Dec 2, 2024: Our weekly Institutional Insights explores the latest market developments — market performance, industry news, exchange-traded fund (ETF) flows, trending topics, upcoming events and token unlocks — to help you supercharge your crypto trading.

 explores the latest market developments — market performance, industry news, exchange-traded fund (ETF) flows, trending topics, upcoming events and token unlocks — to help you supercharge your crypto trading.

Weekly Highlight — U.S. Economy Growth Driven by Improved Productivity

If U.S. economic growth is strong, why is the Federal Reserve considering interest rate cuts? This question was recently posed to Fed Chair Jerome Powell. Instead of focusing solely on the Fed's actions, we should explore the reasons behind the robust growth, and see how it can be sustained.

Real GDP is expected to exceed pre-pandemic levels for the second consecutive year. Typically, strong growth raises concerns about overheating, but inflation has actually fallen. Recent growth is largely due to increased productivity and a growing workforce, which are not inflationary and can help rebalance supply and demand.

A significant factor behind this success is the rise in labor productivity, averaging 2.3% over the past two years — faster than the four years before the pandemic. This uptick is linked to a surge in new business applications, especially in the tech sector, as the pandemic's economic shifts and relief measures lowered barriers to entrepreneurship, particularly benefiting underrepresented groups.

The boost in productivity also reflects workers moving to roles better suited to their skills, a trend accelerated by the 

. This mobility has been essential for productivity gains, as higher job turnover correlates with increased business dynamism.

However, sustaining higher productivity is a challenge. The Fed must avoid overly restricting the economy, as high interest rates can deter investment in technology. Additionally, a gradual cooling of the labor market, with declining job quits, is concerning.

For policymakers, monitoring labor market dynamics and business formation is crucial. If these indicators decline, productivity and growth could wane. The U.S. economy has made significant progress, and maintaining this momentum is essential.

Weekly Crypto Highlight — Sui Is Poised for Growth

Bybit has released the Sui ecosystem report, with its key takeaways below. (Read the full report 

: Sui has achieved impressive performance, processing over 297,000 transactions per second (TPS) while maintaining low latency. This positions it among the fastest blockchains available.

: In 2024, Sui's market capitalization skyrocketed over 1,000%, reaching $9.5 billion and reflecting strong investor confidence and growing adoption.

: The total value locked (TVL) in Sui’s DeFi ecosystem has surpassed $1.5 billion, ranking it 11th among major blockchain networks and highlighting its rapid growth in 

: The launch of the Grayscale Sui Trust has significantly increased institutional interest, resulting in an 89% price surge for the SUI token in Q3 2024, indicating its appeal to accredited investors.

: Sui is making strides in the gaming sector, introducing the SuiPlay0X1 handheld gaming device and various 

, enhancing user engagement and expanding its ecosystem.

Developed by Mysten Labs, Sui is a Layer 1 

 (PoS) blockchain launched on May 3, 2023. Its object-centric data model allows for parallel transaction processing, enhancing throughput and reducing latency. Its use of the Move programming language ensures resource safety through rigorous bytecode verification, mitigating common blockchain vulnerabilities.

: Partnerships with firms like Copper and Zero Hash strengthen Sui’s infrastructure and credibility in the financial sector, enhancing its offerings in digital asset custody and transaction facilitation.

: Sui’s DeFi sector is thriving, with leading protocols like 

 offering diverse financial services. In gaming, initiatives such as the SuiPlay0X1 device and various web3 projects bolster user engagement.

In summary, Sui is poised for continued growth, driven by technological innovations that are expanding its presence in both DeFi and gaming.

Advanced

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Weekly Institutional Insights: Sui Poised for Growth; U.S. Economy Driven by Productivity Growth

Chill Guy is a viral meme illustration that took social media by storm before a crypto project used the meme to launch a Solana-based token. Learn more here.

What started as a simple illustration of a laid-back dog has become a global meme sensation, with the cartoon character known as Chill Guy dominating both social media trends and cryptocurrency markets. Created by artist Phillip Banks in October 2023, the easygoing canine character sparked a viral movement that has attracted major brands worldwide.

