Crypto Academy / Season 3 / Week 5 - Homework Post for Professor @imagen

Hello Steemians, a warm welcome to week 5 of this season's lesson series. The lesson taught by professor @imagen discussed in detail Market patterns and Blockchain projects. In this post, I will be responding to the assignment given.

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Question 1

Choose at least 1 of the following cryptocurrencies.
Axie Infinity AXS, Chilliz CHZ, Cardano ADA, VeChain VET
Make an investment of $ 12 or more. Show screenshots of the process.
Source

For this demonstration, I chose Cardano Link which is a decentralized blockchain that uses the proof-of-stake consensus within its network. Cardano has a native cryptocurrency token called ADA.

Crypto Investment

To make an investment, I have to access my exchange wallet. I use Binance exchange.


First visit Binance website Link and click on login

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Next, Enter the required information, and follow through with the captcha verification process.

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On the logged in account, click on the trade tab and select Advanced to access the trade section of the Binance exchange

A deposit will be required if the investors have no token or fiat balance. In my case, I have an available USDT token balance

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Next, click on the drop-down menu icon and select the crypto asset you wish to invest in. Alternatively, you can use the search bar

I chose ADA/USDT

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After the crypto asset has been selected, on the right side of the page.
Click on Spot and choose transaction type. In this case, I chose Buy

select market for instant order execution

The available token balance will be displayed.

Enter the amount to be invested from the available token balance

click Buy ADA

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Next, scroll down to verify that the trade order was executed, click on Trade History

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Next, verify that the acquired token has been reflected in the exchange wallet.

Click on the wallet tab and select Fiat and spot

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An overview of the Fiat and spot wallet will be displayed, showing token and invested shares.

The Cardano token ADA is shown below and the unit share purchased.

14.0559300 units of ADA token was purchased and is worth $17.614368 since 1 USDT token is pegged at $1 equivalent.

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Why did you choose this cryptocurrency?

I chose to invest in ADA because of the following:

The Cardano Project

ADA is backed by Cardano which is a decentralized blockchain that adopts the proof-of-stake consensus within its network. Cardano was developed to tackle the problems facing the second generation of blockchains like ethereum 2.0, the problems include scalability (in range of millions of users), transaction cost and gas fees, sustainability, etc.

Future proof Algorithm

The technology used by Cardano considers the future and emerging blockchain technologies, the algorithm is created in such a way that it can accommodate changes without the need for a Blockchain fork resulting in the creation of new blockchains like in the case of Bitcoin and Bitcoin Cash.

Advanced proof of stake algorithm

The proof of stake algorithm used within the Cardano network is Ouroboros which is very sophisticated, it allows Block miners to maintain more than one block simultaneously with reduced processing cost, with robust security.

Experienced Developers

The developers of Cardano have a verifiable reputation within the cryptocurrency ecosystem. The founder was the co-founder of ethereum, this is a great plus to the credibility of the Blockchain.

Evidence based development

The scope of Cardano Blockchain development is based on research and verifiable data collected through peer-review, seminars, study, and observation of Blockchain system behavior, this gives a solid level of assurance that the blockchain adopts a sustainable development method.


What is it Market Capitalization? What is it position in the cryptoasset rankings?

Data for this analysis was obtained from top-rated cryptocurrency information website Coinmarketcap Link

Market Capitalization

Cardano's cryptocurrency ADA has a market capitalization of $40,209,833,702 ($40.2B) and fully diluted market capitalization of $56,472,600,473 ($56.4 B). The diluted market cap accounts for all tradable ADA tokens in the market.

ADA has a market dominance of 2.68% in the cryptocurrency market, this is calculated based on traded volume and supply of the coin, the volume traded in the last 24 hours is $2.2B

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A unit of ADA token is equivalent to $1.25. ADA has a circulating supply of $32.04 B and a maximum supply capped at $45 B, this implies that about $12.96 B ADA token can still be created.


Crypto-asset rankings

ADA is ranked 5th on Coinmarketcap official website Link, this ranking is aggregated from market capitalization, circulating supply, and traded volume. This makes up for the 2.68% market dominance.

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What is the objective of the project behind this coin?

