This is a quick guide on the Mango Dashboard writen by Ajesh, a Seedling & an esteemed member of the Mango community. Ajesh is a seasoned trader who walks you through his process on how he utilizes the Mango Dashboard in score successful trades.
Introduction
I just wanted highlight how I have been using the dashboard in the last month or so, in the hope it will help somebody. The dashboard has a range of amazing features and can be used in many ways. Like many of you I have a full time job so do not have hours to search the charts. For the purpose of this write up I will be focusing on longs only.
Part of my daily routine
It is very tempting to go straight to the charts first thing in the morning. However, I like having a system/routine that I follow. So, the first thing I do is look at BTC on the dashboard (BTC is king). I then filter for longs only (in this juncture of the market), this keeps it simple for me. What the dashboard allows me to do is search hundreds of coins in just a few minutes and clicks – saving a huge amount of time. This then gives me a handful of charts to check out if I like the volatility profile.
Volatility profile
Colour
Volatility
Volatility Numbers
BLUE
LOW
1 - 40
AMBER
MEDIUM
41 - 60
RED
HIGH
61 - 100
Looking for a LONG Setup
The reason I like the profile on the right is that every timeframe is long and the volatility is super low (compression leads to expansion). To give me additional confidence we also have bullish ichimoku flags on the 12hr, 1d and 2d.
I look for the higher time frames to be long and the lower timeframes 4hr and 12hr to be neutral or long. In some cases the 4hr can even be short.
The reason I like the profile on the right is that every timeframe is long and the volatility is super low (compression leads to expansion). To give me additional confidence we also have bullish ichimoku flags on the 12hr, 1d and 2d.
This profile on the right would match the example of price action I was discussing. Where higher timeframes are long and the 4hr is short
Taking profits
When in a long once the volatility starts to become high (red) I start being cautious and begin to expect the trend to becoming to an end soon and can look to take profits. Of course using nothing in isolation. For example, if you were in a long and volatility was high you could then switch over to your chart to see where the resistance is coming in at.
Using FVG’s on Mangoview
Fair value gap (FVG) occur when there is an inefficiency or imbalance in the market. This is an amazing feature on Mangoview which automatically draws in FVGs on your chart. I like to use the bullish FVG to catch a good bid. I then use the bearish FVGs to take profit.
Process
Filter dashboard for trend and volatility
Check out the chart
Does the chart fit your system/strategy
If so use the FVG for entry
Summary
There are lots of ways to use the dashboard. I have highlighted a couple of ways that I like to use it. Please remember not to use the dashboard in isolation.
In this Part, I will show you how to set up your Fibonacci Retracement tool, how to customize and use it. I will then thoroughly explain some chart examples, what to look for, and how to apply other technical analysis concepts to retracements. This will help find areas of confluence that should give you an idea of how you can implement this into your own strategy to provide some extra edge.
Page 1: -> Setting up & customizing your Fibonacci Retracement tool.
Page 2: -> Example 1 is a simple bearish retracement & explanation. -> Example 2 shows how you can look for a higher low after a break in a downtrend. -> Example 3 shows how you can add an additional piece of confluence to your retracement.
Page 3: -> Example 4, a thorough explanation on finding multiple parts of convergence with your retracements. By using additional indicators, and other time frames -> Additional tips when placing a retracement. -> Summary of Fibonacci retracements.
Setting up the Tool:
Firstly, to find the Fibonacci Retracement tool on TradingView, navigate to the drawing tools on the left side. Click on the third option down from the top. Then select the ‘Fib Retracement’ tool.
Choose Fib Retracement
Next, you will want to set up your Retracement tool with the numbers I showed on the previous part, and any others you may want to add yourself.
To do this, you will need to place a retracement onto the chart anywhere, and then double click it once applied, or find it here by clicking on the Settings icon:
This toolbar gives you basic options such as changing the thickness of the lines, changing the colours, deleting it etc.
