Tether (USDT) is a cryptocurrency algorithmic stablecoin that is pegged to the US dollar. It is completely backed by Tether’s reserves. Owing to its nature as a stablecoin, it pursues a steady valuation. Coins like USDT are usually held by investors who wish to avoid the volatility of the cryptocurrency trading market. It is the largest cryptocurrency after Bitcoin and Ethereum and is the largest stablecoin in the market.
A while ago, Tether's price had briefly fallen to 0.96 US dollars, but shortly after, its value went up to 0.99 US dollars and eventually reached the one US dollar peg again.
BUS
BUSD is a cryptographic algorithmic stablecoin that is backed by a fiat currency and is soft pegged to the US dollar. It is a stablecoin that is issued in partnership with Binance and is founded by Paxos.
The reason behind UST fall while USDT & BUSD is maintained?
Terra (UST) was also a cryptographic algorithmic stablecoin that was soft pegged to the US dollar until May of 2022 when its price fell and it lost its peg to the fiat currency. Terra (UST) along with its sister coin LUNA, both lost their valuation exponentially. This eventually brought the whole market down. The circulation became low and the cryptocurrency market faced losses of up to millions. Many investors were affected negatively due to this crash. Large crypto companies such as Bitcoin and Binance also took a hit. The crash truly devastated everyone.
The Terra crash was so severe that not only did it bring itself down, but also brought down the largest crypto coins such as Bitcoin and Ethereum, which eventually led to the whole market crashing and caused a grave loss to more than thousands of investors.
Tether (USDT) and BUSD were two such coins that did not lose their peg (valuation) to the US dollar even when Terra (UST) lost its value very quickly. These coins remain on par with the value of the US dollar. What is the reason behind the UST fall while USDT & BUSD is maintained?
When UST and LUNA fell, many experts predicted that other stablecoins are sure to be affected due to this fall in the market. The market will be gravely hurt and stablecoins will lose their meaning and value. But, USDT and BUSD retained their value. But why is it so?
Pablo Arduino, the CTO of Tether claimed that despite the market crash, it was possible to maintain USDT's value at 1 US dollar because it was made possible by the assets backing the stablecoin up. He also stated that in the 24 hours that followed the crash, tether was able to redeem 300 US dollars. Arduino's statements were quite confident and powerful. This gives us reason to believe that Teacher will continue to do so shortly. He was also quick to state that Tether will never refuse redemptions to any of their customers (the only requirement is that they be verified.). This practice has been implemented until now and will also be implemented in the future. He also added that Tether already had another 1 billion US dollars ready for redemption.
BUSD is regulated and audited. It is 100 percent backed by US dollars. Since BUSD is backed by the US government, it can be said that it is the most secure stablecoin.
The main reason behind the UST fall while USDT & BUSD is maintained is that both of these crypto coins were backed by stable assets which gave them the certainty of not crashing and retaining their peg.
As a crypto investor, chart analysis is the foremost and essential skill to acquire. To cultivate an impressive crypto portfolio and financial transactions, one should interpret the outcomes of the chart with derivative strategies and methods. So, for beginner investors, it's important to analyze a cryptocurrency chart properly to gain effective estimations and stakes.
What are Cryptocurrency charts?
The Crypto chart's purpose is to make better investment decisions when dealing with cryptos through the interpretation and analysis of current evaluations of price, volumes, and time intervals with graphical interpretations.
The formation of a crypto chart aligns with the past evaluation/price regulations of the cryptocurrencies and can be used in scouring effective opportunities for investment.
To analyze a crypto chart, the most general one is the candlestick chart. The red bar/candle you see represents a lower closing price in contrast to the starting price while a green bar/candle represents a higher closing price in contrast to the starting price, both given in a specified time frame. The former red candle indicates that the price of the asset has declined while the latter indicates the asset price has inclined.
Pre-requisite charts elements you should know
Body: Represents the open/close range
Wick: the shadow represents the intra-day high and low
Colour: represents the direction of market pattern =, green/white indicates price increase, while red/black indicates price decrease.
The bars/candles vary in size, shape, color, and form magnitude of differential patterns. With the record of these patterns, crypto traders strategize their crypto trading.
Types of Crypto Chart Patterns
Bullish Pattern
The bullish pattern from the aftermarket downtrend indicates price reversal, ultimately singing for traders to open a long position to benefit from any upward trajectory.
