Crypto Trading and Exchanges Flashcards
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Read the first 7 Crypto Trading and Exchanges flashcards as text
What is 'dollar-cost averaging' (DCA) in the context of crypto investing?
Answer: Buying a fixed dollar amount of crypto at regular intervals regardless of price
DCA involves investing a fixed amount at regular intervals to reduce the impact of volatility, resulting in buying more when prices are low and less when prices are high.
What is an 'aggregator' in the DEX ecosystem?
Answer: A tool that splits trades across multiple DEXs to find the best price and minimize slippage
DEX aggregators like 1inch route trades across multiple decentralized exchanges to optimize for the best execution price and lowest slippage.
Which technical indicator is most commonly used to identify overbought or oversold conditions in crypto markets?
Answer: Relative Strength Index (RSI)
The RSI is a momentum oscillator ranging from 0 to 100, with readings above 70 indicating overbought conditions and below 30 indicating oversold conditions.
What is 'crypto arbitrage'?
Answer: Profiting from the difference in an asset's price across different exchanges or markets
Arbitrage exploits price discrepancies for the same asset across different exchanges or between spot and futures markets to earn risk-free profit.
What does 'proof of reserves' mean for a centralized crypto exchange?
Answer: Cryptographic verification that the exchange holds sufficient assets to cover all user balances
Proof of reserves uses cryptographic techniques (like Merkle trees) to allow users to verify that the exchange holds enough assets to back all customer deposits.
In the context of crypto trading, what is a 'whale'?
Answer: An entity holding a large enough amount of cryptocurrency to significantly influence its price
A whale is an individual or entity with such a large crypto holding that their buy or sell orders can noticeably move the market price.
What is a 'crypto OTC (Over-The-Counter) desk' primarily used for?
Answer: Executing large block trades privately without impacting the public market price
OTC desks facilitate large-volume trades between institutional clients directly and privately, avoiding the slippage and market impact of placing large orders on public exchanges.