DeFi’s total market cap impacts crypto prices by demonstrating investor confidence in decentralized finance protocols. When DeFi market cap rises, it usually signals growing trust and adoption, positively influencing related assets like Ethereum. Conversely, a drop can indicate reduced interest or regulatory concerns, potentially leading to price declines.
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Token burn is the process of deliberately destroying a certain amount of a cryptocurrency’s tokens to reduce the total supply. This is often done by sending tokens to a wallet with no private key, making them inaccessible. The idea behind token burns is to create scarcity, which could increase the token's value if demand remains constant or grows. By reducing supply, the project aims to boost the perceived value of each remaining token, potentially driving up prices. Token burns can be done regularly or as part of specific events like reaching milestones or during "deflationary" phases in the token’s lifecycle. However, the long-term effectiveness of token burns on price depends on market demand and overall project fundamentals.
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Moving averages help smooth out price fluctuations, making it easier to spot underlying trends. The Simple Moving Average (SMA) gives an average price over a specified time, while the Exponential Moving Average (EMA) gives more weight to recent prices, making it more reactive. When short-term moving averages cross above long-term ones, it’s often seen as a bullish signal (golden cross). Conversely, when they cross below, it can signal bearish momentum (death cross). These indicators are used to identify trends, reversals, and optimal entry or exit points in volatile markets.
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