Enjoy our weekly dose of the market summary below!

: Following early last week’s sell-off, the broader equity market rebounded as Friday's weak job report revived market sentiment. Cryptocurrency followed suit, with Bitcoin climbing back above $60K last Friday.

Enjoy our weekly take on the market summary below!

Friday’s Weak U.S. Employment Data Revives Market Sentiment

Wall Street traders who attempted to anticipate the Federal Reserve's moves can breathe a sigh of relief as the week comes to a close. After withdrawing funds from credit, cryptocurrency and stocks, due to concerns about stubborn inflation, new data emerged that arguably supports the central bank's economic strategy. Consequently, the bears experienced a setback on Friday as Treasuries and the S&P 500 recorded their first simultaneous weekly gain in a month, primarily driven by softer U.S. employment data. 

Another Week of Conflicting Labor Market Reports Arrives

Recent financial markets feature a perplexing landscape of conflicting economic reports, leaving profit-seeking participants repeatedly soaked. On Tuesday, a comprehensive measure of U.S. labor costs surged to its highest level in a year, causing yields on two-year Treasuries to exceed 5%. However, three days later, a 

 from the Labor Department revealed the smallest wage increase since 2021, prompting yields to retreat. Recent reports indicate a surge in retail sales alongside a slowdown in gross domestic product. Industrial production is on the rise, while manufacturing activity is easing. Jobless claims remain steady, but hiring has slightly declined.

In the coming week, several federal officials will give further clarification on the U.S. Fed’s next policy moves.

Bitcoin Spot ETF inflows bucked the bearish trend that had lasted for more than a week, supporting the largest cryptocurrency as it rose back to $60K.

AR Jumps 25.1% After HackMD Integrates Arweave for Permanent Blockchain Document Storage 

, launched in June 2018, is a decentralized platform for permanent data storage, leveraging its native AR cryptocurrency to incentivize users and ensure data permanence. It offers easy web access and is developing moderation tools. Moreover, its key partnership with 

 highlights Arweave’s commitment to secure data preservation. 

 with Arweave in March 2023, enabling users to permanently store documents on the blockchain. This feature ensures decentralized, immutable storage for important documents, such as white papers. Users can export and import documents between HackMD and Arweave using the 

 wallet and browser extension, enhancing data security and permanence. This integration underscores HackMD's commitment to leveraging 

 technologies for secure and efficient document management. 

ZETA Jumps 19.0% After ZetaChain Announces New Growth Program

 (ZETA), launched in February 2024, is a Layer 1 blockchain and interoperability platform enabling 

 to operate across multiple blockchains, including those without native 

 capabilities, such as Bitcoin and Dogecoin. ZetaChain has launched a new program that dedicates 5% of its ZETA token supply to boost DApp development on its platform, with a specific focus on Bitcoin-related projects, which will receive 1% of the allocation. This initiative aims to enhance product and service innovations across blockchain networks, particularly after Bitcoin's recent 

The funding, which will be rolled out over the next 3–4 years, supports advancements in Bitcoin infrastructure, 

 (DeFi), and gaming/social applications. This program is now open for project submissions, emphasizing ZetaChain's omnichain capabilities to improve the blockchain user experience.

ENA Surges by 7.3% After Ethena's Synthetic Dollar Launches on Swell L2 With Rewards and Airdrops in Pre-Launch Phase

 Labs (ENA), founded in 2023, has introduced USDe, a synthetic dollar on Ethereum that offers a decentralized alternative to traditional stablecoins. It features the 

 to manage volatility, and aiming to transform the financial ecosystem by enhancing Ethereum's utility. 

Recently, USDe has become available on Swell L2. By depositing USDe during the pre-launch phase, users can earn Sats, qualify for a Season 2 airdrop upon the L2 launch, receive additional airdrops from projects on Swell L2 and share 1 million EigenLayer points. For more details, visit the 

FRONT Surges by 4.6% After Frontier Wallet Enables Secure Cross-Chain Asset Swaps to Cronos Chain With XY Finance

 (FRONT), founded in 2019, is a multichain DeFi and NFT wallet that supports over 65 blockchains and enables secure trading, staking and asset management through a single interface. It integrates with top wallets via 

, and simplifies the user experience by minimizing the need for multiple extensions and seed phrases. Frontier Wallet now supports cross-chain asset swaps to 

, enabling secure bridging to CRO from over 20 blockchains. 

