn by connecting two or more price points on a chart.

Each contact of the trend line with a low or high without crossing it is a confirmation of the trend

One of the key benefits of using trading trendline crypto is that they can provide a clear visual representation of the direction of the trend. This makes it easy for traders to identify when a trend is starting or ending, and to make predictions about the future direction of the market. Additionally, trend lines can be used to identify key support and resistance levels, which can help traders determine when to enter or exit a trade. Sometimes there is a breakout trendline, what to do in this case - we write below.

💡

The trending line is drawn through at least two points. The third touch point is a confirmation of the trend.

What types of trendlines are there?

There are several different types of trend lines available:

Uptrend line
A line on a chart that connects a series of rising lows and indicates that the market is in an upward trend.
Down trend line
Unlike uptrend a line on a chart that connects a series of falling highs and indicates that the market is in a downward trend
Sideways trend line
A line on a chart that connects a series of sideways movement, indicating that the market is not experiencing a significant trend in either direction. This is also known as a consolidation or range-bound market.

How to draw crypto trend lines?

To draw a trend line on a tradingview chart, simply select the trend line tool from the charting menu. Then, click on the chart to place the first point of the line. Continue to click on the chart to place additional points, until the trend line is complete. It is important to note that the trend line should be drawn through the price points that best represent the trend.

A trendline breakout occurs when the price of an asset moves above or below a previously established trend line. This can be a sign of a change in the direction of the trend, and can indicate a potential buying or selling opportunity.

Breakout trendline: what to do?

This is what a trend line break and trend change looks like

If there is a trendline breakout, traders should take a close look at the chart and consider the overall market conditions. If the breakout is accompanied by strong volume and momentum, it may be a good idea to enter a trade in the direction of the breakout.

The trading volume is usually indicated at the bottom of the chart or to the right of the chart

However, if the breakout is accompanied by weak volume and momentum, it may be best to wait for further confirmation before entering a trade.

In conclusion, crypto trend lines are a powerful tool that traders can use to identify trends and make predictions about the direction of the market. These lines can be drawn in different ways, depending on the type of trend line being used, and can provide a clear visual representation of the direction of the trend. Additionally, trading trendline can be used to identify key support and resistance levels, which can help traders determine when to enter or exit a trade. If there is a trendline breakout, traders should take a close look at the chart and consider the overall market conditions before.

🔥

Do you want to develop and become a professional trader? Sign up and develop together with us!

Biqutex Exchange

Biqutex is an innovative crypto derivatives exchange. Trade an extended list of instruments (Perpetuals Swaps, Futures, Options, Calendar Spreads etc.) with up to 125x leverage and deep liquidity!

Order Types: Market, Limit, Stop Orders and Others

Biqutex — Mon, 26 Dec 2022 18:02:45 GMT

There are several basic types of orders on exchanges - Market, Limit and Stop Orders. Any of these orders can be for Buy or Sell. The main differences between them are related to the terms of execution, as well as your side in the trade (taker or maker) and, accordingly, the commission rate.

Market Order

Market order - an order for immediate execution at the current market price. The order will be executed almost immediately at an available price. Accordingly, in order to guarantee the execution of the order by the market, the available offers of other traders from the order book are taken and your commission on the trade is charged as a Taker.

How it works: For example, you want to buy $10,000 worth of Bitcoin. Quickly. Right here, right now. And let's say the last market price of BTC right now is $10000. So, in an ideal situation, paying exactly $10000 you will receive 1 BTC. But, since it's a market trade, the order book may simply not have any offers from other traders for 1 BTC at such a price, and your order will continue to "buy" bitcoins automatically from more expensive offers at increasing prices until it will buy BTC at the full amount you've specified.

In this way, you will receive Bitcoin instantly, but the final trade price may be different from the market price at which you clicked the "Buy" button. In our example you will get exactly 1 BTC, but its final entry price might be $10030 for 1 BTC instead of $10000.

Limit Order

Limit order - an order for a trade at the chosen price differing from the current market price. Such orders are placed in case to buy cheaper or sell more expensive than the market price.

Unlike "Market" order, "Limit" order simply allows you to place your own order to buy or sell at a fixed price. But in this case your order will be executed not instantly, but only when the market price reaches the price set by you. Execution of the order is not guaranteed because the price specified in the order can be out of the market for a long time. Thus the sum of funds specified in the order is deducted from your available balance and locked in the order until it is filled.

The creation of a limit order is settled by the Maker category, as you add liquidity to the order book with your order and wait for another Taker trader to come and execute the trade, accepting your terms.

What both Market order and Limit order have in common is that they send to the order book here and now. One is "placing your offer" (Limit) in the order book, the other is "executing orders already placed" (Market).

But what a trader must do if he has a position, let's assume 1 BTC, and he believes in bitcoin's growth and therefore does not want to close it now? At the same time, the trader is afraid that the price may go down and does not want to lose his money in case of a significant drop. This is where Stop orders come in.