Customize your tool:
Here is what my Retracement tool’s menu looks like, feel free to use what I have or add/change the values and the colours on your own. I recommend using certain colours that you like to make your chart as personalised as possible, I find it makes charting easier when you are familiar with the style of your chart.
You can see I have some other Fibonacci numbers there, 0.886 & 0.236. Which I turn on and off depending on the scenario. If you want all of your lines to be the same colour, then click on the “Use One Color” option to do so.
If you prefer you can also turn on a background colour to make your retracement tool stand out more.
Now, once you have finished setting your tool up, I highly recommend following this next step:
When you have entered all of your levels, colours etc, setting it up as a template is definitely a good idea in case you lose the edited version, or if it accidentally resets to the default. This way you can quickly turn on your pre-made Fibonacci retracement tool with no worries.
Click on your retracement, or find this option in the settings menu. Then select the “save drawing template as” option.
Then give it a name. This is an example of how you may want to set them up:
Add the Fib Retracement to your favourites, this will display it on a Favourites drawing toolbar. (See next image).
Add to favourites, click or tap the star icon.
Displays the favourite toolbar. You can toggle this on/off by selecting it.
This is what my Drawing Toolbar looks like. You can also add any other tools to this, completely up to you.
I like to have the tools on there that I always use for my technical analysis.
First of all, I would like to point out in this series I will be covering Fibonacci retracements and extensions only for now. The reason being, I want to showcase the most simple and most mango way to implement Fibonacci into your own analysis.
Personally, I do not use these Fibonacci tools solely on their own, but in confluence with other indicators or methods of analysis which (I will touch on some briefly later in the series).
Fibonacci Retracements
Fibonacci retracements come from ratios used to distinguish possible reversal levels, or support and resistance zones (S&R* zones). These ratios are from the Fibonacci Sequence.
A Fibonacci retracement is made up by taking a low and high point of a trend, then dividing the distance between them by Fibonacci ratios (23.6%, 38.2%, 61.8%). This plots out horizontal levels between the two anchor points.
A retracement can be seen as a pause in trend, or a higher time frame pull-back, which can be an edge for getting into larger trends at possibly better entries when used in a strategy with other indicators. A retracement is not a reversal, because, after a retrace, the price will usually continue in the same direction as the former trend.
Furthermore, retracements are a stationary tool so naturally, they give confluence with already priced in areas of support or resistance. But also price usually respects them more compared to other “reactive” or “lagging” indicators like Moving Averages because they are not reacting to price action and are fixed S&R*.
Each retracement level represents a Fibonacci percentage or ratio. However, some traders may not strictly use numbers derived from Fibonacci, mainly as a personal preference. For example, I actually use 0.35, 0.5 & 0.65 as I have found these to add extra edge and confluence in my analysis’ which I will go over further in the series.
Simple Visuals for different Retracements:
Bullish Fibonacci retracement: Price is trending up, and has a pause in the uptrend, essentially creating a higher low. Also seen as an opportunity in the market to enter longs at lower prices to position for another impulsive move upwards.
Also, any shorts may exit their positions around the same Fibonacci levels, as they anticipate a higher low. They want to get out before the price starts moving against them, especially if it’s a bullish trend.
Bearish Fibonacci retracement:
Price is trending down, and has a pause in the downtrend, essentially creating a lower high. Also seen as an opportunity in the market to enter shorts at higher prices for another impulsive move downwards.
Also, any longs may exit their positions around the same Fibonacci levels, as they anticipate a lower high.
The Most Common Retracements:
For now, I will provide examples of the most commonly found retracement levels (or ratios), and ones that I have found to be respected the most.
0.236 or a 23.6% retrace.
0.382 or a 38.2% retrace.
0.618 or a 61.8% retrace.
0.786 or a 78.6% retrace.
Additionally, you can implement a 0.5 or 50% retrace, although it is not a Fibonacci number, often traders will use it as a midline or median point between a swing high and low as it frequently gets well-respected as a level.
