Tuesday, June 25, 2024

New Way to Make Money on Stablecoins

High fluctuations in the prices of cryptocurrencies pegged to the US dollar have created new opportunities for profit

The last few months have been marked by a real storm for stablecoins USDN has decoupled from the value of the dollar several times, UST is trading ten times cheaper than the dollar, and even USDT, backed by reserves, lost up to 5% of its value at the moment. The above events could be a real tragedy for users who neglected the rules of diversification and used only one stablecoin for all their transactions or savings.

Despite the difficult everyday life for the stablecoin market, at the moments of their greatest volatility, there are also the most opportunities to earn on price movements for users with an aggressive trading style.

Features of the approach and worldview


Among the most staunch supporters of technical analysis, it is widely believed that, in addition to market data, charts and the order book, all other information about the asset is superfluous and sometimes even distracting from the main thing. It is difficult to at least partially disagree with this in relation to the crypto market. There are many great projects with excellent fundamentals that the market ignores, while at the same time, promoted tokens, albeit without functionality, can rise in price just because there are enough buyers and sellers creating a “wrapper” price.

Trade only the chart – this is the approach that should be adopted by users who want to make money on the movement of unstable stable rates. In this case, the purpose of the token, the team behind it and the development of scandals related to another fraud are absolutely unimportant – all this only distracts from the schedule and often, according to supporters of this approach, is aimed only at making the market move in the direction the manipulators need .

Having discarded the desire to buy “cheap dollars” in the long term in order to wait for their price to recover, you can look at the price charts of unstable stables from a different angle, considering the worked out patterns of technical analysis, new trading opportunities and, of course, tightening stop losses and take- profits for such high-risk positions.

UST – ideal practice ranges?


On the hourly and four-hour chart of the UST price on the FTX exchange, price support and resistance zones are clearly visible. On May 26, the price of the asset is in one of the zones of historical interest of buyers and psychological support at $0.09 per token. There are other more distinct levels, the key one being $0.06. This level was formed by the asset on the morning of May 13.

After the final strong momentum, which went down to a historical low of $0.044, and the formation of a doji candlestick on the hourly timeframe, a range of candlesticks of the same size formed, exit and consolidation above which subsequently led to an increase of more than 95% for those who opened long positions. Even more aggressively opening a long position on the asset could be guided by the double bottom pattern, buying UST immediately after the second bounce from the $0.06 level and Doji candles on May 13 at 9:00, then the profit at the peak could be a phenomenal 250-300%.

The price bounce stopped near $0.27 per token, and this level could be conveniently used for profit taking, as it coincided with the once support level of the worst closing value of hourly candles on May 12th. Now this level can be considered as the final and most ambitious point for setting a take profit for swing positions on the asset.

A more likely near value of the take profit could be the level near $0.13 per token — this is where the price rebound ended, which began on the afternoon of May 16 and lasted until the middle of the day on May 18. Then, also, turning around at a historical low, the asset showed an increase of more than 90%.

Where to put a stop loss for such a position depended on the desired level of risk of users: values ​​​​below the psychological mark of $0.05 are convenient. It is also possible to use values ​​below the historical low of $0.04.

The safest approach for taking positions on UST would be to abandon any purchases now in favor of placing a buy order in the historical low area, followed by a stop loss immediately after it. The minimum risk in this case will lead, however, to the minimum probability of execution of such an order.

USDN – the convenience of harami candles?


The USDN chart on the Waves crypto exchange is upside down compared to the chart from the previous paragraph about UST. In this part of the text, we are talking about how much USDN you need to pay in order to acquire a more stable USDT that is approximately equal to the dollar.

Users could observe excellent entry points into transactions, almost like in a technical analysis textbook, on April 4 and 5 at the time of the first serious decoupling of the USDN from the dollar. Four-hour candles on the evening of April 4 and early morning on April 5 formed a series of inside bars or harami candles – a pattern when several candle bodies completely fit into the previous ones. An exit from such a range to either side on increasing volumes may indicate the direction of subsequent movement.

A position opened at the exit from the range at that time could bring more than 10% profit even with moderate profit taking after reaching the psychological levels of $1.06-1.05, after breaking through which the USDN price began to drop rapidly.

It was possible to successfully repeat the deal on the inside bar pattern already on the evening of April 5 on the hourly timeframe. An open position at the exit from the range of harami candles entering into each other could bring more than 5% profit with exactly the same fixation at the levels described in the paragraph above.

In both cases, an additional important criterion for opening positions was the volume increasing during the beginning of the movement, as well as the presence of doji candles before the impulse on the hourly timeframe. Many similar setups for opening short-term positions on the asset were also presented during the second detachment of USDN from the dollar price on May 12, 13 and 14.

Where is the best place to put a stop loss when trading ranges inside bars? The classical theory suggests two options. You can place a stop above the upper limit of the harami candlestick range from which the price has just exited in the other direction, or you can use a trailing stop that dynamically follows the price as it moves in the desired direction. The trailing stop functionality, unfortunately, however, is still not available on most crypto platforms.

Platform opportunities for additional profit


USDN and UST tokens, which appeared on the balances of users as a result of opening long positions, can also be used to receive additional profit. The FTX exchange allows you to use UST for margin lending directly from the Portfolio tab, by clicking the Lend button, users will begin to receive payments every hour for providing loans for margin trading of other market participants.

In recent weeks, the interest per annum for the provision of UST loans due to the market situation for the asset has been extremely high, reaching up to 200% per annum. There is no need to manually set the percentage value – the exchange will automatically calculate rewards every hour, taking into account the current value of the percentage per annum at the current moment.

USDN tokens on the Waves platform can also be used to generate passive income, either in staking or to provide liquidity in pairs with other assets, earning up to 90% per annum.

Despite the temptation of the methods of passive income described above, it is worth remembering that their use will lead to the loss of the ability to automate the position with orders – users will have to fully monitor the open transaction themselves.

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