Stop Order

A Stop order is an order that enters the order book only once the market reaches a certain trigger price (stop price). In the case of a stop order, the trigger price can be specified as either the last price, the mark price or the index price.

Once the trigger price is reached, the stop order will execute as a normal Limit or Market order:

Stop Limit Order is an order to execute a trade at a predetermined price when the trigger price is reached. Once the trigger price is reached, a limit order will be placed. They are charged like a Maker orders.
Stop Market Order is an order to execute a trade at the market price once the trigger price is reached, a market order will be placed. They are charged like Taker orders.

A Stop order does not place an order to the order book immediately.

In fact, a Stop order is your command to the exchange that reads something like this: If the price of my asset drops or rise to the "X" level, sell or buy "that amount" of my asset by placing an order to order book. This is available both for buy orders and for sell orders. And accordingly they are called "Stop Sell" order and "Stop Buy" order.

And if the price really reaches the value "X" - your Stop order will place a Market or Limit order, which will sell or buy the asset.

How it works: Suppose you opened a Long position on BTC-PERP with an entry price of $9500, and the current price is $10000, that is, you are now $500 in profit, but you want to earn more. And yet, if the price goes down - you wouldn't want to make a loss.

So, you place a Stop Sell order (Stop loss) at $9700 and go to drink tea while you are waiting for the Bitcoin price to go up. Now you don't have to worry about losing on this trade, because if the price falls to $9700 - your position will be automatically closed, and you won't at least make a loss when you make a 200$ profit.

In this example a Stop Order (Take Profit) is used to close a Long position when the price reaches the green bar. Most often this order is used for automatic profit taking.

Other Order Types

In addition to these basic types of orders, there are also other types of orders:

Trailing Stop order is a dynamic Stop order. The trailing stop follows the rise in price of the asset if you hold a long position and the fall in price if you hold a short position, at a predetermined distance from the current price of the asset. It is updated as the price of your position moves in the market.

💡

The main purpose of this order is to maximize your profit and avoid losing it in case the market turns around

In a long position the trailing stop will follow the price and grow with the market, and when the price reverses (moves down), it will stop. The position will close automatically when the price goes down to the set level.

How it works: For example, you open a long position at $10,000 and place a stop-trailing order at $9500 to limit your potential loss to $500. Suppose the price rises to $12,000. Your Stop Trailing order would automatically move to $11500, but would remain at $11500 if the price continued to drop from $12000 to $11800.

Using orders of this type is most useful when trading within a trend, since it allows you to keep a potential profit as the price moves, while maintaining a loss limit.

In a short position a trailing stop will follow the price moving down and will stop when the price starts to rise. The position will close automatically when the price moves upwards and reaches the selected target level.

Iceberg order

Iceberg order is used to hide a large trade size from other traders in the order book by splitting it into several smaller orders, which will be automatically placed one by one after they are filled. In that case, only one order are visible at order book - "Iceberg Top".

Market Makers vs Takers: What is the difference?

Biqutex Research — Sat, 17 Dec 2022 12:24:54 GMT

Any crypto exchange matches orders of buyers and sellers. Exchanges are platforms where sellers meet buyers without having to advertise their offers, making deals directly.

The trader who puts up a new bid for the price in the market is called a "Maker", and the trader who accepts the existing conditions is a "Taker".

If you are a trader, you are either a maker or a taker, and you can be one or the other at different moments, trading different instruments. Makers and takers make possible the existence of the exchange in principle. Their presence and quantity determines its viability. The price of any asset is the result of an agreement between the buyer and the seller. Without the participation of the two parties, the trade will not occur.

Order book is a place where exchanges calculate and reflect the market price of assets. This is where bids for buying and selling exchange clients' assets are collected. The order looks like this: Buy 1 BTC at $10,000. This order will be added to order book and executed when the price reaches $10,000.

What is Liquidity?

The term liquidity is usually used to define the ability of some asset to be sold quickly and easily.

For example, gold is a liquid asset, meaning it can be sold quickly and easily for cash. But a gold toilet would be an illiquid asset, unless you sell it by the ounce by weight. There are few people who would agree to buy such a toilet bowl, even though it serves its purpose perfectly.

The liquidity of the market is somewhat different from the toilet bowl example. A market is liquid if you can simply and quickly buy and sell assets at a fair price. In a liquid market, there is sufficient demand from sellers and buyers.

Demand and activity are such that they often meet in the middle: the price of the first sell order (or ask price) is very close to the price of the first buy order (or bid price). The difference between the first sell order and the first buy order is called the spread. If it is minimal, the spread is said to be small or narrow.

A market without liquidity will have a wide spread, there will be few participants, and the price of the asset will not be fair. In such a market, it is difficult to sell the asset at a fair price because there are few buyers.