[ *Tip: I added two extra retracements to my tool, the 0.35 and the 0.65 values. The reason I do this is to simply mark out zones so I can more easily find confluence with other tools like analysing horizontal support/resistance from price action. ]
Fibonacci levels have been marked out on the chart below as a visual reference.
In this example you can see how after Bitcoin bottomed out in the $3-4k region, it manages to retrace and find resistance firstly at the 0.382 zones, then also rejects the 0.618 retracements (this was almost to the wick high perfectly). What previously is resistance is then used as support as it based right along the top of the yellow 0.382 zone before breaking below it and seeing a deeper correction.
I used this Bitcoin example as I know a lot of you reading this will be familiar with this particular chart, and for those who haven’t seen this Fibonacci retracement example before you may find it interesting, to say the least.
Calculating Fibonacci Retracement values:
23.6% – This is when you divide one number by another number three places to the right in the sequence. For example, if you do 13/55, or 21/89. These equal approximately 0.236 or 23.6%.
38.2% – This is when you skip a sequence in the division. For example, if you do 21/55, or 55/144. Another way to get it is: 0.618². These equal approximately 0.382 or 38.2%.
61.8% – This is when you divide the current number in the sequence with the next number (starting from 13). For example, if you do 34/55, or 55/89. These equal approximately 0.618 or 61.8%.
78.6% – Simply put, is when you get the square root of 0.618. For example √0.618.
0% and 100% are not actually Fibonacci numbers but represent the start (first anchor point) and the end of the retracement (second anchor point). 50% is midline or the median between the two.
Fibonacci Extensions
Fibonacci extensions are ratios formed by the Fibonacci sequence, these ratios are applied to a high and low point that create extensions beyond the 100% retracement level (first anchor point).
Extensions are commonly used to establish projected areas of projected support and resistance that can form when assets are in price discovery (making new highs or lows), or where there is little/no price history for you to use obvious horizontal support and resistance lines (or other similar methods).
However, extensions can be used when a chart is not in price discovery as they can provide additional confluence to your levels using existing support and resistance zones or other indicators. (I will touch on some examples of this in another part of the series).
Simple Visuals for different Extensions:
Fibonacci extension – Uptrend: Price is trending up (higher highs & higher lows) and has a pause in the uptrend, essentially creating a higher low. Once the higher low is confirmed, the price moves up past the previous high and beyond.
Extensions can become targets for longs to exit positions, or to take profits.
Fibonacci extension – Downtrend: Price is trending down (lower lows & lower highs) and has a pause in the downtrend, essentially creating a lower high. Once the lower high is confirmed, the price moves down past the previous lows and beyond.
Extensions can become targets for shorts to exit positions, or to take profits.
The Most Common Fibonacci Extensions:
Here are some of the most common Fibonacci Extension ratios, I will point out the ones I would recommend as a start because you can always try new ones and implement them later. Ultimately you can decide which ones you would like to use, this is just a general guide to try to help narrow your focus.
1.272 or a 127.2% ratio.
1.414 or a 141.4% ratio.
1.618 or a 161.8% ratio.
2.36 or a 236% ratio.
2.618 or a 261.8% ratio.
4.236 or a 423.6% ratio.
As seen below, these are the Fibonacci extension levels I have decided to recommend for starting off.
This is a simple example of how to place an extension, you can see the values I have used here: 1.272, 1.618, 2.36, 2.618.
You can see how the price didn’t really respect the 1.272 level much, whereas with the other three extensions it respected them much more obviously (evident with the 2.618 around the top).
This is only a brief explanation of how you can use this tool in your technical analysis but I will give a deeper explanation & tutorial in the upcoming part of the series, ‘Diving into Fibonacci Extensions’.
Calculating some Fibonacci Extension values:
127.2% – Is the square root of 1.618: √1.618
161.8% – Divide the next number in the sequence with the current number (these are covered in Part 1 when explaining where the golden ratio comes from).