Cardano blockchain technology developers claim their technology is the first 3rd generation Blockchain that has addressed the problem of previous generations of blockchains. The problem can be categorized into three sections. They include:

Scalability

Cardano blockchain developed an efficient way to manage multiple transaction mining simultaneously, this addresses the scalability issues faced by ethereum and other blockchains when the number of the blockchain network users runs in deep millions (hundreds of millions). The efficient scalability allows for the low cost of mining, maintaining similar robust security like other blockchains.

Sustainability

Cardano blockchain was developed based on developmental researches, this improves on the rigid nature of blockchains by accommodating changes without the need for a split within the network. Like in the case of Ethereum and ethereum classic, Bitcoin and Bitcoin cash which resulted from hard fork changes made on the Blockchain.

interoperability

Cardano blockchain technology is resolving the complexity associated with cross-blockchain transactions and data accessibility. This will drastically reduce the cost of cross-chain transfers etc.


Who founded this coin? Show the roadmap.

Founder

ADA's blockchain, Cardano founder is Charles Hoskinson. He's a grounded figure in the cryptocurrency ecosystem, best known as the co-founder of Ethereum. He created Cardano with a collection of experts in various fields, and together they created the first 3rd generation blockchain that has a future proof use case considering scalability, reduced cost, and interoperability.

Cardano's Road Map

Cardano blockchain road map is splitted into five phases. The phases were named after poets and writers that influenced the world with their work in one way or the other.

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The roadmap phases are:

Byron Phase (Foundation)

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This phase is the foundation phase of Cardano Blockchain, detailing the methods adopted in the starting phase, the developer's research, peer review, and a rigorous formal development model to create the Blockchain.

This phase highlights the timeline of progress from conceptual ideas to a real Blockchain that allowed users to buy and sell the native token ADA, the token was named after the revolutionary programmer Ada Lovelace
Reference Article


Shelley Phase(Decentralization)

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This phase begins the transition to a decentralized network from the mainnet structure of Byron Era. The transition is designed to be smooth, low cost, and prevent interruption of the network.

This phase highlights the introduction of various features on the blockchain, like integration of community to encourage a more decentralized blockchain with a high number of actively connected nodes, introduction delegation, and incentive schemes, etc.
Reference Article


Goguen Phase (Smart Contracts)

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This phase includes the use of smart contracts to the blockchain. This enables the creation of decentralized applications on the Cardano network and improving the accessibility of the network to a wide range of users.

This phase highlights the creation of Plutus, a smart contract development language that will help manage the decentralized activities on the blockchain.
Reference Article


Basho Phase (Scaling)

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This phase effects the optimization of the blockchain through the improvement of scalability to accommodate more users and interoperability of the network with other blockchains.

This phase highlights the introduction of side-chain. This side chain will run simultaneously with the main chain on the Cardano network, with the purpose of reducing the workload on the main chain to improve the network experience and accommodate more users.
Reference Article


Voltaire Phase (Governance)

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This phase sort to enhance the community inclusiveness with the introduction of voting and treasury protocols. This allows for a more decentralized blockchain where users can contribute to the development of the blockchain.

This phase highlights the introduction of systems where stakeholders can submit proposals on the further development of the blockchain.
Reference Article


What is the specific purpose of the cryptocurrency?

The Cardano Project's main purpose is to improve and shape the future of blockchain technologies through the creation of advanced system mechanisms that can handle the problems associated with scalability (growth of the blockchain, through inclusiveness of more users), sustainability, and interoperability with other blockchains at a reduced cost.

This will further improve on the use-cases of cryptocurrency in areas like businesses and organizations which comprise of a large number of users and require a sustainable, efficient system with robust security to manage transactions.


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Question 2

Explain in your own words what the "Evening Star" pattern consists of. What is its hit rate?

The evening star candlestick pattern is a reversal candlestick pattern associated with the downtrend movement of price. It is comprised of three candlesticks forming in this order, a strong bullish candlestick, followed by a weak small body candlestick, then followed by a strong bearish candlestick.

The first candle (strong bullish candle) indicates the presence of buyers controlling the market price of an asset. The small candle shows the struggle between buyers and sellers for control of price. The last strong bearish candle indicates the presence of sellers controlling the market price of an asset.

When an evening star candlestick pattern forms at the top of an Uptrend, it is considered a strong bearish reversal pattern, as the last bearish candle confirms the presence of sellers thus, beginning a shift in market sentiment (from bullish to bearish).

