Bitcoin, also known as the king of crypto, has been on a rollercoaster over the last few weeks. Falling from a high of $12,700 in late June, the coin's value now stands at $10,547 as of this writing. Most traders who track the rise and fall of the markets, either through an index fund or an ETF, gather on crypto social media to deliberate with each other.
Two of the most common meeting places are Reddit’s r/bitcoin and the famed forum Bitcointalk. Other popular meeting places include Telegram chat rooms, Twitter, and Teamspeak. However, anyone new to these forums might feel like a fish out of water due to the baffling crypto slang that emerges.
You might, for instance, be bewildered by the use of words like "hodl," a purposely misspelled word that should be easy to autocorrect. Why would anyone be called a "bag holder"? And what is "Lambos"?
Recently, news of a possible security data leak from a popular cryptocurrency exchange hit the crypto grapevine. The exchange's CEO quickly took to social media in a bid to avert a full-blown panic from the exchange's investors.
In a tweet, Changpeng Zhao, aka CZ, tweeted, "Don't fall into the ‘KYC leak’ FUD. We are investigating, will update shortly." If you are new to crypto trading, you might mistake this tweet for some sort of cryptic message. However, it’s merely crypto trading slang, the preferred and rather “quick” language of the crypto-verse.
Well, if the crypto bug has bitten you and you’re looking into how to start trading crypto, it will pay to know a bit of the lingo. Below are some trading terminology basics that we have demystified for you.
Trading Slang Terminology: Beginners List
When the 2019 Bitcoin rally kicked off, “when moon?” was a popular crypto Twitter meme. In cryptocurrency trading terms, the word “moon” has many connotations. The word came into widespread use from the phrase "Bitcoin will go to the moon."
It’s a reference to the coin or its potential for value increases over time. “To the moon” means skyrocketing digital asset prices. This is also where “Lambos” comes in. “Moon Lambos” are Lamborghinis purchased with the winnings from trading a coin whose value has “gone to the moon.” What else would anyone buy with so much money made in an instant than a Lamborghini?
Moon could also be used to deride the all too eager, undereducated beginner investors who purchase coins with the expectation of large profits. "When moon" is a subtle approach on crypto forums to mock such investors.
You do not want to be a bag holder in crypto trading slang. A bag holder is an investor who has an asset that is decreasing in value and could end up worthless.
This term is, as you have probably guessed, a misspelled version of the word “hold.” So, why does the whole crypto-verse use it in its misspelled state? Well, it’s said that one GameKyuubi, a Bitcoin forum user, after binge-drinking, drunkenly announced that he was “hodling” onto his BTC in late 2013, when the coin's value was crashing.
The term HODL then became synonymous with the multitude of complex feelings that all long-term Bitcoin investors experience as the coin’s value rises and crashes. HODLers are in the market for the long haul and do not respond in a panic to the volatility of the market. Most Bitcoin HODLers are ordinary Bitcoin maximalists.
In cryptocurrency terms, a bag holder can be a “whale.” This is an individual or group who holds a ton of a given digital asset. It’s easy to find them. Remember, public chains are transparent, and given the pseudonymous nature of Bitcoin, for example, it’s easy to pick them out. Satoshi Nakamoto, the anonymous founder of Bitcoin, is a whale of Bitcoin, Ripple Inc is another whale: They own the majority of XRP. Vitalik Buterin, the co-founder of Ethereum, is an ETH whale. Generally, most co-founders and founders of blockchain projects are whales, partly because of the initial token allocation during the crowd-funding stage.
Pump and Dump
Orchestrating a false demand for a tradable asset is illegal in traditional setups. However, in cryptocurrencies, which struggle with regulation, “pumping” a coin or token is now an open secret. Planned in private chat rooms such as Slack, a group may decide to “pump” the price of a token/coin by buying it en masse and “dumping” them by selling at the same time.
To get rekted is to be destroyed or ruined. A common catch phrase amongst gamers, the term permeated into the crypto scene and popularized in 2018. Then, many bag holders were rekted in that they posted huge losses following the drastic fall of cryptocurrency prices in what was dubbed the crypto winter. If a margin trader is rekted, then his or her position has been liquidated by the exchange.
Real cryptocurrency traders don’t usually value digital assets using USD or any other fiat term. They do so in Sats, which is the smallest fraction of BTC: 0.00000001. This high level of divisibility is what sets BTC and generally most cryptocurrencies apart from fiat.
Altcoin or Alt
Any coin that is not Bitcoin is an alternative coin. That means ETH, XRP, Bitcoin Cash, Bitcoin Private, and more than 2,000 more coins are altcoins. These altcoins can also be tokens, and understanding the difference between coins and tokens is important.
Most altcoins are “shit coins,” meaning they are rarely used and valued near zero.
Fiat is a term for the currency issued by governments. Fiat money is currency declared to be legal tender by a government and is, consequently, state-issued. The word came into use in the English language around 1630. In that age, fiat meant “authoritative sanction.” Literally, it’s Latin for “let it be done.” According to Dictionary.com, the word was first used to denote money in the early 1870s.
Back to the data leak allegations mentioned in the first paragraph: CZ attributed these claims at an attempt to fuel FUD. What does this mean? In currency trading terminology, FUD is the acronym for fear, uncertainty, and doubt. You might be wondering what these three emotions have to do with crypto trading. Well, according to Webopedia, “FUDding” was there before the age of digital currency.