236% – This is from removing the decimal place from “23.6%” and making it “236%”.
261.8% – Divide a number by two places to the left in the sequence and it equals roughly 2.618. Also calculated from 1.618².
423.6% – Divide a number by three places to the left and the ratio equals approximately 4.236. Example: 377/89 = 4.23595.
Other extensions that show up are actually not derived from the Fibonacci sequence, but use existing Fibonacci numbers that are and add 100% or 200% etc to the number. For example, the 361.8% & 461.8% ratios are just using the base of the 161.8% golden ratio and replacing the first 1 with 3 and 4.
The reason these ratios still may work is that as an asset continues to go further into price discovery the higher the relevant extension ratios become. Often traders will use these more ‘uncommon’ extensions like 361.8% or 427.2% as they might be the only way to gauge potential points of support or resistance.
This should give you a decent starting point and overview of Fibonacci Retracements & Extensions, and hopefully, you have learnt something new.
Part 3 is the next in the series, and that is solely focused on Fibonacci retracements.
Our Mango Socials
If you enjoyed this article and want to stay up to date with more to come, please join the discussion in our Community through Discord.
If you’re a trader, technical or fundamental analyst wanting to learn trading the Mango way, please check out the Mango Seed Program and join the Seed fam. Make sure to also reach out to some Seedlings who are in the program to get another perspective on their experience.
This is a quick guide on the Mango Dashboard writen by Ajesh, a Seedling & an esteemed member of the Mango community. Ajesh is a seasoned trader who walks you through his process on how
The Fibonacci Sequence, one of the most well-known formulas in mathematics, was invented by the Italian Leonardo Pisano Bigollo (or Leonardo Fibonacci) in his book “Liber Abaci”.
Simply put, each number in the sequence is the sum of the two numbers that precede it. For example: 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144… To infinity.
This sequence was then found to create what is known as the “golden spiral” which implements these numbers into a “golden rectangle”. Each square is a Fibonacci number timesed by itself (8×8, 13×13 etc).
To get the Fibonacci spiral, draw a line starting in the bottom corner of a golden rectangle within the first square (start of the blue line) and then touch each succeeding multiple squares outside corners, this creates a Fibonacci spiral that continues forever.
Fibonacci Golden Spiral
Fibonacci sequence is seen in many things of nature so here is a smaller list of examples: Fibonacci can be found in sunflowers, korus, snails, eggs, many vegetables like romanesque broccoli & spiralled chillis. In pinecones, chameleon tails, waves, shells, whirlpools, spiral galaxies, and may even be visible in your own fingerprints.
Examples of Fibonacci in Nature
The Fibonacci sequence is all about proportion, and the 1.618 ratios (or its inverse 0.618) is referred to as the “golden ratio” or the “golden mean ratio”. This ratio is essential in almost everything and you can find it throughout nature.
In the Fibonacci sequence, every number is approximately 1.618 times greater than the previous number. You can multiply one number by 1.618 and it will give you approximately the next number in the sequence.
Calculating numbers in the Fibonacci Sequence:
3 x 1.1618 = (5)
5 x 1.618 = (8)
8 x 1.618 = 12.944 (13)
13 x 1.618 = 21.034 (21)
21 x 1.618 = 33.978 (34)
34 x 1.618 = 55.012 (55)
To add to the importance of the golden ratio, here is another example. If you take any two successive numbers in the sequence and divide them, their ratio gets closer to 1.618 as you go further along in the sequence:
In the next part, I will show how you can implement Fibonacci into your technical analysis.
Our Mango Socials
If you enjoyed this article and want to stay up to date with more to come, please join the discussion in our Community through Discord.
If you’re a trader, technical or fundamental analyst wanting to learn trading the Mango way, please check out the Mango Seed Program and join the Seed fam. Make sure to also reach out to some Seedlings who are in the program to get another perspective on their experience.