's community has propelled its platform into a leading Layer 2 network, boasting over $500 million in TVL and significant ecosystem growth. In response to this success, Mode will end its 

 on May 5, 2024, and launch Airdrop 2 with 500 million MODE tokens to further incentivize ecosystem participation. 

The native MODE token, essential for governance and ecosystem growth, will launch on May 7, 2024. The first airdrop saw 5.5% of MODE's total supply allocated, with significant vesting terms for top wallet holders to promote long-term holding. Airdrop 2 aims to continue this momentum by rewarding ongoing user and developer engagement.

 allocations as follows: 64% for OGs, 30% for Trader Points Program participants, 5.5% for early version 1 users and 0.5% for the 

 network. An additional 2% of tokens (20 million) have been added, bringing the total to 12%, to celebrate community milestones. 

, and redistribute penalized allocations. A novel claim bonus incentivizes delayed claims to minimize bot activity and network congestion, with bonuses increasing over a six-hour period and unclaimed bonuses returning to the DAO. The exact claim date will be announced soon, with details available on 

friend.tech Launches V2 and Announces Airdrop

 version 2 of its blockchain-based social platform, with new features and anticipation of a 100% airdrop of its FRIEND token. The company has already taken a snapshot for the airdrop, which may occur as soon as next week when points balances become blockchain-based. friend.tech, which debuted in August 2023 on 

, a Coinbase-incubated Ethereum Layer 2, had initially seen significant activity but later experienced a decline. 

 for managing community treasuries and minting tradable collectibles, a new points system for the airdrop, and custom engagement metrics. Additionally, version 2 allows users to customize their chat spaces. The platform currently has $34.4 million in total value locked, down from its peak of $52 million.

Stay tuned for more institutional insights and crypto updates next week!

Advanced

Bybit_Institutional_Weekly_Poster_(4).png

Weekly Institutional Insights — Crypto Rebounds Following Friday’s Weak Job Report; This Week’s Outperformer: AR, ZETA

Mysten Labs, the creator of the Layer 1 Sui protocol, celebrated its mainnet's first anniversary with significant growth and notable partnerships with major tech companies like Google and TikTok's parent company, ByteDance.

Daily Top Performer — Near Protocol (NEAR)

Last week, the SPX index is up 0.55%, and the jobs report for April indicated a slowdown in hiring, which fell short of expectations and was lower compared to March. Additionally, Berkshire Hathaway reported a significant reduction in its Apple holdings at its annual shareholder meeting. The broader cryptocurrency market is down, with Bitcoin and Ether dropping by 0.35% and 0.26%, respectively in the past 24 hours.

Today’s outperformer is NEAR, which jumped 8.0% after 

 enhances ecosystem scalability with NEAR Protocol Data Availability integration.

Near Protocol (NEAR), launched on April 2020, is a decentralized platform using sharding for efficient app development and operation. Prom has announced the integration of the NEAR Protocol Data Availability (DA) solution into its ecosystem. This strategic move aims to enhance scalability for rollup developers by offering low-cost, reliable, and high-performance data availability. The integration allows for greater flexibility in addressing blockchain architectural constraints and promises more updates in the future.

Check Out the Latest Prices, Charts, and Data of 

Mysten Labs, the creator of the Layer 1 Sui protocol, celebrated its mainnet's first anniversary with significant growth and notable partnerships with major tech companies like Google and TikTok's parent company, ByteDance. The CEO of Mysten Labs, Evan Cheng, expressed optimism about the future of blockchain technology, predicting a transformative "

" for web3. The company announced new ecosystem partnerships focused on enhancing security and scalability with Alibaba Cloud and Google Cloud, and developing web3 gaming and other digital initiatives with BytePlus. Despite facing stiff competition from other blockchains and having fluctuated in the rankings of total value locked (TVL), Sui remains a strong contender in the blockchain space, boasting robust transaction volumes.