Example: Hammer Candle Pattern
The pattern indicates the stock's nearing downtrend at the bottom, and the bar/candle's body is short which indicates the seller is negotiating low prices in a given trading session which would end with a session on high race with buying pressure.
Bearish Pattern
They form after a market uptrend and indicate a point of resistance. Due to negative perception, traders would close their long position and instead open a short one to benefit from the falling price.
Example: Hanging Man
The equivalent of the hammer pattern is bearish, it has the difference of forming at then ed on an uptrend. Indicating, a significant sell-off but an elevation in price nonetheless. The large sell indicates the monopolistic asset losing market control.
Famous patterns for proper analysis
Wedges
The wedge pattern appears when the market trend starts to settle downwards and occurs in a breakout. Markets are often recorded to move sideways in order t wedge back and forth until they finally move in a firm direction.
Head and Shoulders
This pattern is a reversal pattern that might show up at a peak or bottom of a continuing trend =. If it's in the bottom, it is known as an inverted head and shoulders pattern. The patterns represent the conflict between traders and investors with push and pull.
What are the support and resistance levels?
When analyzing the final interpretations of the crypto chart, it's vital to be familiarised with support and resistance level. Support level refers to a price level in which the asset doesn't fall beneath a fixed period, while resistance level refers to the price at which the asset can't be expected to increase any higher.
Afternote
For beginner investors, it's essential to be familiarized with cryptocurrency charts
at the behest of investing in the currencies. The trading requires trading platforms that can help you determine patterns and indications for your financial advantages.
Price action trading is often considered one of the most difficult methods of trading while this might be true to some extent but we must also know that price action puts the fundamental pillars of technical analysis and provides one to find perfect entry and exit points without depending on the news or opinions of the experts.
Here is what to consider before taking a trade
Market structure
Market structure is the behavior of the price over a time frame which can go upside forming an uptrend market, downside forming a downtrend market and if the price decides to go neither of these directions and keep fluctuating in a price range or sometimes refer to as price bands is called a sideways market.
Support and Resistance
After observing the current scenario of a market, the price action is supposed to decide whether to go long (buy) or go short (sell) on a trade.
If the market seems to be going in an uptrend it'll be bringing buying opportunities, if the market is not in the favor of bulls then it'll pop up shorting opportunities.
The next key step is to look for support and resistance levels, i.e. the area of demand and supply or the buying and selling pressure zones.
Support is a level or a zone of value where buyers could enter the market and push the price to the new highs similarly, Resistance is the zone where shorters or sellers could enter and take the market downside.
Entering a trade
Technically, when a breakout happens then it brings an opportunity for the traders to enter and take control of the market, but one should not enter a trade right after a breakout.
Instead, wait for the price to sustain at that level after a breakout. If it's a breakout then buyers will look for the price to retest that previous level and if it's a breakdown the sellers will look for the price to retest that previous resistance level and if it follows a bearish trend then one should enter the trade.
Stop loss, a savior
Entering a trade is a good thing but managing one's risk could be a terrible experience as it holds the power to wipe out the whole account in very little time.
So, where to put a stop loss?
If one sees a breakout forming and it sustains the higher levels and they decide to enter that trade, the stop loss varies from trade to trade but in general, it is okay to put a stop-loss slightly below the previous swing low.
Higher Timeframe
So far so good but, is the trader aware of trends in a higher timeframe?
A trader needs to be well aware of the higher timeframes as they show the actual direction of a market in a long run, a direction where it is heading. So it becomes very important to check onto a higher timeframe before entering a trade or making a position.
Volume, another key component
Yes, volume is another key component of trade because if a breakout happens and the trader is looking for a buying opportunity but doesn't see any volume. At this point, the trader must not enter that particular trade because it could be a fake breakout that captures new buyers at higher levels. So make sure to have decent volume before entering that trade.
Exit level
This one is the final phase of the whole trade but it should as well be planned and calculated before entering the trade.
For those who are buying in a trade, they should target the previous resistance level or better slightly below that. Not putting the proper exit target could end up as losing all the profits made, try to put realistic exit points.
While trading in a market it becomes very critical for one to get to know the direction of the trend to make the accurate move to get desired results. Let me explain>>>
Why do we consider Price action as a Leading Indicator?
When someone enters the market they see a lot of charts and rapid changes in values of a currency or stock or commodity depending on the market it is, so they operate according to their expectation of upcoming events.
In other words, a person trying to profit from the market will try to predict the future of the trend and will go LONG or SHORT in their trades based on several different tools and indicators available in the platform they are using. For a price action trader, it is not important to utilize them as these indicators use data from past events.
