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2023-02-22 19:39:08 Educational Post:

The Tulip Mania Bubble

The Tulip Mania took place in the Netherlands, during the Dutch Golden Age. The country had the highest global per capita income at that time, thanks to its growing international commerce and extensive trading operations.
The economic boom helped many people achieve wealth and prosperity, which in turn drove the market for luxury goods. In this context, one of the most coveted items were tulips, particularly those that had a mutation to make them even more stunning than the typical flowers. These unique flowers were much different from the other options available, so everyone wanted to show them off due to their unusual colors and patterns.

Depending on the variety, the price of a single flower could easily exceed the income of a skilled worker or even the price of a house. The creation of futures contracts pushed the prices even higher as the flowers didn’t have to physically change hands. It’s said that the bubonic plague also had an impact on the market because people were more inclined to take investment risks.
But with more and more farmers growing the flowers, the supply eventually got too high, and the tulip market found its peak in February of 1637. There was a sudden lack of buyers, and after a failed tulip auction in Harlem, fear and panic spread very quickly, causing the bubble to burst in a just a few days.

Historians aren't sure whether any bankruptcies actually occurred due to Tulip Mania, as financial records are hard to come by from that period, but the crash certainly caused significant losses to investors that were holding tulip contracts. But what does it have to do with Bitcoin?

Tulip Mania vs. Bitcoin

The Tulip Mania is considered by many as a prime example of a bursting bubble. The popular narrative describes an episode of greediness and hype that drove the price of tulips far beyond reasonable levels. While savvy people started to get out early, the late ones were panic selling after the free fall started, causing many investors and service providers to lose a lot of money.

It is quite common to hear that Bitcoin is another example of a financial bubble. But, connecting the Tulip Mania with Bitcoin fails to account their different asset classes and market circumstances. Our current financial environment is completely different and with far more players than the tulip markets of the 17th century. Moreover, the cryptocurrency markets are quite distinct from the traditional markets.

Main differences

One of the biggest differences between tulips and Bitcoins is the potential to act as a store of value. The tulips had a limited lifespan, and it was almost impossible to tell the exact variety or appearance the flower would have just by looking at the bulb alone. Merchants would have to plant it and hope that they got the exact type that they invested in, especially if they paid for one of the rare colors. Other than that, if they wanted to transfer tulips, they needed a way to safely ship them to their destination with all of the associated costs. Tulips were also unsuitable for payments because it was not possible to divide them into smaller parts, as that would most likely kill the plants. In addition, flowers could be easily stolen from fields or out of a market stall, making them harder to protect.

In contrast, Bitcoin is digital and can be transferred within a global peer-to-peer network. It is a digital currency that is secured by cryptographic techniques, making it highly resistant to frauds. Bitcoin cannot be copied or destroyed and can be easily divided into multiple smaller units. Furthermore, it is relatively scarce, with a limited supply fixed at a maximum of 21 million units. It is true that the digital world of cryptocurrencies presents some risks, but following general security principles will likely keep your funds safe. Open / Comment

2023-02-22 19:39:08 Educational Post:

What Is Etherscan and How to Use It?

Etherscan is a blockchain explorer for the Ethereum network. The website allows you to search through transactions, blocks, wallet addresses, smart contracts, and other on-chain data. It's one of the most popular Ethereum blockchain explorers and is free to use.

Using Etherscan can help you understand exactly how you interact with the blockchain, other wallets, and DApps. This knowledge can also help you stay safe and spot suspicious behavior.

To use Etherscan, you'll need a wallet address, transaction ID (TXID), contract address, or another identifier to paste into the search field. The information you'll see will depend on what you're looking at, but most of it will include associated transactions, addresses, timestamps, and amounts.

You can also interact directly with smart contracts to make transactions, check gas fees, and search for airdrops through Etherscan.

Why should I use Etherscan?

Etherscan is one of the most trusted and popular block explorers for Ethereum. However, it’s more important to understand why you should use a block explorer like Etherscan to check on-chain information. Having more knowledge of how you interact with the blockchain can help you better understand what's going on with DApps and transactions. This knowledge can also keep you safe and help you spot suspicious blockchain activity.