In this Part, I will show you how to set up your Fibonacci Retracement tool, how to customize and use it. I will then thoroughly explain some chart examples, what to look for, and how
Looking at this formation here with three potential scenarios. In my eyes, this is an ascending triangle breakout, the same one that Shawn and many other members in the Grove have posted about recently.
I am looking for upwards continuation based on other indicators all in agreement on multiple time frames (I am talking about the higher time frames like the 2D, 3D, 4D & Weekly here). Volatility has been really low on many time frames and is starting to expand now, which means we will probably see the resolution of this formation up or down in the next 1-3 days at most.
I have a target of at least 53k from the measured move of the formation, but I would aim for 58-60k based on other Fibonacci extension levels.
If BTC loses this blue horizontal zone between $48700-49000 I think a move to at least that rising trend line and likely back down to purple box ($46600-47000). BTC would probably continue some ranging between these zones.
Break below purple support box will change my bullish bias, to more medium-term ‘bearish’. But would look for the marked levels around ($43,000 – 44,000) to bounce, which would likely line up with the Daily 21EMA as well.
I also like to look for confluence with CMEs (BTC1!) which look a lot more like an ascending triangle than spot price action. (Chart below). As long as it holds the 4hr 21EMA or Dynamic for that matter the trend is still up and I lean for continuation higher.
The Mango Dynamic on CMEs 4hr chart has been really accurate for the past couple of months, and this recently flipped green and is continuing to climb & use the blue dots as great opportunities alongside the 10SMA. I look at this as a way to determine the overall trend, as long as it keeps supporting price, naturally, it will continue higher.
I want to see momentum oscillators like RSI, Stochs & MACD all gaining positive momentum, start to get stronger as price moves higher.
A high volume node will be a useful indicator for confirmation as well.
Overall, this is looking like a bullish continuation formation, and we are highly likely going to see resolution very soon. I am leaning bullish from my own view of the indicators I see on the lower time frames, but also because the Weekly looks really strong. However, the support levels I have defined need to be held for this to happen.
Disclaimer: The ideas presented in this article should not be taken for investment advice, and are simply the views and opinions of the authors.
Watch Shawn’s Original YouTube Analysis
Quick Summary
We have started a new month! Bitcoin has closed a Monthly, Bi-Monthly, and today the Weekly. We will be covering higher/macro time frames, specifically the Monthly, 2M + 3M, with the Weekly being towards the end to cover more ‘immediate’ price action.
Monthly + Bi-Monthly
The Monthly close was very strong, with a close just above $13800.
So the question is, what is likely to happen over the next month or two?
There are four major levels of Support & Resistance:
$13900 as resistance, $12475 as a potential support level, and finally $11780 being the most important region of support.
$12475 is the August Monthly high, a level talked about on the daily videos as potentially being a strong support region. We need to keep in mind that if Bitcoin is very strong, which it is at the moment, it may result in BTC being bought up off of this level instead of any lower.
Bitcoin did not manage to clear the $13900 level on this candle, so just based on this it has not broken the Monthly or 2M resistance, YET. This may be an important piece of information for us all because it means that there is still a possibility that Bitcoin still may come down and retest lower levels (use a level as support). The first one being $12475, and the second $11780.
2 Month Chart:
2-Month timeframe
I personally really love this chart, as it clearly showed on September 1st that BTC broke out of its long term resistance, it also gave an area of support that was likely to be tested before moving up to $13900. Which it actually did perfectly.
When I look at this chart, I cannot ignore the $11780 level as it has the potential for a retest. However as mentioned before, we should not forget about $12475 as BTC buyers may step in and defend this level (which will show strong confidence in market participants and a rejection of any price lower than this).
Summary & what to look for:
If Bitcoin does start to break down, the levels I outlined will be where I see it the most likely to bounce off of. But this doesn’t mean it will happen, so I am prepared for it to just continue higher from here as everyone else waits for lower prices.