Prices dropped from around $64,000 to below $57,000, with significant ETF outflows peaking at $563.7 million on May 1. Concurrently, Grayscale’s GBTC saw major outflows, while some ETFs like Ark Invest’s ARKB experienced inflows. 

 for its upcoming ZRO token airdrop, an essential milestone in the protocol's development aimed at fostering cross-chain interoperability. The airdrop, set to occur in the first half of 2024, has sparked significant anticipation within the DeFi community, evidenced by trading activity on Hyperliquid DEX, where ZRO's perpetual futures are priced at $8.4, indicating a $17 billion valuation. However, concerns persist about the potential adverse effects of Sybil users, who may exploit the airdrop for short-term gains, as seen in other recent airdrops, which could impact ZRO's price stability post-launch.

Beginner

Daily_Bits_Title_Subtitle_&_Eyebrow_1600x900_(67).png

Mysten Labs Celebrates Sui Protocol's First Anniversary with Major Partnerships and Optimistic Outlook for Web3

Merlin Chain is a Bitcoin L2 ecosystem that uses ZK-proof transactions to scale Bitcoin, and offers many helpful features that support blockchain technology.

Bitcoin has been the leading cryptocurrency for years due to its vast user base and reliable price. However, this older 

 often struggles to provide users with cutting-edge services. Merlin Chain hopes to empower Bitcoin by adding key features. This 

 has the potential to make Bitcoin faster, more affordable and easier to use, and it's already attracted a lot of early investors. Keep reading to see how Merlin Chain works, and to learn more about its native crypto.

 ecosystem. This blockchain protocol uses 

 transactions to scale Bitcoin, and offers many helpful features that support blockchain technology, such as 

Merlin Chain was founded by a pseudonymous crypto enthusiast 

 who’s been working in tech spaces since 2013, primarily focusing on 

 technology. However, the creation of the 

 protocol attracted Jeff to the crypto space as he realized the growing interest in new, on-chain assets for Bitcoin. 

During his efforts to create an ecosystem in which people could design native assets linked to BTC, Jeff also started exploring Layer 2 technology and zero-knowledge proofs. Ultimately, all of these interests were combined in forming the Merlin Chain. 

The primary goal of Merlin Chain is to enhance Bitcoin's ability to serve its community by adding additional features to the main chain, thus helping Bitcoin remain competitive in the modern blockchain industry. Some of the many ways that Merlin Chain aims to improve Bitcoin include:

The underlying architecture of Merlin Chain is built on the concept of the zero-knowledge proof. This cryptographic algorithm allows a blockchain to verify that a transaction is correct without needing to explain how it knows. It cuts back on the amount of data that needs to be transferred between chains, greatly speeding up transaction times and reducing processing needs.

 to process and approve transactions on its independent blockchain. It then uses 

 to bundle these transactions into compact blocks that can be published quickly on the main Bitcoin blockchain. The result is a system that efficiently handles data off-chain before storing it on the main chain.

Following are the key features users can access through Merlin Chain.

This service is a helpful way of increasing scalability within the crypto space. DApps that require fast, affordable transactions can use Merlin Chain's ZK-rollups to quickly and easily handle large amounts of transactions.

Merlin Chain's decentralized network of oracles is used to move information on- and off-chain. People can use this service to collect Bitcoin information for their own applications, and to make sure their application data is placed back on Bitcoin. 

In the future, Merlin Chain hopes to increase its security by adding on-chain fraudproof mechanisms. Nodes from its oracle network will stake BTC to verify transactions. Other nodes will then be able to challenge a node's veracity and prove whether or not the transaction was conducted correctly. Anyone who can prove another node has been inconsistent will earn a reward as an incentive.

A big perk of Merlin Chain is that it's compatible with the Ethereum virtual machine. This allows users to easily work with the countless projects hosted on Ethereum, and developers can easily incorporate other services, such as Ethereum-based wallets, into their own Bitcoin projects.

 makes it easy to transfer assets back and forth between Merlin Chain and Bitcoin. Users can connect their wallets to the bridge to 

One of the fascinating things about Merlin Chain is that it provides more than just basic scalability services. This Layer 2 protocol includes a wide variety of blockchain tools, as follows.

