Understanding pairings is an important concept in the market that is often overlooked and misunderstood. Knowing how to move in and out of the crypto market will help you always get the most relative value for your assets. Traditional and crypto markets consist of buyers and sellers. The markets on an exchange typically operate by allowing the sale of one asset for another. The two assets make up what is called a Currency Pair. Some examples of this: BTC/USD, TFUEL/BTC, CREAM/BNB.
Here’s a handy graphic.
Pairings are a way to show relative value. Above, the base currency, BTC’s value is being measured in USD, the quote currency. Simply, 1 BTC is worth X dollars. On a chart, it will look like this. The Quote currency is by default on the right vertical scale and the Base Currency is plotted in whatever format, typically candles or a line, on the chart. As the line or candles go up the value of the Base (BTC) is going up relative to the Quote (USD).
Here’s another one. TFUEL/BTC. As the line goes down TFUEL is worth fewer satoshis. As the line goes up TFUEL is worth more satoshis.
This relationship is very important. Your capital is important. If you can understand this relationship you will make your capital stretch farther on buys. You will make your profit orders more profitable. You will become a value shopper.
A Crypto Coupon Clipper.
You should always want to get the most bang for your buck. One way to achieve this is to divide the capital you want to risk between the available QUOTE assets. On Binance for example the available quote pairs are FIAT (USD,GBP,EUR,AUD, whatever), BTC, ETH, and BNB. To always ensure you can snag the best deal for your buy or sell it’s beneficial to have some of all these quote assets. Most exchanges will have some screen like this, a “markets” page where you can sort by the specific quote asset.
Finding value is achieved by using the “compare” tool on tradingview. Type in the possible trading pairs available for the coin you have a position in. The scale on the right will now display a % instead of a $ value. This is displaying the relative performance.
Finding value when EXITING the market using the comparison of relative performance can be determined with the chart below. If I’m holding ADA and I want to cash out I want my ADA to accumulate as much profit as possible with it. The chart is showing me currently that ADA is performing the BEST against BNB. 1 ADA is worth more in BNB than it is worth in BTC, more than it is worth in ETH, and more than it is worth in USD. Selling ADA into BNB will accumulate the most of any other available quote currency to sell into.
Finding value when ENTERING the market using the comparison of relative performance can also be determined with the chart above. If I want ADA and I’m holding all of the available quote currencies I want to buy as much ADA as possible. The chart is showing me currently that ADA is performing the WORST against USDT. 1 ADA will cost less to buy with USDT, than it would be to buy with ETH, BTC, or BNB. Buying ADA with USDT will accumulate more ADA than buying with any other quote currency.
You don’t have to go all “beautiful mind” with it and analyze all the different trading pair charts during the period of your trade/investment.
It doesn’t matter if you didn’t look at it at the beginning, though checking in when you want to enter or exit is ideal.
If you WANT to go extreme though it is achievable. It’s some work though. This is more realistic on long-term assets that there is always gonna be interest in and are charts that would be looked at anyways. Follow me down my rabbit hole.
Create a watchlist of long-term hold coins against each quote pair (DAILY OR WEEKLY CHARTS ONLY). On each chart draw out the major market structure supports and resistances. On each chart draw out major ascending or descending trendlines which are psychological supports and resistances. Set alerts on EVERYTHING! When an alert pings check out the chart.
Let’s pretend a SOL/BTC alert goes off. SOL is about to go on a breakout against BTC. If the chart looks good create a trading plan and buy a chunk of SOL with BTC and when the exit point is reached sell enough SOL equivalent the original amount of BTC sold and pocket the extra SOL or sell all the SOL you purchased for this trade and stack those sats.
Another hypothetical DOT/BNB alert goes off. DOT has closed below a low support and is gonna fail hard. Make a trading plan and sell off some DOT for BNB and watch the bleeding. When the bleeding is confirmed stopped buy the same amount of DOT back and pocket the extra BNB or buy all the DOT you can with the BNB you got from the original sale.
There’s really no wrong way to do things. It’s really just how deep do you want to get. You don’t have to look at all the quote pairs. I would at least focus on the quote pair you believe in most besides just the USD pairing. Keep your mind open as well. Different exchanges provide unique trading and investing opportunities. Binance has some TRX quote pairings. Kraken has a DOT quote pair. Kucoin has plenty of KCS quote pairs. Price action between unconventional trading pairs can bring about some interesting ways to profit that I imagine many don’t even consider. Care should be taken though because risk increases the farther you move away from conventional pairs. Choose your pairs wisely. See you on Sunday.
@theprivacysmurf
AWESOME!!!
Insightful, and very usefull...Thank-you