Crypto glossary

Airdrop

A free distribution of tokens to wallet holders, often to reward early users of a project. Fake airdrops are a common scam to steal wallet access.

Altcoin

Any cryptocurrency other than Bitcoin. Ethereum, Solana and XRP are altcoins. Altcoins usually move more sharply than Bitcoin in both directions. Altcoin Season Index

ATH (all-time high)

The highest price an asset has ever reached. The distance from the ATH shows how far a coin is below its peak. Cryptocurrencies

Bear market

A long period of falling prices and pessimism, usually defined as a drop of 20% or more from a peak. Fear & Greed Index

Bitcoin dominance

Bitcoin's share of the total crypto market capitalization. Falling dominance often goes along with an altcoin rally. Bitcoin dominance

Blockchain

A shared ledger in which transactions are grouped into blocks and linked together. Thousands of computers keep the same copy, so records are very hard to change.

Bull market

A long period of rising prices and optimism. Bull markets in crypto have often followed Bitcoin halvings. Fear & Greed Index

CEX (centralized exchange)

A crypto exchange run by a company that holds customers' funds and matches their orders, usually with identity checks.

Cold wallet

A wallet that keeps private keys offline, usually on a hardware device. It is the safest way to store larger amounts.

DCA (dollar-cost averaging)

Investing a fixed amount at regular intervals regardless of the price, which spreads the risk of buying at a bad moment. DCA calculator

DeFi (decentralized finance)

Financial services such as lending, borrowing and trading that run on smart contracts instead of banks.

DEX (decentralized exchange)

An exchange where users trade directly from their own wallets through smart contracts, without handing their coins to a company.

Fear & Greed Index

A score from 0 to 100 that measures market sentiment. Low values mean fear, high values mean greed. Fear & Greed Index

FOMO

Fear of missing out: buying in a hurry because prices are rising fast. It often leads to buying near a top.

Funding rate

A periodic payment between long and short traders in perpetual futures that keeps the contract price close to the spot price. A high positive rate means longs are crowded. Funding rates

Gas fee

The fee paid to the network to process a transaction or run a smart contract, especially on Ethereum. It rises when the network is busy.

Halving

The event, about every four years, when the reward for Bitcoin miners is cut in half, slowing the creation of new coins. Bitcoin halving

Hash rate

The total computing power securing a proof-of-work network such as Bitcoin. A higher hash rate makes the network harder to attack. On-chain indicators

HODL

Crypto slang for holding coins for the long term instead of trading, born from a famous misspelling of "hold".

Hot wallet

A wallet app connected to the internet, on a phone, computer or browser. Convenient for daily use but more exposed to hacking.

KYC

Know your customer: the identity checks that regulated exchanges must carry out before you can trade or withdraw.

Layer 2

A network built on top of a blockchain to make transactions faster and cheaper, such as the Lightning Network or Ethereum rollups.

Leverage

Trading with borrowed money to open a position larger than your deposit. It multiplies both profits and losses. Liquidation price

Liquidation

The forced closing of a leveraged position when the margin can no longer cover the losses. The deposit is usually lost. Liquidations

Long and short

A long position profits when the price rises, a short position when it falls. The long/short ratio shows how traders are positioned. Long/short ratio

Market capitalization

The price of a coin multiplied by its circulating supply. It is used to rank cryptocurrencies by size. Cryptocurrencies

Mining

Using computing power to confirm transactions and add new blocks in a proof-of-work blockchain, in exchange for newly created coins and fees.

NFT

A non-fungible token: a unique digital item on a blockchain, such as a piece of art, a collectible or a ticket.

Open interest

The total value of futures contracts that are still open. Rising open interest means new money is entering leveraged positions. Open interest

Perpetual futures

Futures contracts with no expiry date, the most traded crypto derivatives. Their price is anchored to spot by the funding rate. Funding rates

Private key

A secret number that proves ownership of crypto and signs transactions. Whoever has it controls the coins.

Proof of stake

A consensus method in which validators lock up coins as collateral to confirm blocks. It uses far less energy than mining.

Proof of work

A consensus method in which miners spend computing power to confirm blocks. Bitcoin uses proof of work.

Seed phrase

A list of 12 or 24 words that can restore all keys of a wallet. Never share it and never type it into a website.

Smart contract

A program stored on a blockchain that runs automatically when its conditions are met. DeFi, NFTs and tokens are built on them.

Stablecoin

A token designed to keep a stable value, usually 1 US dollar, such as USDT or USDC. It is widely used for trading and payments. Stablecoins

Staking

Locking coins in a proof-of-stake network to help secure it, in return for rewards. Staked coins may be unavailable for a while.

Token unlock

The release of tokens that were locked for the team, investors or the treasury. Large unlocks can add selling pressure. Token unlocks

Volatility

How strongly and quickly a price moves up and down. Crypto is far more volatile than stocks or bonds. Crypto heatmap

Whale

An investor or wallet holding a very large amount of a cryptocurrency. Big whale transfers are watched as possible signals. Whale tracker

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