Makers

This is a limit order, that is, one where you have specified your intentions with a performance condition, and put it in the order book before those conditions occur. If you placed such an order, you are a market maker because you "made" a market. An exchange is like a marketplace where people put their goods on the shelves.

Creating a buy or sell order as a "Maker"

By creating limit orders with different conditions you create liquidity so that takers can come in and simply and quickly buy or sell your liquidity.

Takers

Remember the makers laying out their products on the shelves and waiting for customers to come? Well, the buyers in our case are market takers. And instead of eggplants and cucumbers, they're buying the liquidity you sell through market makers.

Creating an order as a "Taker"

And when a taker comes in, he takes some of that liquidity out of the market with a market order, which is executed instantly because it has the instruction to execute at the market price.

Let us briefly repeat: Makers place orders and wait for them to be executed, while Takers execute someone else's orders taking them away at the market price. It is important to understand that makers supply liquidity.

Why is it important to understand the difference?

When trading on crypto exchange, regardless of who the buyer is and the seller is, it matters who created the trade request and agreed with the price already indicated in the orderbook.

There are different trading conditions for the Taker and the Maker. They differ because the trader who declares the price and places the collateral under his application is in a less favorable position than the trader who decides to conclude the trade. Until the order is executed, the capital used to ensure a potential future trade does not generate income.

Therefore, to stimulate participation in trading, exchanges always take commissions from Makers less than from Takers. Takers pay higher commissions than makers because they take liquidity from the market to buy or sell quickly.

On the Biqutex exchange, there is an opportunity to participate in the “Market Maker Program” and receive a rebate (cashback) of part of the commissions from trades that helped to conclude your placed orders.

Biqutex Exchange

Biqutex is an innovative crypto derivatives exchange. Trade an extended list of instruments (Perpetuals Swaps, Futures, Options, Calendar Spreads etc.) with up to 125x leverage and deep liquidity!

There is a concept of a “professional market maker” - a bidder/seller who often helps reduce the spread (difference) between buy and sell orders. Such activity involves placing a large number of orders in order to find a fairer price on the market for retail participants.

The Derivatives Magazine #31

Biqutex Research — Wed, 14 Dec 2022 13:44:44 GMT

Last week, the total market capitalization remained within the narrow corridor of 719 - 800 billion USD. The market continues accumulating the consequences of the FTX exchange's collapse and looking for new possible reasons for growth. This week, the immediate attention of traders will be focused on macro statistics and the actions of the central banks of the United States and the European Union, where the refinancing interest rate and market conditions for the next few months will be determined.

The derivatives and spot trading market continues to go down. As the data of the analytical platform Glassnode shows, the volume of Bitcoin derivatives trading has been actively declining for more than a month, having almost halved to the level of 8.5 billion USD.

An additional confirmation of the decrease in activity is a decrease in the volume of Ethereum spot trades. Before the Merge in September, the spot market stabilized and competed with derivatives. However, after that, the spot market decline continued, indicating the absence of an active, long-term buyer and the dominance of speculative trading in the market.

Currently, the crypto market feels relatively confident compared to traditional markets. Fears of a global recession have less impact than local news, and it is likely that the most negative events in the crypto industry have already happened. Further developments will largely be determined by the conditions for the inflow of new liquidity—access to capital (the refinancing rate from the Central Bank) and regulation at the legislative level.

FTXend

On Monday, it became known that the story with the former CEO of the FFTH exchange, Sam Bankman-Fried, is coming to its logical conclusion. The authorities of the Bahamas arrested him at the request of the American authorities. The SEC, the CFTC, and the Prosecutor of the Southern District of New York brought charges. Based on official statements, the former crypto investor is accused of deceiving investors, fraud, and money laundering. You can read more about how the exchange collapsed in our FTX Game Over special issue. Now, it's time to take responsibility for the many rash decisions and practices that the growing market of 2020-2021 covered up.

Binance FUD

The press and government agencies do not ignore another participant in the FTX epic - the head of the competitor exchange and a former investor in FTX CZ. According to reports by the Reuters news agency against a group of managing managers, including CEO Binance, the US Department of Justice has been conducting a preliminary investigation since 2018. The subject of the study was a possible violation of the sanctions regime by the exchange - providing access to Iranian and Russian crypto traders. In addition, Binance may have been used in the past as an intermediary point for laundering money obtained illegally - from hacking by hackers and scammers. This article caused a heated discussion on social networks and led to a significant outflow from the balance sheets of the exchange - about 2 billion USD. However, unlike its competitor FTX, Binance coped with the panic much better, and at the moment, the exchange is not experiencing significant withdrawal problems.

US CPI Index

On Tuesday, preliminary data on inflation were released, which turned out to be better than market forecasts. Inflation in the US was only 7.1%, declining for the second month in a row. This trend allows the Fed to at least slow down the pace of rate hikes and possibly even put this process on pause shortly. This news has supported the market and allows us to look at the next week with great optimism.

