CCE Crypto Trading and Exchanges 5

Question 1

What is 'dollar-cost averaging' (DCA) in the context of crypto investing?

Accepted Answer

Buying a fixed dollar amount of crypto at regular intervals regardless of price

Answer

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.

Question 2

What is an 'aggregator' in the DEX ecosystem?

Accepted Answer

A tool that splits trades across multiple DEXs to find the best price and minimize slippage

Answer

DEX aggregators like 1inch route trades across multiple decentralized exchanges to optimize for the best execution price and lowest slippage.

Question 3

Which technical indicator is most commonly used to identify overbought or oversold conditions in crypto markets?

Accepted Answer

Relative Strength Index (RSI)

Answer

The RSI is a momentum oscillator ranging from 0 to 100, with readings above 70 indicating overbought conditions and below 30 indicating oversold conditions.

Question 4

What is 'crypto arbitrage'?

Accepted Answer

Profiting from the difference in an asset's price across different exchanges or markets

Answer

Arbitrage exploits price discrepancies for the same asset across different exchanges or between spot and futures markets to earn risk-free profit.

Question 5

What does 'proof of reserves' mean for a centralized crypto exchange?

Accepted Answer

Cryptographic verification that the exchange holds sufficient assets to cover all user balances

Answer

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.

(CCE) Certified Cryptocurrency Expert Practice Test

(CCE) Certified Cryptocurrency Expert Practice Test

CCE Crypto Trading and Exchanges 5