For example, whale alerts let you know if large amounts of a cryptocurrency have been moved onto an exchange. While not always the case, this information might suggest a large sell-off. You can also see what the founders of a project are doing with their project's tokens. This can help you spot potential scams or rug pulls, where developers abandon their projects and sell their coins. Open / Comment

2022-11-27 19:30:12 Bullish Hidden Divergence Ⅱ
- This classical bullish reversal-formation marks out the potential stopping of the downtrend with two lows building the baseline of a potential double-bottom while the MACD is establishing this lower low structure it is the proper further confirmational part to develop a sufficient bullish reversal which will finally take place when the price-action breaks out above the upper neckline of the double-bottom to complete it and show up with further continuations to the upside.
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Bearish Hidden Divergence Ⅲ
- When the price-action forms lower highs that do not maintain new higher highs in an uptrend it is always a sign that the uptrend is struggling and that it is likely to reverse together then with the higher highs divergence in the MACD to form the final bearish reversal has a high possibility to emerge which will validate when price-action moves below the previous lows in the uptrend and continues to the south.

Bullish Hidden Divergence Ⅲ
- With this form the uptrend and the higher highs structure that developed in the price-action have a tendency to reverse as the MACD forms the lower lows in the structure signaling that the MACD is already doing the markdown that follows also in the price-action. In this case the final confirmation will take place with a breakout below the established ascending trend-line after which a bearish continuation will likely follow up.
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Therefore moving through all these important different forms the MACD can be a substantial indicator for spotting reversals in the structure when done right. It is always necessary to maintain the objection to the current situation and further technical factors to apply the MACD-divergences rightly. Open / Comment

2022-11-27 19:30:12 Bearish Regular Divergence Ⅱ
- This is a very interesting divergence as it combines the classical price-action formation double-top with the lower highs forming in the MACD . A confirmed double top alone can also be a strong signal for a reversal nevertheless with the additional MACD making lower lows this can add to the main bearish reversal coming in and accelerating it. A valid confirmation will take place when the price-action regularly confirms the double-top with the neckline breakout to the downside.

Bullish Regular Divergence Ⅱ
- Here is another divergence in which the price-action forms a reliable reversal-formation, in this case, a double-bottom which also can alone be the decisive factor for the final reversal, together then with the higher lows forming in the MACD it is a strong signal to reversing the trend into the bullish direction and similarly to the Bearish Regular Divergence Ⅱ it finally confirms with the neckline breakout by the established double-bottom with proper volume to the upside.

Bearish Regular Divergence Ⅲ
- This divergence has a good and appropriate application in the market formations to form. In this divergence, the price-actions form higher highs while the MACD forms lower lows signaling a bearish reversal to take place. A good confirmation occurs when the price-action closes below the lastly established lows and after that continues also further to form further bearish continuations, it can be a good point to spot the final reversal when the MACD looks like it develops the next lower high.

Bullish Regular Divergence Ⅲ
- This is the exact counterpart of the Bearish Regular Divergence Ⅲ while the price-action forms lower lows in the structure the MACD develops higher highs showing this given divergence and likely to indicate the bullish reversal to take place sooner or later. Additionally, a falling volume and momentum in the actual price-action will lead to more increased validations followed by an upcoming rise in volatility above previously lower highs, these structures and developments are always also important.
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Hidden MACD Divergences:

Bearish Hidden Divergence Ⅰ
- This divergence is actually the counterpart to the Bearish Regular Divergence Ⅰ and in this case, the MACD also forms a double top in the structure however unlikely as in the Bearish Regular Divergence Ⅰ in this case the price-action forms lower highs in the structure showing the exceptional weakness of the bulls as the price-action does not manages to maintain further higher highs, this is why the formation is finally likely to confirm bearishly to the downside and the reversal took place.

Bearish Hidden Divergence Ⅰ
- In this divergence the MACD forms a double-bottom with both lows forming a lower baseline in the MACD-histogram structure while the price-action forms higher lows which is very important here as such a constellation is normally defined as bullish with the possibility to reverse, the double-bottom in the MACD then confirms the further bullishness to establish and likely bullish volatility to show up in the structure, the requirement is that the established uptrend-line does not invalidate to the downside.

Bearish Hidden Divergence Ⅱ
- The next divergence is forming a classical reversal-development with the formation of a double-top in the price-action as the two highs form a horizontal baseline where the price-action rejects while the MACD is developing higher highs in the structure. In this case, the final confirmation sets place when the price-action breaks out below the neckline of the double-top in the structure which is the set-up for the further continuations bearishly to the downside, the best is to wait on the final confirmation before considering moving into. Open / Comment

2022-11-27 19:30:12 Classical MACD Crossover
- The Classical MACD Crossover comes up when the MACD-line crosses the signal-line either from the upside to the downside or from the downside to the upside. Both versions can indicate a reversal into the direction the MACD-line crossed the signal-line however the timeframe and structure is important here. When this crossover happens on the lower timeframes below 6-hours it can happen that there are many fake signals with several crossovers behind each other while the price-action is actually trending into one direction. The higher timeframes such as the daily are therefore the best to apply this regular classical MACD crossover.

