Cryptocurrency Trading & Investment Flashcards
7 cards from real CCE practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Cryptocurrency Trading & Investment flashcards as text
What does the Sharpe ratio measure in a cryptocurrency portfolio?
Answer: Risk-adjusted return relative to a risk-free rate
The Sharpe ratio divides excess return over the risk-free rate by the standard deviation of returns, quantifying how much return is earned per unit of risk.
Which indicator combines price and volume to gauge buying or selling pressure?
Answer: On-Balance Volume (OBV)
OBV is a cumulative indicator that adds volume on up-days and subtracts volume on down-days, revealing whether volume is flowing into or out of an asset.
What is a 'wick' (or shadow) on a candlestick chart?
Answer: The thin line showing the high and low beyond the open/close range
The wick (shadow) extends above and below the candle body to represent the highest and lowest prices reached during the time period, outside the open/close range.
In options trading on crypto, what does an 'in-the-money' call option mean?
Answer: The underlying asset price is above the call option's strike price
A call option is in-the-money when the current market price of the underlying asset exceeds the option's strike price, giving it intrinsic value.
What does 'HODL' represent as an investment strategy?
Answer: Holding through volatility rather than actively trading
HODL (originally a misspelling of 'hold') describes the strategy of retaining cryptocurrency holdings long-term despite price volatility, avoiding short-term trading decisions.
Which on-chain metric tracks the ratio of coins that last moved at a profit versus a loss?
Answer: SOPR (Spent Output Profit Ratio)
SOPR measures whether coins being moved on-chain were last purchased at a profit or loss; values above 1 indicate coins are being sold in profit, a potential sell-pressure signal.
What is the significance of Bitcoin's halving event for traders and investors?
Answer: It reduces the block reward miners receive by 50%, decreasing new supply issuance
Every ~210,000 blocks, Bitcoin's block subsidy is cut in half, reducing the rate of new BTC issuance and historically acting as a supply shock that precedes bull cycles.