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The evening star candlestick is observed to have a hit rate of 68%-70%.


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Question 3

Explain in your own words what the pattern "Abandoned Baby" consists of. What is the percentage correct?

Bullish Abandoned Baby

The bullish abandoned baby candlestick pattern is a reversal candlestick pattern associated with the uptrend movement of price, similar to the morning star pattern.

It is comprised of three candlesticks forming in this order, a strong bearish candle, followed by a Doji candle, then followed by a strong bullish candlestick.

1- The first candle (strong bearish candle) indicated the presence of sellers controlling the price of an asset.

2- The Doji candlestick in the middle depicts that the candle opening price and the closing price were the same, this indicates indecision between buyers and sellers.

3- Lastly, the strong bullish candlestick indicates the presence of buyers controlling the market price of an asset.

When the bullish abandoned baby candlestick pattern forms at the bottom of a downtrend, it is considered a strong bullish reversal pattern, as the last bullish candle confirms the presence of buyers, thus, beginning a shift in market sentiment (from bearish to bullish).

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Image Source


Bearish Abandoned Baby

The bearish abandoned baby candlestick pattern is a reversal candlestick pattern associated with the downtrend movement of price, similar to the evening star pattern.

It is comprised of three candlesticks forming in this order, a strong bullish candlestick, followed by a Doji candlestick, then followed by a strong bearish candlestick.

1- The first candle (strong bullish candle) indicates the presence of buyers controlling the market price of an asset.

2- The Doji candlestick in the middle depicts that the candle opening price and the closing price were the same, this indicates indecision between buyers and sellers.

3- The last strong bearish candle indicates the presence of sellers controlling the market price of an asset.

When a bearish abandoned baby candlestick pattern forms at the top of an Uptrend, it is considered a strong bearish reversal pattern, as the last bearish candle confirms the presence of sellers thus, beginning a shift in the market sentiment (from bullish to bearish).

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Image Source

The correctness percentage of this candlestick pattern is observed to be about 68%.


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Question 4

Perform analysis for 3 and 7 recent calendar days for Bitcoin Do you identify any patterns?


please note: I used the 15-minute timeframe to represent the 3 days interval and the 2hour timeframe to represent the 7 days interval. I also indicated the start and finish dates.


Bitcoin 3 Days interval (25th - 27th July 2021)

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The BTCUSD chart above has two candlestick pattern seen:

1- Evening Star

The evening star is comprised of three candles, a strong bullish candle, followed by a weak candlestick (bullish in this case), followed by a strong bearish candle. This candlestick patterns indicated a trend shift from an uptrend to a downtrend.

2- Three Black Crow

The three black crows is comprised of three bearish candles forming near a high, the candle's formation follows each sequentially. This indicates the presence of sellers, hinting at a trend shift from bullish to bearish.


Bitcoin 7 Days interval (21th - 27 th July 2021)

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The BTCUSD chart above has two candlestick pattern seen:

1- Bullish Abandoned Baby

The bullish abandoned baby is comprised of three candlesticks, a strong bearish candle, followed by a Doji, followed by a strong bullish candle. This candlestick pattern indicates the shift in trend from a bearish trend to a bullish trend.


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Conclusion

Fundamental Analysis in cryptocurrency is curial, as it helps traders understand and evaluate the prospects of cryptocurrency projects (through white paper evaluation, roadmap, statistical enumeration) before investing in it. This boosts the crypto ecosystem greatly by aiding proper investment choices.

Technical Analysis in form of candlestick analysis provides investors with a graphical representation of market sentiment. This improves the chances of investing with the correct trend to avoid losses.

A balanced investment combines the fundamental and technical analysis to better improve the probability of profiting from the investment made in cryptocurrency.

Thank you professor @imagen for this insightful lesson and assignment.

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 2 months ago 

Gracias por participar en la Tercera Temporada de la Steemit Crypto Academy.

Scale of EstimationScoreObservations
Question 14.0
Question 21.8
Question 31.8
Question 41.6
Qualification9.2

Te felicito, realizastes un buen trabajo.

Continua esforzandote y espero seguir corrigiendo tus proximas asignaciones.

Thank you professor @imagen