 (DEX) that runs on the Merlin Chain, supporting both Merlin and Bitcoin tokens. In addition to assisting with transactions, MerlinSwap also provides the crypto community with 

 is the Merlin Chain’s launchpad. It incubates new projects, and helps developers build DApps on the Chain. Merlin Starter also provides asset support for various digital assets, including 

Throughout 2023, Merlin Chain has been focusing primarily on designing its system's framework. Once everything was up and running, it launched its mainnet in 2024. The project's plans for the near future focus on releasing its 

 system so that users will be able to stake tokens to generate interest through the system. 

Once this system is fully underway, Merlin Chain plans to enhance its projects by finalizing the public release for Merlin Bridge and other features. The team still hasn't announced a defined road map of exciting developments for 2025, but Merlin Chain’s social media indicates it will be trying to expand its ecosystem and get more DApps running on its Layer 2 protocol.

MERL is the native token for Merlin Chain. It provides a variety of different services in the crypto community, including functioning as a governance token and as a method of paying network fees. MERL is also used to manage staking rewards and provide liquidity for the network. Its 

 is slowly being released over four years (current circulating supply is around 225 million), and will be distributed according to the following plan:

MERL debuted in mid-April 2024 at a price of $1.31. Since then, the coin has been on a gradual decline. As of late April, MERL crypto prices had more than halved in value. Though there were some brief price spikes, the coin's value has been under $1 for quite some time. Its price was $0.532 as of May 6, 2024. 

Despite this lackluster beginning, some crypto experts believe the MERL crypto’s price will recover. So far, its pricing has been closely tracking that of BTC, so it's likely that MERL’s price will start to rise again when BTC’s does. CoinCodex data 

 will start to increase in May, reach $2.55 by 2025 and hit $3.41 by 2029. This positive sentiment is supported by DigitalCoinPrice data, whose analysts 

 will reach $1.39 by 2025 and hit $2.98 by 2029.

Looking to trade Merlin Chain tokens? Bybit now offers the MERL/USDT Spot trading pair and MERLUSDT Perpetual contracts. To get started, you’ll first need to 

, fund it with cryptocurrency and navigate to the 

Though the Merlin Chain coin doesn't seem like the next big thing on crypto exchanges, it still might be a decent choice for a discerning investor. Those who like to take the risk of purchasing overlooked coins and profiting from small fluctuations in price might enjoy MERL. Keep in mind that MERL is likely to be a volatile token, so investors need to exercise caution when purchasing it. Never put money into MERL or any other altcoin that you can’t afford to lose, and make sure you keep your portfolio as diverse as possible.

Merlin Chain hopes to provide valuable features that will be useful to the entire blockchain industry. The protocol has had some exciting developments and created helpful features for DApps. This crypto project is worth watching, but investors need to 

Intermediate

merlin_chain.png

Merlin Chain (MERL): A Bitcoin L2 With Cutting-Edge Architecture

A Solana ETF is a type of exchange-traded fund that offers a way for investors to gain exposure to the Solana ecosystem without directly owning SOL tokens.

The U.S. Securities and Exchange Commission (SEC) 

) on Jan 10, 2024 electrified the cryptocurrency community, 

. This landmark decision has opened the floodgates for speculation about the introduction of spot ETFs for other leading cryptocurrencies. Several issuers have already 

, a rising star in the blockchain arena, could also be a prime candidate for its own spot ETF. This article examines the feasibility of a Solana Spot ETF in the wake of Bitcoin’s ETF success. Explore the potential of a Solana Spot ETF while considering the lessons learned from Bitcoin’s ETF journey and the unique aspects of Solana’s blockchain technology that could influence its own spot ETF approval.

A Solana ETF is a type of exchange-traded fund that tracks the price of Solana's native cryptocurrency, SOL, offering a way for investors to gain exposure to the Solana ecosystem without directly owning SOL tokens.

A Solana ETF, if approved, would function as a regulated investment fund that follows the price of Solana’s native token, SOL, by directly holding these tokens in its underlying basket. The ETF would be traded on stock exchanges, so investors could buy and sell shares of the fund, just as they would with stocks. The value of the ETF shares would fluctuate with the market price of SOL tokens, providing investors with exposure to Solana’s performance without the need to directly purchase or store the cryptocurrency.