The acronym, however, is rooted in the computer age, having become a marketing term used to “cast a shadow” over a competitor’s product. This often happens when the product relying on FUD is less competitive in the marketplace. Webopedia says that the term was coined by Gene Amdahl, who once worked for IBM and left the tech giant for Amdahl Corp.
Gene is known to have said, "FUD is the fear, uncertainty, and doubt that IBM sales people instill in the minds of potential customers who might be considering Amdahl products."
In cryptocurrency trading, FUD can lead to price drops, not due to chart signals of the coin's fundamentals but due to bad news on social media. FUD is therefore the opposite of FOMO, often leading to inexplicable sell-off trades. A person who intentionally spreads FUD is a FUDster.
When the market cap of a coin or token surpasses another and is therefore ranked higher, a flippening has occurred. Last year, XRP temporarily flipped ETH, becoming second. Soon, ETH changed the tables, flippening XRP. Flippening in altcoins happens frequently.
An excellent example of FOMO is the 2017 Bitcoin rush that lifted the coin from lows of $900 to highs of $20,000 within a year. FOMO is an acronym for “fear of missing out” and is slang for irrational behavior fueled by the worry of missing a fantastic opportunity.
The 2017 Bitcoin Bull Run was labeled as FOMO-driven because the excitement surrounding the new asset fueled it. In the end, the overbuying led to a dramatic fall in value to the $3,200 mark in 2018. The digital currency and its investors have matured since then and are now experiencing a new boom.
This term is not widely used, but it’s the exact opposite of FOMO. The “joy of missing out” was a term coined after the 2018 drop in the value of digital assets. Those who didn’t buy tokens/coins in early 2018 had a JOMO moment, entering at better prices in late 2018.
The act of deliberately spreading false news to “pump” the price of a coin/token when one has a vested interest is called “shilling.” Tron co-founder Justin Sun is a notorious TRX shill, and so is the public support for BNB from Changpeng Zhao of Binance.
Basic Trading Terminology For Beginners
When you sell crypto assets, the ask price refers to the minimum amount you are willing to sell the assets for.
The bid price of an asset refers to the maximum amount a trader is willing to pay for it. Supply and demand play a critical role in trading. You can think of a coin's bid price as its demand side of the supply vs. demand equation.
The difference between the ask and bid prices for crypto assets makes up the bid-ask spread. That spread is the profit that market makers earn by trading assets on an exchange on the investor's behalf.
The cryptocurrency market is known for its volatility. This feature is both its strength and weakness, too, depending on the type of trader you are. A short-term day trader who lives to make a quick buck off fast-changing prices will enjoy the volatility of the market. They can make large profits when there are quick movements in crypto asset prices.
This very same phenomenon can simultaneously bring about losses when the prices take a considerable nosedive in a very short time. Long-term investors, however, are hardly affected by this volatility. They are in for their long-term goals and, in cryptocurrency trading terms, are known as HODLers. This group sees Bitcoin, for instance, as a store of value rather than a trading instrument. They are less interested in swing and day trading, which relies on volatility for profit.
Sell walls happen when a large group of sell orders are placed on an exchange's order book all at once. Sell wall orders often have what looks like undervalued prices. Many crypto pundits say that it’s a sign of wealthy individuals or whales manipulating the crypto market. A sell wall is built as an attempt to drive the value of assets down so that the affluent investors can take large positions on the assets.
When the market is flooded with a particular asset, the buying pressure is reduced. This implies that any other seller who wishes to sell the asset in question will have to settle for a lower price than that of the sell wall. When the whales are happy with the lowered rates, they will eliminate the sell wall, which will push up the value of the coin for their profit.
This is the opposite of a sell wall. It is a large number of buy orders placed on exchange order book all at the same time. The buy wall can push up the price of an asset and also keep it from dropping.
Buy the Dips
Great advice from Warren Buffet: "Be fearful when others are greedy and greedy when others are fearful" leads to “buy the dips.” This means that you should purchase a digital currency when its value is low with the hopes that it will rise later and give you a good return. This works better for digital currencies that have genuine use cases.
A bull market is caused by demand causing prices to trend up. Thus, a bull trend is an upward trend in the value of an asset. Depending on the underlying demand and/or participants, the pattern can grow over months or years and is often associated with a positively sloped moving average (MA). A bear trend, which is also part of Forex trading jargon, refers to a long-term reduction in the value of an asset. It could last for months on end and is signified by a negatively sloped MA.
This is a cryptocurrency trading term that refers to a false signal pointing to a rise in a coin’s value when, in fact, the prices are about to dip. The bull trap therefore ensnares bullish traders.
This is the opposite of a bull trap. A bear trap is a false signal that a coin's value is about to dip when, in reality, it is about to rise. Bearish traders then short the coin or sell off and lose on profit.
A market maker does not need to be super capitalized to influence the whole crypto market with their trading. However, they are highly liquid, placing limit orders on an exchange's order books at a wide range of prices. An exchange could reward a market maker with rebates for the increased liquidity, which fuels trade and increases the depth of the exchange’s order book. Ordinarily, it is recommended that you do ample research before joining a crypto exchange to ensure that you enjoy your trading. Xena Exchange, for instance, not only offers security for your deposited assets but also boasts competitive fees. Furthermore, there is an option to trade derivatives on margin.