Market Analysis and Strategies Flashcards
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Read the first 7 Market Analysis and Strategies flashcards as text
What is the 'Mayer Multiple' and how is it used in Bitcoin market analysis?
Answer: The ratio of Bitcoin's current price to its 200-day moving average, used to identify overvalued or undervalued conditions
The Mayer Multiple divides Bitcoin's current price by its 200-day moving average; historically, readings above 2.4 have indicated overvalued conditions while readings below 1.0 have signaled undervaluation.
Which Elliott Wave principle component describes the three-wave corrective structure that follows an impulsive five-wave move?
Answer: ABC corrective pattern
In Elliott Wave Theory, after a five-wave impulse move, the market corrects in a three-wave ABC pattern, where waves A and C move against the trend and wave B retraces partially.
A crypto trader using the 'VWAP anchored to a major low' strategy is primarily trying to:
Answer: Calculate the average price at which an asset has traded since a significant turning point, to identify fair value and trend direction
Anchored VWAP calculates the average traded price weighted by volume from a specific starting point (such as a major low), providing a dynamic fair value reference that institutional traders often use.
What is 'basis' in cryptocurrency futures markets, and what does a positive basis (futures price above spot) indicate?
Answer: Basis is the difference between futures and spot prices; positive basis (contango) indicates bullish market expectations with futures trading at a premium
Basis equals the futures price minus the spot price; a positive basis (contango) reflects the market's expectation of higher future prices and includes carrying costs, indicating bullish sentiment.
Which market analysis approach examines blockchain data such as active addresses, transaction counts, and exchange inflows to evaluate crypto asset value?
Answer: On-chain analysis
On-chain analysis uses publicly available blockchain data — including active addresses, exchange flows, miner activity, and supply distribution — to derive insights about market participants' behavior and asset valuation.
In a crypto portfolio context, what does 'correlation risk' mean and why does it matter during market downturns?
Answer: The risk that assets believed to be diversifying actually move together during stress, reducing the protective benefit of diversification
Correlation risk refers to the tendency of cryptocurrency assets to move in the same direction simultaneously during market stress, undermining diversification and amplifying portfolio losses.
What is the primary goal of a 'mean reversion' trading strategy in cryptocurrency markets?
Answer: To profit from the tendency of prices to return to a historical average after extreme deviations
Mean reversion strategies assume that assets trading significantly above or below their historical average will revert toward that mean, prompting traders to sell overbought and buy oversold conditions.