This article follows Chill Guy’s transformation from a social media sensation to a cryptocurrency asset. We'll examine its viral beginnings, community growth, market impact and what potential investors can expect from CHILLGUY in the future.

 is a viral meme illustration by artist Phillip Banks, depicting a laid-back dog in casual clothes whose easygoing attitude took social media by storm before a crypto project used the meme to launch Just a Chill Guy as a Solana-based token.

What Does Just a Chill Guy Aim to Achieve?

The CHILLGUY meme coin aims to spread a "Why worry?" philosophy into cryptocurrency markets by embracing the laid-back, stress-free attitude that made the original meme go viral. The project transforms this easygoing vibe into a community-driven token, where being low-key isn't just a catchphrase — it's a shared mindset among holders.

The CHILLGUY community brings this philosophy to life by sharing endless variations of the CHILLGUY meme across social platforms. Through market swings and viral trends, CHILLGUY keeps his iconic pose: hands in pockets, subtle smirk, perpetually relaxed.

Just a Chill Guy (CHILLGUY) operates as a Solana Program Library (SPL) token on the 

 blockchain, leveraging the network's ultrafast speeds and low costs to ensure smooth trading. The token was created using Pump.fun, a specialized platform that lets users launch Solana-based tokens without any fees, removing traditional barriers to token creation.

CHILLGUY is a community takeover (CTO), meaning it's completely owned and directed by its token holders with no central team in control. This decentralized structure ensures the project stays true to its community-driven nature, its holders collectively guiding its future while embodying the laid-back spirit of the original meme.

The CHILLGUY token launched with a maximum supply of 1 billion tokens, of which 999,965,435 are currently in circulation. This near-complete distribution of tokens to the market supports active trading and community participation.

What makes CHILLGUY's tokenomics particularly notable is its widespread distribution across more than 142,000 unique holders (as of Nov 27, 2024), achieved in just 12 days. This rapid expansion of its holder base demonstrates strong community adoption and aligns with the project's decentralized, community-driven principles.

CHILLGUY has exploded across social media, especially on TikTok, where the meme has amassed hundreds of millions of views. Its laid-back character resonates with users worldwide, inspiring countless creative adaptations.

Major brands worldwide have embraced CHILLGUY in their marketing campaigns. From Sprite Europe to NFL on CBS, the character has resonated across mainstream media, even catching the attention of global figures like El Salvador's president Nayib Bukele.

The “Chill Guy” meme’s influence spans multiple social media platforms, with a growing community of followers: 96.6K on X (

). On the other hand, the meme token itself also has a vast community, with 39.9K on X (

) and an active Telegram channel of over 15,000 members. These numbers reflect the meme's ability to engage audiences across different platforms.

The token's popularity in cryptocurrency markets matches its social media success, with CHILLGUY maintaining a substantial 24-hour trading volume of over $330.03M as of Nov 27, 2024. This high trading activity demonstrates the strong market interest in CHILLGUY beyond its meme status.

Looking to trade Just a Chill Guy tokens? Bybit now offers the CHILLGUY/USDT Spot trading pair and CHILLGUYUSDT Perpetual contract. To get started, you’ll first need to create a Bybit account, then fund it with cryptocurrency and navigate to the 

While CHILLGUY has maintained strong trading volumes and continues gaining mainstream attention through its viral social media presence, investors should carefully weigh its strengths and risk factors before making investment decisions.

With its widespread brand adoption, sustained trading activity and explosive community growth of over 142,000 holders, CHILLGUY demonstrates significant market potential. However, meme coins are inherently volatile. Potential investors should 

 and invest no more than they can afford to lose.

CHILLGUY is the latest viral sensation to harness the power of the attention economy to convert social media momentum into crypto market success. While CHILLGUY has already demonstrated its ability to capture mass appeal, its position as a leading meme token will depend upon how effectively it maintains its cultural relevance and community engagement in this fast-moving market.

Intermediate

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Just a Chill Guy (CHILLGUY): Embracing the Art of Nonchalance

Zircuit (ZRC) combines optimistic and ZK rollups with AI-driven security, offering fast, low-cost Ethereum Layer 2 solutions. 

 network has flourished, mainly due to the ongoing network congestion, high fees and poor scalability of the latter. Many of these platforms use rollup technology, whereby batches of multiple transactions processed off-chain are bundled together and posted in bulk to the underlying Layer 1. Ethereum-linked rollups mainly come in two varieties 

 (ZK). While optimistic rollups boast lower computational overhead, the ZK variety of these networks features a higher degree of security.