3 Month Chart:
Quarterly timeframe
This chart is what everyone should be watching for the end of this year, it is going to be the most telling in direction and will likely confirm the long term bull market if it closes above $13900-14000. This resistance is going to be key for the 3 Month close at the end of the year as well. This will mean that this consolidation since early 2018 will be resolved to the upside, breaking out of this massive ascending triangle pattern (could also be looked at as a bull flag/pennant).
The best-case scenario for Bitcoin long term is to see a convincing close above this level, similar to last cycle in late 2016, and then look for a possible retest for entries.
3 Month Summary & what to look for:
This huge ascending triangle has a horizontal resistance around $14,000. The 3M close will coincide with the 12M as well, and they both have that same key level. Any close above that is going to be extremely bullish. As mentioned, it will mean that the next market cycle phase is likely initiated with further continuation to the upside expected.
The Weekly had another good close but only just closed underneath the $13900 Monthly level. To me, there are no signs of weakness yet.
When looking at the weekly, the major area is the yellow box, a resistance zone that has held BTC down for almost 3 years. Bitcoin has now confirmed a second weekly candle above this, showing market acceptance. If you think about simple Support & Resistance, this area now has a possibility of being tested and is highly likely it provides strong support.
The reduction in percentage ‘dumps’ from each test of this zone (talking about compared from the first times in early 2018 -> now) hints that the same ‘big money/institutions’ that were originally using this zone to get out of the market or for shorts are now not interested in it anymore. So just based on this, what is it telling us? Price acceptance, and a major change in market behavior.
Any sort of move down to the low $12,000s, in my opinion, is a gift (or the Monthly support levels talked about earlier), and shouldn’t be ignored – It is also a really easy area to risk manage from. If this zone is tested in the next few weeks I expect that the 10SMA & 21EMA will be creeping up towards the box too.
Weekly Summary & what to look for:
If Bitcoin manages to break above the 14k level, I am expecting this to continue up towards 14.8-15k (.706 Fib level & 4D resistance), if that is broken the next level is around 16K (weekly resistance & .786 Fib).
If Bitcoin closes this Weekly underneath this level, and the following weeks also. I would then consider looking towards the mid 12,000s as they would be on the cards in my opinion. If there is any move down towards the levels mentioned (12k-12.4k) this would be a strong buying opportunity for me.
For information on the Mango Seed Program offered by Mango Research,check it out here.
Removing third parties is the core principle of cryptocurrency—with the community rallying behind slogans like "not your keys, not your coins" , and "don't trust, verify!" But as the ecosystem sprung up around cryptocurrency, this original ethos has weakened. Most buying and selling takes place through secondary software on third party exchanges or wallet services, and most cryptocurrency is stored with third party custodians.
This discrepancy between placing trust in code, and placing trust in third parties, has opened an ideological chasm at the heart of the cryptocurrency space. Now with the explosion of Decentralized Finance (DeFi) protocols and Centralized Finance (CeFi) platforms that facilitate borrowing, lending and trading of cryptocurrency, the two ideologies are directly pitted against each other.
These two branches of blockchain-based finance share the same goal of liberation from the limitations of legacy banking, but each has a unique set of pros and cons.
What Is DeFi? - Decentralized Finance
DeFi protocols are typically open source, with all financial processes facilitated by a system of smart contracts hosted on a blockchain.
Instead of a bank clerk shuffling funds around, or a centralized database, the smart contracts moving money are secured by decentralized consensus, typically on Ethereum, EOS, or Tron.
With all operations taking place on the public blockchain, full transparency is possible. Transactions can be verified with Blockchain Explorers, and smart contracts verified by specialist auditors.
With no gatekeepers to the system, those who wish to remain anonymous are able to, and do not need to surrender valuable passports or ID documents through KYC processes that can put sensitive information at risk. This permissionless freedom, along with an open source development culture, has transformed the strictly regimented world of traditional finance. With DeFi, innovators are free from regulations and can use smart contracts like "lego pieces" to create new forms of financial plumbing.
