Adjusting investing time frames for blockchain speed

Blockchain markets move at an incredibly frenetic, bordering on violent pace. Could the 24/7 nature of blockchain markets be a major reason for this market behavior?

Traditional US stock markets operate from 9am to 4pm eastern time Monday through Friday with generally low volume after hours trading. Conversely the blockchain markets never close operating 24/7 365. This allows for 5x more trading activity in a given year.

A conservative estimate of 7 hours per day trading 252 days per year yields 1764 hours per year vs 8760 hours a year for 24/7 365 blockchain markets. 

This 5x speed increase means bull and bear markets happen 5x faster. While a typical movement might take months to work out in traditional markets, the same market gyrations in blockchain could resolve in a matters of weeks or even days.

Fundamental analysis

Market speed ups allow less time for fundamental stories to develop. This issue is especially acute as software development tends to take longer than anticipated. Scope creep and impatient investors reacting strongly to updates (or a lack there of) can cause fundamental stories to play out much faster than traditional markets. 

Technical analysis

This speed up can be especially problematic for technical analysis. To combat this problem, many traders have found success adjusting the settings on traditional technical indicators to account for the speed increase.

An interesting example is modifying Ichimoku cloud settings from their original parameters to twice as many periods to account for the additional hours of trading.

The original Ichimoku cloud system relies on a 9 period fast moving average and 26 period slow moving average which corresponds to traditional trading hours.

By doubling the settings to 20 period fast and 60 period slow moving average, many false entry signals can be avoided. This works by effectively dulling the signals so they more accurately reflect the increased trading hours.

First let's examine the traditional 9/26/52/26 settings on the current Bitcoin/USD pair. Fast SMA is shown in red, slow SMA is shown in blue. 

 Traditional settings are overly sensitive and give potentially misleading information about a bullish cross inside of the cloud. 

Traditional settings are overly sensitive and give potentially misleading information about a bullish cross inside of the cloud. 

Next let's examined the "dulled" double settings to try and avoid false signaling. Ichimoku cloud settings are set to 20/60/120/30 per the Josh Olszewicz recommendations.

 Doubled settings show a strong support line at 1850 as the lower bound of the cloud is completely flat. In this double view the current price is also safely above cloud, though a bullish TK cross is yet to happen. If a bullish cross were to happen above cloud it would be a much stronger signal on the doubled settings.

Doubled settings show a strong support line at 1850 as the lower bound of the cloud is completely flat. In this double view the current price is also safely above cloud, though a bullish TK cross is yet to happen. If a bullish cross were to happen above cloud it would be a much stronger signal on the doubled settings.