Classical MACD Histogram Divergence
- This divergence occurs when the histogram has formed a new high together with the price-action, for example, the histogram forms the new high at 0.3 in the MACD-histogram then the price-action moves further and forms a higher high exceeding the previous one however the MACD-histogram does not do a higher high also while staying below the 0.3 level. This indicates that the market is likely to reverse into the other direction because the histogram does not correspond with the actual price-action and therefore forms a divergence. This can be applied in the reverse direction as well and a good combination would be to look also at the volume or overbought and oversold conditions.

Histogram Divergence Fakeout
- In this case, it is the crucial part of the histogram divergence. The price-action and MACD fulfilled the initial requirements for a classical MACD histogram divergence and the price-action should markdown after forming the final high and the divergence, however in this case it does not happen instead the price-action moves lower a little bit signaling the possible normal development after this signal and then moves up again exceeding the previous high and stopping out traders who may have entered the market because of the divergence, after that the price-action can markdown finally and move lower, therefore it is necessary to look at the price-action also and see if the market is really ready to markdown after the signal.

Bearish Regular Divergence Ⅰ
- The Bearish Regular Divergence Ⅰ is a divergence in the price-action that marks two important confirmations including this a technical confirmation in the MACD normally seen in price-action. In this divergence, the price-action marks consecutive higher highs while the MACD forms a double-top with the rejection at the upper baseline confirming the double-top. This divergence is likely to reverse the previously established bullish trend to the downside and continue with bearish determinations. It is important to watch out for fakeouts before potentially entering and when this possibility is low it can be a good entry.

Bullish Regular Divergence Ⅰ
- This is the counterpart to the Bearish Regular Divergence Ⅰ. In this case the price-action marks lower lows in the structure in the best case also with falling volume and momentum while the MACD makes a double-bottom which is a good sign when both form that the price will likely reverse into the bullish direction. A trendline breakout of the previous established lower highs in the downtrend can also add additional confirmation to the final bullish reversal. Open / Comment

2022-11-27 19:30:12 The MACD is an indicator developed in 1986 and since then established as a primary indicator in the oscillator types besides the RSI or stochastic . The indicator mainly has the function of spotting reversals and potential entry points into the market to catch the appropriate values and upcoming reversal developments. Although the indicator can be used as a single signal for market action only it is best combined with other technical analysis aspects such as candlesticks or volume . The main timeframe to apply the indicator should be the daily timeframe , it can be also applied to higher timeframes such as the weekly to assess broader trends. The indicator can also be applied on lower timeframes such as the 4-hour or hourly however in this case the fake signals getting higher.

The MACD consists of 3 main elements, the first is the MACD-Line marked in my chart in orange which is calculated by the 12-day EMA (Exponential-Moving-Average) minus the 26-day EMA . The second element is the signal-line which is a 9-day EMA . Further comes the histogram which measures the distance from the MACD-Line to the signal line and the histogram is positive when the MACD-Line is above the signal-line as well as negative when it is below. The main signal happens when the MACD-Line crosses the signal-line when it crosses from the downside to the upside this is typically seen before a bullish reversal takes place and the same in reverse with the MACD-Line crossing the signal-line down when a bearish reversal takes place, in both cases also the histogram changes from positive to negative or negative to positive.

In any case, it is always necessary to combine the MACD with the current price-action happening as in this case comes the interesting part with the divergences happening that can lead to dedicated signals. These divergences happen when there is a discrepancy between MACD and the actual price-action happening indicating a potential change in direction of actual price-action as the MACD shows up with these signs. In any case, it is unavoidable to consider the price-action together with the MACD as otherwise, it can lead to catching a fake-out and getting stopped out of the position what should be avoided in trading. The MACD also does not typically spot overbought or oversold conditions as it is an indicator consisting of EMAs it represents the previously developed price-actions in relation to the ongoing and upcoming price-actions.
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Regular MACD Divergences: Open / Comment

2022-11-15 05:22:34 https://www.tradingview.com/watchlists/68053125/ Open / Comment

2022-11-14 02:14:22 https://www.trailingcrypto.com/ Open / Comment

2022-11-14 01:09:45 #educational_post Open / Comment