This overview was prepared by the analytics department of the Biqutex, an innovative crypto derivatives exchange. Trade an extended list of instruments (Perpetuals Swaps, Futures, Options, Calendar Spreads etc.) with up to 125x leverage and deep liquidity!

The Derivatives Magazine #30

Biqutex Research — Wed, 07 Dec 2022 13:52:57 GMT

Crypto market is not going to give up and actively demonstrates it. After the strongest collapse caused by the fall of one of the world's largest exchanges - FTX, for the second week in a row we can see growth. The week started with $776.3 billion. Then we saw active rallies through the middle of the week to $824.6 billion, followed by sideways movement through the end of the week. At the end of the period under review there was another wave of growth. The period ended on the peak of this wave, reaching $827.5 billion. The final growth amounted to 6.6%.

Some macroeconomic indicators give hope (but not much so far) for improvement in the situation in the industry. For example, the S&P500 stock index demonstrated growth last week, exceeding 4100 points for the first time since the beginning of autumn. Given the uncertain situation with the forthcoming interest rate hike cycles of the leading central banks, it is too early to talk about a dramatic turnaround in the global economy. However, some positive signals are never superfluous to increase confidence of crypto market participants. Especially now, when that confidence has literally been "crushed.

In the current market situation, the ratio between realized profits and realized losses can serve as an interesting indicator to study. According to Glassnode, this indicator reached its historical maximum during the week. As a result the losses fixed by the market were 14 times more than the fixed profit. According to analysts of the service, previous values of the same low historically coincided with the market reversal. However, one should always remember the following postulate: what happened in the past will not necessarily happen in the future.

Santiment has recorded a 4.1% decline in total supply of the top 4 stablecoins on exchanges over the last four months. Of course, the interesting fact is that even now, at the hypothetical "bottom" of the market, this indicator is higher than during the bull market of 2021. In other words, there is quite a lot of buying power in the market right now. The only question is at what point it will be realized.

Bybit cuts off staff
Cryptocurrency exchange Bybit will cut its staff as part of a business reorganization "amid a prolonged bear market." This was announced by co-founder and head of the company Ben Zhou. According to Zhou, the company intends to refocus its efforts amid the protracted crisis. He stressed that the reorganization will affect all divisions of the structure. Bybit joined a group of cryptocurrency industry players who decided to downsize amid a drop in digital asset prices. On November 30, the Kraken platform announced the layoff of about 1100 employees or about 30% of its staff.

Gemini unsuccessfully trying to recover funds
According to Financial Times, cryptocurrency lending service Genesis and its parent company Digital Currency Group (DCG) owe customers of the Gemini exchange more than $900 million. Gemini, founded by Tyler and Cameron Winklevoss, has been unsuccessfully trying to recover funds after cryptocurrency lender Genesis suffered significant losses due to the FTX crash. Genesis and DCG owe Gemini customers more than $900 million, with venture capital firm DCG, which owns Genesis Trading and Grayscale, accounting for the bulk of the $575 million debt. Experts note that the presence of large interstructural loans can cause additional complexity. For example, DCG itself owes its subsidiary company Genesis about $2 billion. DCG declined to comment, but Financial Times reporters learned that some of DCG's loans were used to finance the operations of its other subsidiary, Grayscale.

Alibaba cloud partners with Avalanche
Alibaba Cloud, also known as Aliyun, a division of Chinese e-commerce giant Alibaba, announced an integration with Avalanche blockchain to support the company's Node-as-a-Service initiatives. Avalanche's partnership with the Alibaba Cloud will develop tools that will allow users to run validation nodes on Avalanche's public blockchain platform in Asia. The integration will allow Avalanche developers to use Alibaba Cloud's plug-and-play infrastructure as a service to launch new validators. Developers expecting a high demand for resources during peak hours can also use the additional resources - compute, storage and distribution - offered by Alibaba Cloud.

The Derivatives Magazine #29

Biqutex Research — Tue, 29 Nov 2022 09:35:40 GMT

The past week actually began immediately with a renewal of the local total-cap anti-record. Starting at $751.9 billion, the total capitalization index first renewed its low, reaching $734.2 billion (the last time such capitalization values were observed in December 2020), but then there was a rebound and gradual growth to a weekly high of $803.03 billion. Then the news background again became sharply negative in the moment and the total capitalization of the crypto market literally in a couple of hours fell to $769 billion. The observation period ended at $775.2 billion. The final growth was 3.1%.

According to Blockchain.com, the anti-record for daily miners' earnings was also broken last week, amid the collapse of the BTC price. On November 26, that figure amounted to just $11.674 million. This value is the lowest it has been in 2 years. Due to a severe shortage of funds caused by declining mining profitability, the major mining companies continue to sell bitcoins on their balance sheets. In its latest filing with the SEC, Core Scientific reported a net loss of more than $400 million for Q3 2022 and $1.7 billion for the last nine months.