The mechanics of a Solana ETF would involve several key components:

The establishment of a Solana ETF would depend upon regulatory approval. This requires the ETF issuer to demonstrate that the fund meets all legal and regulatory standards, including those related to investor protection and market integrity. The SEC’s stance on cryptocurrency ETFs has been cautious, but the recent approval of Bitcoin Spot ETFs has set a precedent that could pave the way for other cryptocurrencies such as Solana.

The current landscape of Solana ETFs is filled with anticipation and a few options for those eager to get in. While there aren't any official Solana ETFs approved yet in the U.S., there's a lot of talk about the possibility. People are particularly hopeful following the SEC's approval of Bitcoin Spot ETFs, whose funds directly hold BTC.

Although the exact timeline for approval remains uncertain, experts believe that Solana could hit the crypto spot ETF market in 2024. They're keeping a close eye on the SEC's decision regarding potential Ethereum Spot ETFs, 

, which could set a precedent for Solana ETFs.

In the meantime, investors looking to get a piece of the Solana action can turn to products such as 

 (VSOL), which are available in certain regions. In Canada, 

 is getting ready to launch a Solana Spot ETF, which could be the first of its kind in North America.

The excitement around Solana ETFs comes from the blockchain's increasing adoption, its technological advancements and its attractiveness as an investment. Nevertheless, getting ETF approval is anything but straightforward, as the market needs clear structures to support them and there are numerous regulatory hoops to jump through.

Still, with the growing interest in crypto ETFs, there's a reasonable chance of Solana ETFs becoming a reality soon. When they do, they'll offer investors a new way to tap into Solana’s exciting blockchain platform.

Chances of Solana ETF Applications Being Approved

As mentioned above, approval for Solana ETFs depends upon a few key factors, including the regulatory landscape. Right now, it seems like getting the green light for a Solana ETF in the U.S. might be a long shot. Tellingly, no company has yet applied for one to the SEC.

Instead, all eyes are on Ethereum. Several companies, including big names like Franklin Templeton and 

s. The SEC is expected to decide on these applications this year, a decision that could hold sway over the fate of Solana ETFs.

However, there's a twist: The SEC sees Bitcoin differently because of its 

 (PoW) consensus mechanism, whereas Ethereum and Solana are both 

 blockchains, making approval trickier. The SEC is still investigating whether Ether (ETH) is a security, which would open up additional compliance requirements for the asset.

 because it aims to play a similar role in the blockchain world. It boasts compelling features, such as fast transactions and low fees. Therefore, if Ethereum gets the thumbs-up, it may bode well for Solana, too. The anticipation is that if a Solana ETF gets the go-ahead, it could see a wave of inflows, much as Bitcoin did.

What Will It Mean If a Solana ETF Application Is Approved?

If a Solana ETF application were approved, it would mark a significant moment for the crypto world, especially for Solana itself. 

Investors would gain the ability to effectively buy Solana's token, SOL, through a regulated investment product traded on stock exchanges. This could bring more liquidity into Solana, make its token easier to access and provide some regulatory clarity — all of which could attract larger institutional investors.

Looking at the impact of Bitcoin ETFs on the crypto market, we could see a similar rush of mainstream adoption if a Solana ETF were to be approved. Being able to invest in Solana from a typical retail or institutional brokerage account would open the door for larger inflows.

However, since the SEC is still trying to determine whether Ether is a security, it will almost certainly have ruled on this issue before approving a Solana ETF. 

The SEC's January 2024 approval of Bitcoin Spot ETFs has sparked excitement over the potential for a Solana ETF, a possibility that could make investing in the SOL token more accessible for everyone. Although no applications are in the U.S. pipeline yet, the anticipation in the industry is undeniable. Approval would mark a major milestone, with an impact potentially similar to that of Bitcoin's Spot ETF approvals — and the promise of bringing more institutional players into the cryptocurrency market.

solana_etf.png

Solana ETF: The Next Contender After BTC and ETH Spot ETFs

Strategies

Trading

Supply and demand zones are consolidation areas that occur before an explosive upward or downward price movement.

bitcoin-supply-demand-zones.png

xrp-supply-demand-zones.png

how-to-draw-supply-zone.png

how-to-draw-demand-zone.png

pullback-strategy.png

bullish-breakout-strategy.png

bearish-breakout-strategy.png

range-trading-strategy.png

supply-zone-resistance-level.png

 and trading that can help traders identify potential areas of market reversals or trend continuations in cryptocurrency markets. Understanding how supply and demand levels work can be an invaluable tool for traders looking to make more informed decisions in the financial markets. 