How Does DeFi Work?
Interoperability is central to DeFi, and each project, of which there are over 200 listed on DeFi Prime, can be linked with others through smart contracts to create something new. This makes collaboration simple, and incentivizes the sharing of resources because each project benefits from the additional liquidity that each new success brings into the space—a stark contrast to the increasingly fragmented liquidity of the centralized exchange landscape.
The success of this approach has made DeFi responsible for a long list of innovations supercharging the functions of traditional finance. These include new types of assets like wrapped BTC, new governance experiments like Compound's COMP, and complex forms of lending like flash loans.
On the flipside, this complexity makes Defi a daunting prospect for newcomers. But while the learning curve might be long, at the end there are lucrative opportunities with new esoteric money making schemes like liquidity mining (aka yield farming), and interest rates that blow anything traditional banking can offer out the water.
The opportunities provided by these new protocols have incentivized the fast flow of new money into DeFi, which has doubled to more than $2 billion in just two months.
Difference Between DeFi vs CeFi
The downside of DeFi is that it is still very experimental, and while there might not be a custodial risk, there is the possibility of smart contract hacks with faulty code creating vulnerabilities.
This risk is what CeFi platforms aim to eliminate. Instead of removing trust by replacing third parties with code, CeFi adds more third parties in the form of auditors and certifications to replicate the functions of traditional finance with familiar reassurances like insurance and regulation.
CeFi platforms—including Nexo and BlockFi—typically benefit from a friendlier UX, and the same familiar sign-up processes as any centralized exchange, but have the same drawbacks of traditional finance like KYC processes that can put information at risk, and custodial services that represent an attractive target for hackers.
As regulated entities, CeFi platforms also tend to offer more possibilities for holding fiat in custodial wallets, and converting fiat to cryptocurrency and vice versa via a fiat gateway. These fiat gateways have helped CeFi services like Crypto.com attract hordes of new users, and make CeFi platforms an easy entry point into the ecosystem, even if funds are later moved to more decentralized regions.
This scenario, which involves points of centralization with fiat gateways in an otherwise decentralized ecosystem, is what DeFi pioneers like Maker's Rune Christensen envisage as the next stage of evolution of DeFi and CeFi.
As Christensen told CoinTelegraph, “it is still the very early days” for DeFi, and eventually it is likely to merge with Centralized Finance: "What's currently known as CIFi will become the front end and sort of the access points to the various DeFI protocols (...) You will have a custodian that you trust and then that custodian interacts with the DeFi protocols for you.”
Ever since Bitcoin was created in 2009 by Satoshi Nakamoto, it has largely been pushed aside by the traditional financial services industry and the institutional space. A similar attitude has been displayed towards most cryptocurrencies and digital assets, based on fear and the fact that very little was known about these new “actors” in the industry. Now that they are gaining traction and have received the attention of millions of investors, lawmakers and governments are beginning to address the question of regulation for these virtual currencies.
This war between the institution and the new wave of digital assets has been going on for years. However, it seems like we are noticing a shift in mentality and approach from the institutional space towards bitcoin. More and more financial organizations are changing their opinion about the first-ever virtual peer-to-peer currency and have developed interest in these new forms of potentially lucrative investments for their loyal customers.
In this brief overview, we will see how the tide is turning for bitcoin and how it is becoming one of the most sought-after assets by large and reputable financial firms all across the globe. In turn, we will demonstrate how this could eventually lead to the crypto markets regaining their strengths and how we might be on the cusp of one of the largest bitcoin bull runs in history.
