CCE Cryptocurrency Trading & Investment 3

Question 1

What is the Relative Strength Index (RSI) primarily used to identify?

Accepted Answer

Overbought or oversold conditions in a market

Answer

RSI is a momentum oscillator that ranges from 0 to 100; readings above 70 suggest overbought conditions and below 30 suggest oversold conditions.

Question 2

Which risk management concept describes spreading investment across multiple uncorrelated crypto assets?

Accepted Answer

Diversification

Answer

Diversification reduces unsystematic risk by allocating capital across assets whose prices do not move in perfect correlation.

Question 3

What is 'funding rate' in perpetual futures contracts?

Accepted Answer

A periodic payment between long and short traders to keep contract price near spot

Answer

Funding rates are periodic payments exchanged between long and short holders of perpetual contracts to anchor the contract price to the underlying spot price.

Question 4

Which chart pattern is characterized by two peaks at roughly the same price level separated by a trough?

Accepted Answer

Double top

Answer

A double top is a bearish reversal pattern featuring two consecutive peaks at similar highs, suggesting the asset is failing to break above resistance.

Question 5

In cryptocurrency portfolio management, what does 'rebalancing' accomplish?

Accepted Answer

Restoring target asset weightings after price movements shift allocations

Answer

Rebalancing involves selling outperforming assets and buying underperforming ones to restore the portfolio to its original target allocation percentages.

(CCE) Certified Cryptocurrency Expert Practice Test

(CCE) Certified Cryptocurrency Expert Practice Test

CCE Cryptocurrency Trading & Investment 3