Zircuit (ZRC) is a Layer 2 chain that adopts a hybrid approach, combining the elements of optimistic and 

. This lets the platform offer the performance benefits of optimistic technology along with the security of ZK validity proofs. To further enhance overall security, Zircuit uses a unique 

 (AI)–driven system of monitoring for malicious transactions.

 (ZRC) is a hybrid Layer 2 blockchain that combines the features of optimistic and ZK rollups, and uses AI-driven monitoring for potentially harmful transactions. 

 rollup development technology, a popular framework for building optimistic rollup networks. Additionally, it uses zero-knowledge proofs, which lets the platform offer the best of both worlds 

 the performance benefits of optimistic rollups and the security of ZK technology. Zircuit is 

The Zircuit project takes security very seriously, and has introduced a unique system of AI-based protection against malicious transactions at the sequencer node level. The use of ZK proofs and an AI-based protection system make Zircuit one of the most secure platforms in the competitive world of Ethereum Layer 2 chains.

Along with its excellent security benefits, Zircuit also boasts low costs, fast transactions, excellent scalability and 2-second block production intervals. All these features make it an ideal environment for 

 (DApps) in various niches, particularly 

 (DeFi). In fact, the leading protocols within the Zircuit ecosystem are all dedicated to the finance niche, with Zircuit Staking being the largest application by TVL.

With its heavy focus on DeFi, Zircuit aims to become a leading liquidity hub for various token types within the sector, including 

. These assets can be staked through the Zircuit staking program — supported by the platform's Liquidity Hub — to earn staking APRs, airdrop rewards and points based on the Zircuit Point program (covered further in our article).

The platform also operates a secure native bridging solution, 

, to help users transfer assets between its Layer 2 network and Ethereum Layer 1.

The company behind the project, Zircuit Ltd., was founded in 2021 in Canada by Dr. Martin Derka, Jan Gorzny and Angel Xu. Zircuit's testnet was launched in November 2023, but made headlines in April 2024 when the project reported that its 

 (TVL) had soared past $2 billion. While testnet TVLs are more a gauge of future potential for a blockchain than an indicator of its existing worth, the news attracted the attention of industry observers toward the platform. Following its highly publicized testnet success, Zircuit launched the first phase of its mainnet in August 2024. This was followed by the launch of the platform's native token, ZRC, in November 2024.

As a typical rollup, Zircuit uses an off-chain sequencer node to batch and organize Layer 2 transactions for subsequent posting to the underlying Ethereum Layer 1. The batches have ZK validity proofs attached to them to signal to Layer 1 validators that they’re free from fraudulent transactions. Zircuit's architecture also includes prover nodes, whose job is to produce these validity proofs.

However, unlike other rollups using ZK proofs (also known as validity proofs), Zircuit doesn't generate validity proofs for every block of transactions. Instead, some blocks have pre-generated template proofs, while others go through the process of having a dedicated validity proof created for them. After a few blocks featuring validity proofs, there are several more that utilize template proofs. The image below illustrates this approach.

The key reason Zircuit has adopted this form of proof design is that the process of generating ZK proofs is computationally intensive. By using template proofs for some of the blocks in a sequence, Zircuit can reduce the overall computational overhead. However, the project’s team has stated that the template proof model is temporary, and will be phased out in the future. At that stage, the platform will move to generating ZK proofs for each block.

Zircuit features a highly modular design whereby provers — responsible for generating validity proofs on the platform — can easily be plugged into or removed from the network. This modular approach is distinct from the standard ZK rollup design, in which provers are more tightly and less flexibly integrated into the overall architecture.

As noted earlier, Zircuit uses a dedicated sequencer to organize and batch transactions into blocks. The platform also applies AI-driven monitoring at the sequencer level (the Sequencer Level Security, or SLS) to spot and exclude fraudulent transactions before they’re finalized on Layer 2.

When transactions are first posted to Zircuit, they enter the 

 — a temporary area from which the sequencer picks and organizes individual transactions into blocks. The mempool is being monitored at all times, using AI algorithms to identify suspicious transactions. If a transaction in the mempool raises a flag, it's quarantined and assessed for validity before the sequencer can include it in a block. The image below shows how this process works.