In this article, we’ll provide an overview of the successful use of supply and demand zones in cryptocurrency trading, including identifying these zones on price charts and implementing them in a trading strategy, and their pros and cons. Whether you’re a new or experienced trader, mastering the art of supply and demand zones can give you an edge in trading.

Supply and demand zones are price areas where larger market participants, such as 

 or institutional asset managers, are presumed to be accumulating (buying) or distributing (selling) cryptocurrency. 

Relatively sideways consolidations characterize these zones before an explosive move. Supply and demand zones can indicate a possible reversal or continuation of an existing trend.

 or move must be present to use supply and demand zones effectively. This move is a quick and pronounced shift in price direction populated by large red (downswing) or green (upswing) candles. A consolidation zone would be considered normal price consolidation without this impulse move.

In technical analysis, cryptocurrency prices are solely determined by the interaction between supply and demand. When demand exceeds supply, prices rise, and when supply surpasses demand, prices fall. This dynamic is roughly balanced at times, resulting in price consolidations within a range.

Therefore, supply and demand zones are a form of 

, or relatively sideways price action, that occurs before an explosive move.

 The impulse wave indicates that the market is leaving a supply or demand zone, and traders can use it to identify an imbalance between buy and sell orders. This imbalance marks the start of a trend. Traders use supply and demand zones to determine price ranges where demand decreases and supply increases during downtrends, and where demand increases and supply decreases during uptrends.

The following Bitcoin chart depicts some of the supply and demand zones over a 2-year period.

A supply zone is a price area that marks the beginning of a sharp, fast downtrend move, either as a bearish reversal or downtrend continuation. Typically, selling or distribution takes place within the supply zone. Eventually, a significant imbalance will result in a rapid decline in prices. You’ll profit from 

A demand zone denotes a price range that signals the start of a sharp uptrend, either as a bullish reversal or uptrend continuation. Within the demand zone, accumulation or buying is occurring. At some point, an imbalance between supply and demand occurs, leading to a swift rise in price. You can take a 

To identify supply and demand zones, we want to look for impulse moves. An impulse move shows a clear imbalance between the two forces of supply and demand, culminating in a sharp move either up or down. When scanning charts, look for large red or green candles within a sharp trend to quickly find supply and demand zones. 

Furthermore, for trend continuation setups, look for short bases following an impulse wave in anticipation of a continuation. Sharp swings frequently consolidate for a short time before price continues to trend again. This is especially true with impulse waves.

This next daily chart of XRP/USD showcases some examples.

Supply and demand zones are found at the beginning of an impulse move. Therefore, first find the impulse moves to determine the supply and demand zones.

First, find a declining impulse move and look at the beginning of the move. Start drawing the top horizontal line from the highest candle wicks of the zone, then extend the rectangular box to the lower line where downside momentum is triggered, that is, at the beginning of a long red candle, as shown below.

When looking to draw a demand zone, you first want to find a sharp rally or an ascending impulse move. Then, find the consolidation zone near the beginning of the move. Start drawing the rectangle at the lower wicks of the demand zone, and end where the large green candle begins to show upward momentum improving. The beginning of the green candle’s breakout area is where momentum has taken off.

The stronger the price move after the zone, the greater the credibility of the zone. What is the strength (up or down) of the movement following a supply or demand zone? This analysis is largely a judgment call, but there are a few things to look for to increase accuracy. First, are there relatively larger green (uptrend) or red (downtrend) candles? Is the move faster and more significant than has been seen recently? Did the breakout take off immediately — or hesitate?

Time refers to the amount of time that a supply or demand zone takes to form — in other words, how long it takes for the consolidation period to develop. A zone that has been in place for an extended period is likely to be stronger and more reliable, because the longer the basing period, the greater the potential for a sharper and longer move once a breakout or breakdown occurs.

One of the most important things to consider when identifying a supply and demand zone is how fresh it is. Freshness relates to whether the zone has been tested yet, or how many times it’s been tested. The fewer tests, the fresher it is. A fresh zone is more likely to function as a supply and demand zone once again during a pullback, presenting a second opportunity to enter. However, the more frequently a zone has been tested, the more likely it will be busted. 