Bitcoin & Institutional Investors - The SEC, ETF's and More
Some recent events and news have been very positive for bitcoin and its slow but steady breakthrough within the institutional space. Institutional investors refer to large entities such as banks, hedge funds, insurance companies, investment groups and more. The first major news that has been affecting the space as of recently and that showcases bitcoin’s growing position within the institutional markets is the upcoming (and recently delayed) decision by the U.S. Securities and Exchange Commission (SEC) regarding the approval of a bitcoin exchange-traded fund (ETF).
An ETF is a fund that represents an asset’s value and that is traded directly on the stock market. They are considered passive investments.
In the recent weeks, the cryptocurrency community, as well as actors in the institutional space and even some members of the SEC, have been strongly advocating for the creation of a bitcoin ETF. This truly shows that there is a heavy desire from financial firms and large investors to join the cryptocurrency trend.
Another recent report by Forbes has stated that the Northern Trust, a financial services firm that has close to $10.7 trillion in assets under custody, has opened their doors to companies involved in the crypto space. In addition, the firm is supporting multiple blockchain-based projects. Moreover, Northern Trust’s President, Pete Cherecwich says he believes in a tokenized economy and future.
The Launch Of 'Bakkt' - A Global ecosystem for digital assets
The Intercontinental Exchange (ICE), parent company of the New York Stock Exchange, has announced that it will be launching a new company called Bakkt which aims “to create an open and regulated, global ecosystem for digital assets”. It will enable big organizations to purchase, sell, and safely store virtual currencies and other decentralized assets. With large companies such as Microsoft and BCG involved in the project, this shows how blockchain-based applications and crypto-assets are gaining in popularity and are making their way through various industries. The ICE also plans to initiate a one-day physical bitcoin futures contract when Bakkt launches.
NBER Analysis - Cryptocurrency Forecasts
Furthermore, the National Bureau of Economic Research (NBER) recently published a 70-page-long report on the “Risks and Returns of Cryptocurrency”, analyzing three major coins: bitcoin, ripple, and ethereum. The fact that this paper is being published already shows that cryptocurrencies are actively being discussed by institutional investors. The NBER explains a “strong time-series momentum effect and that proxies for investor attention strongly forecast cryptocurrency returns”. The report even goes as far as recommending investing in digital currencies with “1 or 4 or 6 percent in bitcoin”.
First Cryptocurrency Index Fund?
Lastly, popular cryptocurrency exchange Coinbase has recently announced the launch of the Coinbase Index Fund. It allows institutional investors, with a minimum investment of $250,000, to place money and bet on the performance of the Coinbase Index. The Coinbase Index is composed of all the coins listed on the American giant’s platform. We clearly see that the desire to invest in cryptocurrencies is not strictly one-sided, but that the crypto space is also eagerly waiting for these institutional investors.
Long Term Upward Trend
As many have said over the last months, institutional money is on its way and it could be extremely positive for bitcoin and its value. Although the markets have been experiencing bearish trends and severe downturns in the past months, bitcoin and other major cryptocurrencies such as ethereum, litecoin, or ripple still show a lot of potential for growth and progress. With all the new excitement and innovations in the crypto space, in addition to the institutional investors finally joining the movement, the market has a lot to look forward to. Banks, financial organizations, hedge funds, and large investors are now less hostile towards these new digital assets, which are nothing short of programmable money. Coins and tokens have become more attractive and offer incredible potential, and institutional investors are aware of it.
Bitcoin & The Institutional Market - Summing It Up
In conclusion, there has been a shift in the way digital currencies, especially bitcoin, are viewed in the institutional space. Previously considered scams, frauds, and even fake, they are now starting to be looked at as real financial assets with considerable potential and upside. In this article, we have seen that numerous events have cemented the belief that opinions are changing, and so has the place of bitcoin in larger investors’ hearts. As a result, we can probably assume that the crypto markets will be positively impacted by the increase of institutional investors in the near future.
About the Author
Mati Greenspan
Market Analyst @eToro
Senior Market Analyst at eToro; a man very up-to-date with the goings on of the Crypto markets. Follow him on twitter and other mediums at the links below.