Coinshares data on financial flows in crypto products shows a combined $16.2 million in outflows. $10.1 million was withdrawn from BTC-oriented products, and $6.1 was withdrawn from ETH-oriented products. Outflows continued in altcoins, with XRP, Polygon and Tezos as the primary targets, totaling $0.5 million, $0.3 million and $0.2 million, respectively. Blockchain stocks are also suffering from the aftermath of the FTX crash, with last week's outflows totaling $13 million.

Sentiment recorded the share of BTC held on cryptocurrency exchanges below 7% for the first time since November 24, 2018. The driver of this trend is primarily the sharply increased distrust of users to centralized exchanges amid the collapse of FTX. Withdrawals from exchanges to non-custodial wallets and extremely low exchange balances are generally bullish indicators, but we should not forget about the great pressure from major miners going bankrupt.

$2.8 billion in outstanding debt on Genesis' balance sheet.
The troubled cryptocurrency lender Genesis Global has $2.8 billion in outstanding loans on its balance sheet. An interesting fact is that according to Bloomberg, about 30 percent of the loans are to related parties, including the parent company Digital Currency Group. In a note to shareholders, founder Barry Silbert (CEO of Digital Currency Group) said that "in the normal course of business, DCG borrowed money from Genesis Global Capital in the same manner that hundreds of crypto investment companies do. These loans were always structured on a market basis and priced at prevailing market interest rates."

1inch introduces Rabbithole
1inch Network introduced the RabbitHole feature to protect MetaMask wallet users from "sandwich attacks," one of the most common ways to extract MEVs in DeFi. Manipulations to generate additional income by using advance transactions are not formally classified as illegal activities. Rather, in the community, they are considered unethical. The 1inch RabbitHole feature eliminates the "sandwich attack" problem. The solution works as a proxy between MetaMask and Ethereum-validators – swap transactions bypass the mempool. The developers have aggregated Flashbots, BloXroute, Eden and Manifold products on the platform for this purpose. Initially, RabbitHole will be in free access for the testing period. After receiving feedback from the community, the platform will consider possible payment options for the solution.

TIME’s president to lead MoonPay
TIME magazine president Keith Grossman has decided to leave the media company to head cryptocurrency company MoonPay. According to sources, he announced on Twitter that he would become president of MoonPay after a three-year stint at TIME. During his tenure at TIME, he introduced digital assets: the magazine began accepting cryptocurrencies as a subscription payment method. The company launched the TIMEPieces initiative, a collection of NFTs that showcase original artwork, which generated more than 10 million in revenue. Grossman also acted as distributor for the purchase of NFT by celebrities such as Snoop Dogg and Paris Hilton. These celebrities, as well as Justin Bieber, The Weknd, Drake, Ashton Kutcher and Gal Gadot, teamed up for MoonPay's $555 million Series A funding round in 2021.

This overview was prepared by the analytics department of the Biqutex, an innovative crypto derivatives exchange. Trade an extended list of instruments (Perpetuals Swaps, Futures, Options, Calendar Spreads etc.) with up to 125x leverage and deep liquidity!

What is Futures Trading with Leverage?

Biqutex — Fri, 25 Nov 2022 09:55:04 GMT

When it comes to trading, leverage and margin are two important concepts that you need to understand. In this article, we'll take a closer look at both of these concepts and how they can be used when trading Perpetual Futures on Biqutex.

Leverage is a tool that can be used to increase your potential profits (or losses) on a trade. It essentially allows you to control a larger position than what you have the capital for. For example, if you have $1,000 and you're trading with 10x leverage, you're effectively controlling a $10,000 position.

Margin is the amount of money that you need to put up in order to open a position. For example, Biqutex requires you to have at least 0.4% of the value of the contract in your account to trade.

Now that we've covered the basics, let's take a look at how these concepts can be used when trading Futures.

When you trade Bitcoin Perpetual Futures, you're essentially making a bet on the future price of Bitcoin. If you think the price of Bitcoin will go up, you can buy (long) a contract. If you think the price of Bitcoin will go down, you can sell (short) a contract.

One of the great things about trading BTC Perpetual Futures is that you can use leverage to magnify your potential profits (or losses). For example, if you're trading with 20x leverage and the price of Bitcoin goes up by 1%, your account will increase by 20%. Conversely, if the price of Bitcoin goes down by 1%, your account will decrease by 20%.

Example of profit and loss calculation when opening a long position with x20 leverage

That way, if the Bitcoin price goes up just 5% you will have already doubled your initial investment of $500 to $1000 (500$ profit). Of course, leverage can also work against you. If the price of Bitcoin moves against your position, your account can quickly get wiped out. That's why it's important to use leverage responsibly and always have a stop loss in place.

When trading BTC Perpetual Futures, the margin requirement is usually around 5%. That means you need to have $5,000 in your account in order to trade a $100,000 position. However, some exchanges allow you to trade with less than 5% margin. For example, Biqutex allows you to trade with up to 125x leverage. That means you only need $1,000 in your account to trade a $125,000 position.