The notion of freshness in supply and demand zones is unlike that of support and resistance, where price levels gain strength from being retested multiple times by the market.

Supply and demand zone trading strategies include setups for trend reversals and continuations. However, this is one tool for market analysis, and the quality of the analysis can be enhanced by using other market analysis or technical indicators along with supply and demand analysis.

 strategy, a trader is looking to enter the market following the first test to the zone. When a sudden move or impulse wave occurs, a certain degree of pullback typically follows. You can enter on that pullback if it returns to the zone, as it usually provides a safer entry with a tighter protective stop.

When an uptrend breaks out from a demand zone, the trader waits for the price to “pull back” to the zone's support level in anticipation of a continued upward movement. In the case of a breakdown from a supply zone, the trader is looking for a pullback into the resistance of the zone in anticipation of a bearish continuation.

When defining the entry, traders will look at other technical indicators for 

 to confirm the setup. For example, see if you can spot the signs for confirmation in the chart below. A 

 confirm the reversals in the chart below.

In the case of the breakout strategy, traders are seeking a relatively short area of consolidation for a trend continuation following an initial impulse move. This first chart shows a bullish breakout strategy.

 involves trading within a specific price range that’s defined by a supply zone and a demand zone. Traders aim to buy near the lows of the range and sell near the highs, or vice versa. They then exit the trade when the price reaches the opposite side of the range.

A momentum oscillator can be helpful in timing the trades for this strategy. The example below uses the 14-day 

 (RSI) indicator. Generally, an intraday time frame is going to be more useful in trading cryptocurrency with this strategy, though it also depends on the volatility of the cryptocurrency traded. 

While analyzing candle setups alone may not always provide clear insights, the RSI indicator can confirm the observations in price behavior. The vertical lines illustrated below identify when the RSI turns up for buying opportunities, and down for selling opportunities.

Many traders consider supply and demand zones as resistance or support, respectively. But while both supply and demand zones and 

 are used to identify key price areas with buying or selling pressure, there are some crucial differences.

Supply and demand zones point to specific price levels with a concentration of either buyers or sellers, resulting in an imbalance between supply and demand. In supply and demand zone trading, traders are looking to identify fresh or recent price action.

Conversely, support and resistance levels are price levels where buyers and sellers have historically entered or exited the market, respectively. In other words, supply and demand zones are fresh or more recent price areas, whereas support and resistance price levels may be recent or current price areas, but are also identified historically.

Supply and demand zones are more useful in trading, given their more recent price action. In contrast, using support and resistance levels can be useful in a broader context for trade or market analysis, but it’s not as helpful for establishing specific trade strategies.

: Supply and demand trading is based on objective data, such as price, volume and investor sentiment. This helps reduce the impact of emotions and biases on trading decisions.

: Supply and demand trading provides a versatile approach to trading, as it can be applied to any market, asset class or time frame.

:There are times that the signals may be very accurate for entering and exiting trades. This is because supply and demand trading’s focus is on key price levels where significant buying or selling pressure is likely to occur.

: By identifying key resistance and support areas, supply and demand trading can help traders manage risk by using it to place appropriate 

: If executed correctly, supply and demand trading can generate high returns due to the favorable 

:Using supply and demand strategies in trading can be a complex process, and traders should have a solid understanding of technical analysis, market dynamics and 

: While the data may be objective, the interpretation of that data can be subjective, differing from one trader to another.

:Supply and demand trading requires significant time and effort to identify key price levels, keep levels up to date, find setups and execute trades.

:False signals are possible, and can lead to losses or missed opportunities.

Understanding supply and demand zones is crucial for successful trading. Some tips for successful trading with supply and demand zones include differentiating between support and resistance on one hand and supply and demand on the other, recognizing impulse waves emerging from zones, and considering the pros and cons of this methodology. Combining these strategies with other tools and indicators can increase your likelihood of success when trading with supply and demand zones.

Supply and Demand Zones: Tips For Successful Trading

Grab Up to 5,000 USDT in Rewards

Grab Up to 5,000 USDT in Rewards