Glossary: All Cryptocurrency Terms to Know (Part 2)
Cryptocurrency market just like the stock and forex markets have its trading terms that traders use daily. New traders can sometimes be confused by these terms as some are unique to the crypto world. In this blog post, we define all the trading terms you need to know to get used to the crypto market.
Previous: General Terms
All-Time High (ATH) refers to the highest price of cryptocurrency on an exchange in reference to another particular currency. For example, Bitcoin’s ATH is $19,783.06 which was reached on 17th December 2017. This ATH, however, varies since it depends on which exchange you are referencing.
Arbitrage is the process of buying crypto on one exchange and selling it at another exchange where the price is higher.
Bagholder is an informal term used to refer to someone who buys crypto at a high price and keeps holding it as its value decreases, hoping the price would come back up and they can sell.
Bear/Bearish market refers to a market situation where traders are more likely to sell than buy. This causes the prices in the market to decline steadily from a recent high over a period of time.
Bull/Bullish market is the opposite of a bear market. It is the upward movement in the prices of a market over a relatively short period of time.
Buy Limit Order
Buy limit order is an order to buy a crypto asset at or below a certain price. This is a way to control the amount you pay to purchase a cryptocurrency.
Buy Wall is used to refer to multiple large buy orders at the same price or a single buy order that is very large enough to form a kind of “wall” in the order book. A buy wall is commonly placed by a whale in an attempt to prevent the market price of a cryptocurrency from dropping.
Candlestick Chart is a kind of time-series chart that shows the open, high, low and close price of an asset within a set period. It is used by traders for Technical Analysis.
Confirmation refers to the number of blocks that have been added to the blockchain since a transaction was made. When a transaction is made, before a block is added, the transaction will be unconfirmed. Once a block is created and the transaction is included, the transaction gets a confirmation. The more blocks are added from then, the higher the confirmations the transaction gets and the more secured it is and the more difficult it is for the transaction to be reversed.
Contract Address is usually used in reference to Ethereum as the address where your cryptocurrency is stored. This is because the Ethereum network uses Smart Contracts to execute transactions. It is similar to the Wallet Address.
Dip refers to a drop in the market price of a crypto asset.
Fundamental Analysis (FA) is a market strategy that focuses on gathering as much qualitative information about a particular market as possible. This involves delving deeper into factors such as the reputation of the company, the industry health, market capitalisation, economic factors and other factors that might have influenced major events in the market and the reactions of key players. This is in an effort to determine the actual value of a crypto asset.
Going long refers to a strategy where you buy a crypto asset and hold it while you wait for the price to increase so you can make a profit.
Going short is when a trader believes the price of a crypto asset will fall, so they “borrow” the cryptocurrency and sell at the current market price. The trader then buys back the cryptocurrency when the price drops thus making a profit.
Limit Order is a market order to buy or sell a cryptocurrency at a particular price. See Buy Limit Orderand Sell Limit Order.
Margin Trading in cryptocurrency is when you “borrow” crypto assets from other traders or a cryptocurrency exchange to trade and they earn an interest in exchange. The provided asset is referred to as margin funds. This is similar to Gamblers betting with someone else’s money.
Market cap, short for market capitalisation, is used to measure the relative size of a cryptocurrency. It is calculated by multiplying the current price of the cryptocurrency by the total number of its coins currently in circulation.
Market Order is any order on a cryptocurrency exchange to buy or sell an asset.
Moon (Mooning) is a term used to describe a cryptocurrency whose price is on a continuous upward movement.This is in reference to the term “To The Moon!”.
Moving Average (MA) is a Technical Analysis tool that shows the movement in the market price of a crypto asset. The moving average could be moving upwards or downwards; each sends strong signals to traders about the market.
Over The Counter
Over The Counter trading refers to a crypto transaction that happens directly between two parties at a mutually agreed price. This is in contrast to an exchange where buyers state the price they are willing to buy an asset at (bid) while sellers state the price they are willing to sell at (ask) and an overlap in a bid and ask ends in a match which closes the trade.
Pump and Dump
Pump and Dump (P&D) is a ploy by some traders where they inflate the price of a cryptocurrency they own by making misleading statements so they can sell that crypto at a higher price. Literally, they pump the price and then dump the coin. Whales, or holders of large amounts of cryptocurrency, are also able to create the environment to pump and dump, by artificially inflating demand.
Sell Limit Order
Sell limit order is an order to sell a crypto asset at or above a certain price. This is to ensure that if the price of an asset reaches a particular price, they can sell the crypto at that price and make a profit before the price goes down.
Sell Wall refers to a huge sell limit order made by a whale or a composition of several large sell orders by many traders at the same price. A sell wall is usually created to form a “wall” in the order book that makes sure the order is fulfilled in an attempt to prevent the market price of a cryptocurrency from rising above a particular level.
Sat, short for Satoshi, is the basic unit of Bitcoin. It is a fraction of one-thousandth of a Bitcoin.
Shitcoin is a term that refers to a cryptocurrency with little or no value, where the project and its coin are of limited utilitarian value, are not supported by a strong technical team, and are designed purely as cynical money-making schemes.
Spoofing is the process of creating false orders or making unusual market moves by a trader or a group of traders with substantial market influence in an attempt to influence the price of a cryptocurrency in their favour.
Stablecoin is a cryptocurrency that is designed to have a stable market price. This is usually done by pegging the market value of the crypto to an external asset so as to minimize the volatility of the price. Common Stablecoins utilise the US Dollar to maintain a stable currency-pegged price.
Technical Analysis (TA) involves trying to predict the future price of a cryptocurrency by using past statistics such as volume and movement.
Volatility simply refers to the level of uncertainty of a crypto asset’s value. That means, how quickly and how much the price changes.
Whale is used to refer to an individual or entity that holds an amount of bitcoin that is large enough to give them the potential to influence the market value of the cryptocurrency.