Biqutex Exchange

Biqutex is an innovative crypto derivatives exchange. Trade an extended list of instruments (Perpetuals Swaps, Futures, Options, Calendar Spreads etc.) with up to 125x leverage and deep liquidity!

While high leverage can lead to high profits (or losses), it's important to remember that it also increases your risk. So, only use as much leverage as you're comfortable with and always have a stop loss in place.

Biqutex uses a margin system with different levels depending on the value of the trader's position. The larger the trader's position, the higher the initial margin rate at which the position is opened. This means that the higher the value of the contract held by the trader, the lower the maximum available leverage. Each contract has a certain maintenance margin rate, and the margin requirements will increase or decrease as the risk limit changes.

When the margin is lower than the maintenance margin, an automatic liquidation will occur. It is highly recommended that traders liquidate their positions above the maintenance margin to avoid higher automatic liquidation fees.

In conclusion, leverage and margin are two important concepts that you need to understand when trading Futures. Leverage allows you to control a larger position than what you have the capital for and margin is the amount of money that you need to put up in order to open a position. Use these concepts responsibly and always have a stop loss in place to protect your account.

✅ Answer the questions and receive $1 Fee Bonus + 100 Points in the "Learn and Earn" Program at Biqutex

Claim $1 + 100 Points

The Derivatives Magazine #28

Biqutex Research — Wed, 23 Nov 2022 12:52:55 GMT

"Black Friday" in the cryptocurrency market continued for the second week in a row. After the previous rapid drop, the total capitalization index of the cryptocurrency market continued to decline, but with a smaller amplitude. Starting the period at $801.1 billion, the index showed sideways movement in the range of $777 billion to $814 billion almost to the end of the week. In just the last 24 hours, it fell to $747.5 billion. The period ended at $755.45 billion. The market decline at the end of last week was 5.7%.

The market continues to feel the effects of the FTX cryptocurrency exchange collapse. Further investigation by regulatory authorities revealed some shocking (for some people expected) details. For example, there was virtually no financial management at the company, and client and investor funds were "burned" in the process of margin trading by a related trading firm, Alameda Research. This was one of the main reasons for the formation of such a huge hole in the balance sheet. Only $900 million of the exchange's $11 billion in reserves is in liquid form (the rest is actually in a multitude of blocked tokens from various projects). In addition to various blockchain companies and lenders that were on the verge of bankruptcy because of their connection with FTX (e.g., BlockFi), one of the main blows came to the Solana ecosystem. Prior to the start of last week, the price of the SOL ecosystem's native token had fallen 62.5%, and over the past week, it has fallen another 10%. Against this background, Solana's prospects at the moment look very dim.

In the case of exchange balances of stablecoins, we could observe a very interesting situation in the market. Thus, after the first wave of market fall, we could see one of the largest daily withdrawals of USDT from the balances of exchanges in recent months. At the moment of the second wave of fall, there was almost the same volume of inputs of this type of stablecoins to the exchange. Probably, it happened due to the fact that large market players brought liquidity to exchanges for drawdown redemption. Speaking about the total balance of stablecoins withdrawn from exchanges during the period of the so-called "panic moods" in the market, the total outflow was only $3 billion (considering the total market capitalization of $750 billion, it does not seem such a terrible figure).

The bitcoin price fell below $15 800 for the first time in two years, and the level of activity of bitcoin addresses (according to analytical service Santiment) reached a record level for the last 6 months. This activity may not only be a sign of high trading activity (transferring bitcoin to exchanges for sale), but also a sign of the high volume of bitcoin withdrawals to non-custodial wallets amid a sharp drop in confidence in centralized cryptocurrency exchanges.

El Salvador to buy one bitcoin every day
El Salvador's President Najib Buquele and Tron blockchain founder Justin Sun decided to accumulate bitcoin at a rate of 1 BTC per day. The president of El Salvador tweeted, "We are buying one #Bitcoin every day, starting tomorrow." This statement was followed by Tron founder Justin Sun, who promised to support this hoarding strategy. Blue chips at the top of the cryptocurrency market have risen in value over the past week. El Salvador began buying BTC in September 2021, just after it became legal tender. At the time, BTC was in the middle of a bull market, and every purchase made by the small state looked profitable as the price reached a new all-time high each week. However, with the onset of the bear market in the second quarter of 2022, El Salvador's early BTC purchases began to look like a gamble that resulted in large losses.

Genesis Global suspends withdrawals
Cryptocurrency exchange Genesis stopped withdrawing funds from its credit division and blamed the recent collapse of the FTX exchange for causing a surge in withdrawal requests.This led to an excess of liquidity for lenders. Genesis became the latest cryptocurrency company involved in market turmoil. Genesis said on Twitter that the sudden collapse of FTX last week "caused unprecedented market turmoil, leading to abnormal withdrawal requests" that exceeded Genesis' liquidity. As a result, Genesis said it has temporarily suspended payments and new loans in its Genesis Global Capital lending business, which had about $2.8 billion in loans at the end of last quarter. The firm did not name a timeline for the suspension, but said it plans to "present a plan" for the future of its lending business next week.