Why is it easier to trade with price action?
Many of us might have been fed up with so many indicators and trading strategies and one of the biggest reasons for anyone to consider price action is their only trading strategy because it is going to simplify the whole process for us.
Trading seems to be very much complicated to many of us as it provides us with an enormous amount of data and hence making it all look so difficult while on the other hand if someone uses a price action-based strategy, this is going to affect their portfolio a lot in the green side.
With price action you just have to look at the charts and areas of value over there, once you’ve found it now wait for the price to come around it and when an opportunity pops us then one should enter a trade.
The Mightiest of all
One of the most powerful, simplest, and most effective trading strategies in the world is to trade with the movement of price and by marking key levels of support and resistance, In general, it is said to buy whenever price breaks over a resistance level which was tested a few times and to go short whenever the price breaks below support level which was tested in the past.
Price action signals with key levels define success
When you have a price action signal like a pin bar but you're not aware of key levels then that trading style might push you to the red zone easily, simply putting into words when you have a junction as such where you have a price action signal at a key level of support or resistance there is a huge winning potential in that trade.
A key Horizontal level can be used in any type of market if it is a bullish market, bearish market, or sideways. There are key levels that act as a magnet for the price as it attracts it before the price pushes away.
So, to what it all concludes?
The overall purpose of this whole article is to make sure one who reads this understands that everyone doesn't need to depend on indicators for their trades as they can have Price action in their arsenal, something that is going to show exactly what is happening in the market at this very moment and not like a 200 ema (exponential moving average) which utilizes a data from the previous 200 candles. If a trader only focuses on building their fundamentals strong around support and resistance then he is more likely to have a lot more winning trades than those who are based only on Indicators.
The LUNA crash in May 2022 was one of the most brutal cryptocurrency crashes ever. The crash entailed the crypto’s reserves to fall from 80,000 to 300. It left several investors shocked and many with a huge amount of losses. The crypto stablecoin tied to LUNA, UST, whose value was debugged when the crash took place, was once known as the most scalable stablecoin, but then it crashed. The crash not only took a hit on itself but also decreased the value of other crypto coins, (even Bitcoin and Ethereum) thus decreasing the value of the cryptocurrency market as a whole by almost 400 billion dollars.
Although LUNA is suffering right now, people still have hope that the cryptocurrency will make a comeback shortly and become profitable again as it once was. It will surely be long before we can see LUNA returned to its former glory. But what exactly are the possibilities of LUNA recovery shortly? Let's delve into it.
It is understandable, that at this point many investors are worried and have lost overall faith in LUNA. The promises of the LUNA developers have been falling on deaf ears. After suffering through a huge loss, they do wish that a speedy recovery takes place, but hardly any of them believes it.
What are the developers doing to increase the possibilities of LUNA recovery in near future?
The founder of the Terra network has addressed concerns that arose due to the LUNA crash in a very promising way. His plan involves strengthening the crypto and rebuilding its position.
The developers intend to increase the burn rate of the UST, thus, the initial parts of their plan involve huge amounts of Terra(USD) to be burnt. This is hoped to stabilize the coin’s value back at 1 US dollar and repeat it to the respective fiat currency (USD). This will be done by burning over 370 million UST tokens on the Ethereum blockchain.
The next part will require 240 million LUNA tokens to stabilize governance and keep control.
Currently, the entire blockchain has been completely halted, resulting in the freezing of any transactions. This was done to avoid investors from taking advantage of LUNA’s price and using this opportunity to buy up the cryptocurrency in huge amounts.
After the crash, many investors pulled their investments from this project for obvious reasons. After the above-mentioned step, the developers hope that the investors will come back by convincing them to stay on. For the aforementioned reasons, the investors are skeptical about returning as the crash has cost them losses of millions. Before the crash, it was a known fact that LUNA was doing exemplarily great in the cryptocurrency market. It was known to be one of the best-performing crypto projects in recent years. Had it not been for UST, Terra Luna would have still been one of the best-performing crypto coins. Therefore, it is up to the developers to show this to the investors and persuade them into staying on the project.
The developers would also need to address the issue of LUNA’s relationship with UST. The developers need to make and do good on the promise that such a fall (and then eventually, crash) will never happen again.
Getting back the investors is the key method of getting LUNA to recover. Should the investors be convinced enough to invest in the project, LUNA is sure to reach its recovery point, raising the possibilities of LUNA's recovery in the near future.