Vitalik proposed a technology to check the reserves of crypto exchanges
Ethereum co-founder Vitalik Buterin published an article on his blog regarding technology suitable for verifying crypto exchanges' reserves. Buterin described the limitations of the current methods that CEX uses to demonstrate its transparency and suggested ways to improve them, explaining in detail what Proof of Reserves is. Vitalik believes that the ZK-SNARKS technology will help in proving the solvency of the exchange. It is better than Merkle's Trees, which exchanges use today. The earliest attempts by exchanges to try to cryptographically prove that they are not cheating their users go way back. In 2011, MtGox, the largest bitcoin exchange at the time, proved that they had funds by sending a transaction of 424242 BTC to a pre-announced address.

This overview was prepared by the analytics department of the Biqutex, an innovative crypto derivatives exchange. Trade an extended list of instruments (Perpetuals Swaps, Futures, Options, Calendar Spreads etc.) with up to 125x leverage and deep liquidity!

Special Research: FTX Game Over

Biqutex Research — Mon, 21 Nov 2022 18:02:11 GMT

Interlude

2022 was a difficult and challenging year, not only for crypto-enthusiasts, but also for the global economy as a whole. Post-pandemic problems with logistics, inflation, and the balance of payments of developed countries were greatly complicated by military conflicts in Europe, political uncertainty in the US and China, and constant tension around Taiwan.

The cycle of rising rates in the U.S. debt market, which began in the spring, led to reduced liquidity in the cryptocurrency ecosystem and lower prices for risky assets. The situation was exacerbated by the collapse of the LUNA blockchain and the wiping of 40 billion in capitalization from the market within one week. The subsequent bankruptcies of major crypto brokers 3 Arrows Capital and CeFi liquidity aggregators Celsius/Voyager seemed to be the peak of trouble in the market. However, in the fall, investors and traders faced a “black swan” of a much larger scale – the bankruptcy of one of the largest crypto exchanges, a top-3 venture capital fund, and over 5m ruined clients.

Introduction

Nothing foretold trouble when on November 2 the news portal Coindesk published a news item devoted to the balance sheet of the Alameda Research venture capital fund and also affecting the FTX exchange. The report concerned assets as of the end of the 2nd quarter 2022. FTX tokens accounted for more than 40% of its 14.9 billion in assets, with the fund's liabilities in other cryptocurrencies (like stablecoins, Bitcoin or Ether) given the limited liquidity of the token, the assets were clearly not enough to cover it.
The publication triggered a lot of concerned comments from market participants on social media. Subsequently, Twitter became the main arena for the exchange of information, opinions and rumors. On November 6, the head of the rival exchange Binance posted there an official statement about the intention to sell all FTT tokens that were on the company's balance sheet at the market price. The justification for this decision cited doubts about the capital adequacy of FTX and Alameda. Alameda Reserch's reply offer to redeem the tokens at a price of $22 as part of the OTC transaction was not accepted, which led to the outbreak of panic and mass withdrawal requests from FTX users.

As further events showed, their worries were not in vain. Only four days passed and the withdrawal was halted. Before that, Sam Bankman-Fried, the head of FTX, had approached Changpeng Zhao, the head of Binance, with an offer to buy his exchange or enter the capital. However, as a quick check of the exchange's fortunes showed, even Binance did not have the financial capacity to close the capital hole.

As a result, the exchange filed for bankruptcy and capital protection from creditors in the U.S. District Court for the Southern District of New York on November 11.

State of the FTX balances

In general, if you look at the asset dynamics within the on-chain analysis (according to Glassnode), FTX hot wallets have rarely held more than a few billion USD.

Comparing balances of the market leader - Binance exchange and the third largest by turnover and capital size (till November) exchange FTX, you can see how the dynamics of funds movement differs from time to time. The fall of the crypto market in May and June had almost no effect on Binance, while for FTX it was important, which led to irreparable reduction of reserves. Whereas at the peak of April-May FTX had 139 000 BTC and 850 000 Ether (for comparison at Binance these figures were equal to amounts of 562 000 and 4 300 000 respectively), already in July the values were at 60 000 BTC and 560 000 for Ether (at Binance - 625 000 and 4 000 000 accordingly). And after a small influx on Ether, the balances continued to fall until they almost completely melted at the beginning of November.
So how is it that one of the industry's flagships collapsed completely and unexpectedly to the external observer?

Details from the court sessions.

Most of the information at first came to the community from the publications of the business press - Reuters, Bloomberg, Coindesk and WallStreetJournal. In general, all major publications focused on the coverage of this topic. However, most of the publications did not name the sources and the information was difficult to verify. Thus, details surfaced about the purchase of expensive real estate in the Bahamas, where the FTX headquarters is registered, for FTT tokens and cryptocurrency from the balance sheets of the exchange to the personal accounts of employees. There was also information about vulnerabilities in the exchange engine and the use of customer funds and internal accounts of the exchange in violation of regulations and without following control procedures. After the bankruptcy filing, more verified information began to emerge, and most of the rumors were indeed confirmed.

And, here's how it was.

As part of the bankruptcy proceedings, the new CEO John Ray III, known for his involvement in numerous similar proceedings in the U.S., reported many interesting details under oath.

FTX's total preliminary balance sheet currently consists of 8.9 billion in liabilities to customers and creditors and about 11 billion in assets, only 900 million of which are in liquid form. The rest of the funds are in the form of poorly liquid tokens from various crypto projects (including the FTT token, the exchange's internal token, with which the entire sale was announced). The exact amount of funds by asset and liability has yet to be clarified - FTX as a global company consisted of many companies across multiple jurisdictions. At least 134 companies appear in the bankruptcy filing.

How did it happen that instead of assets in the liquid form of BTC, Ether or Stablecoins, there were so many unsecured and objectively garbage tokens on the balance sheet? The fact is that Alameda Research Venture Company and FTX Exchange had one controlling owner, the head of the exchange, Sam Bankman-Fried. So when Alameda ran into liquidity problems in the summer of 2022, more than $4 billion in liquid assets were transferred from the exchange's balance sheet as collateral for the FTT tokens. These funds did not belong to the exchange itself, but to its creditors and customers.

This was not an isolated incident. As Nansen.ai's research showed, the FTT token was regularly used by Alameda to take virtually unsecured loans from the exchange in liquid assets in the form of BTC, Ether, and stablеcoins. By controlling token supply and market liquidity, FTX and Alameda manipulated the price to increase the value of the FTT token and used it to borrow. And while Alameda borrowed from FTX, the exchange itself borrowed funds from other companies, such as Celsius and Genesis (the trading arm of DCG, an industry leader that, among others, owns bitcoin's largest corporate owner, the Grayscale Trust).

Biqutex Exchange

Biqutex is an innovative crypto derivatives exchange. Trade an extended list of instruments (Perpetuals Swaps, Futures, Options, Calendar Spreads etc.) with up to 125x leverage and deep liquidity!

Consequences

At the moment, it is difficult to make a final conclusion about the size of losses and the future of the FTX exchange. The hole in the balance sheet, the deception of investors and customers is the subject of future litigation.
However, it is already possible to summarize the intermediate results:

What began as a hostile takeover and merger attempt – when Binance publicly opposed FTX – went far beyond the boundaries of the two companies;
A lot of big traders lost their funds, including global crypto market makers;
The FTX investment of $1.8 billion that the company has raised in recent years has been written off as "0" by most investors;
The crypto industry has tried to add more transparency to centralized exchanges by conducting a series of publications of its reserves and wallets with the help of Binance;
However, without commitment, this information remains less useful, and encourages users to use DeFi applications - lending, exchanging, trading, and issuing stablecoins;
The BNB Chain ecosystem was the first to feel the impact in the form of user and liquidity inflows. Another beneficiary was the Ethereum ecosystem, in particular the Uniswap decentralized exchange and dydx and GMX derivatives trading platforms;

The Solana ecosystem, in which both Alameda and FTX actively invested, became the main victim - the volume of liquidity has now fallen to 200 million, dropping from the highs of a month ago by 7 times. The future prospects for blockchain (and the SOL token) are murky.
The outflow of stablecoins from the crypto segment is relatively small - about 2% (3 billion USD), indicating that the negative effect on the entire market is limited;
The amount of liquidity in trading decreased by about 30% in the first days after the FTX collapse in the spot and futures market, and has stabilized at the moment.

A separate question is what fate awaits the projects in the Alameda Research and FTX Ventures portfolios. Some tokens from investments are in a blocked state, and the blocking time reaches several years. That said, we should keep in mind that some projects where there are company investments have been built into the work of the MTF exchange, such as the token of the decentralized CLOB aggregator Serum (SRM). Without the exchange, much of the functionality of the product, in which other companies have invested, is lost. How co-investors, Alameda and FTX Ventures will behave with tokens from such projects is an open question.

The collapse of the exchange was a strong reason for regulators in all countries to pay more attention to the regulation of cryptocurrency exchanges and the creation of legislation to protect the rights of investors and traders. Such loud and epochal collapses of crypto companies have happened before, but the cryptocurrency industry has always recovered and continued its development. We assume that also this time the negativity will be surmounted and forgotten after some time.

This research was prepared by the analytics department of the Biqutex, an innovative crypto derivatives exchange. Trade an extended list of instruments (Perpetuals Swaps, Futures, Options, Calendar Spreads etc.) with up to 125x leverage and deep liquidity!