One of the distinct features of Zircuit is its hybrid architecture, which combines the properties of optimistic and ZK rollups. At the base level, Zircuit is built using Optimism's Bedrock development framework, a technology popular for optimistic rollup networks. However, the use of ZK proofs — or, to be more precise, a combination of validity proofs and template proofs — ensures that Zircuit enjoys a security level that standard optimistic rollups normally can't match.

The use of AI-based SLS provides robust security to Zircuit, complementing the already highly secure ZK proof system. Very few Layer 2 networks in the industry currently feature anything similar, making the platform a true pioneer of AI use for sequencer-level operations.

Like any rollup based on Optimism Bedrock, Zircuit enjoys EVM compatibility. This allows for smooth interoperability with the underlying Ethereum Layer 1. EVM compatibility also makes it easy for developers familiar with Ethereum’s environment to develop Zircuit-based DApps, or to port existing Ethereum applications to the platform. Developers can take advantage of technologies commonly used for Ethereum (e.g., the Solidity programming language and the Hardhat development framework) to build Zircuit applications and smart contracts.

Zircuit Bridge is a native bridging solution designed to easily transfer tokens between Ethereum and Zircuit. It boasts high security, low transaction fees and fast transfers, and allows users to move a variety of cryptocurrencies between Ethereum and Zircuit, including ETH, 

) and LRTs like Super Symbiotic LRT (weETHs). As of late November 2024, the total number of cryptos supported by the bridge is close to 30.

Zircuit has launched a reward program called Zircuit Points. Users can earn these Points by staking supported assets, and by participating in the Build to Earn initiative (more on this below). Accumulated points will be converted to ZRC tokens in the future. Points also create the opportunity to qualify for token airdrops.

The primary way for most users to earn Zircuit points is via 

. The Zircuit Staking program lets you stake LSTs, LRTs, popular stablecoins, some wrapped tokens and Ether (ETH) to earn points. Using LSTs and LRTs, you can earn yields (along with native Zircuit staking APRs and Points) from the respective staking and restaking platforms that issue these assets.

Zircuit Points earned via staking have different multipliers, depending upon the asset. For example, Ether has a multiplier of 0.5, while LSTs, LRTs and stablecoins have a multiplier of 1. Multipliers for different LST and LRT assets may be subject to change in the future.

Build to Earn is another way to qualify for Zircuit Points. The program allows developers to contribute to the Zircuit ecosystem and earn Points in a number of ways, including:

Launched in November 2024, ZRC is the platform's native cryptocurrency. It's an 

 asset deployed on both Zircuit and Ethereum Layer 1. ZRC is mainly used for reward distributions, and participation in token airdrops for ecosystem DApps. Currently, transaction fees on the network are paid in Ether. It's possible that, in the future, ZRC might be used for some transaction fee payments.

ZRC is also used for rewards under the Gas Rebate program. As users conduct transactions on the platform, they 

. Zircuit’s Gas Rebate program provides rebates to offset some of the incurred fees. The amount of ZRC earned as a rebate is proportional to the amount spent on gas in ETH; the project's documentation states that for each ETH spent on gas, the user earns 125% in ZRC. All kinds of gas fee payments qualify for the rebate, including ordinary asset transfers and transactions involving interaction with Zircuit DApps.

ZRC is a supply-capped token, with a maximum and total supply of 10 billion. The token's supply allocation shares are as follows:

The ZRC token is available on Bybit's Spot market as a swap pair with USDT (

 to grab a share of the 5 million ZRC prize pool. New users who sign up for a Bybit account and complete identity verification can earn ZRC rewards by accumulating a deposit volume of at least 2,000 ZRC, or by depositing 100 USDT and trading 100 USDT worth of ZRC via their first trade with Bybit. 

Meanwhile, existing users can qualify for ZRC rewards by trading at least 500 USDT worth of ZRC on the Bybit Spot market, with the possibility of earning up to 10,000 ZRC based on trading volume. The 

 event will run through Dec 10, 2024, 8:59AM UTC.

Zircuit is among the pioneering Layer 2 platforms to adopt a hybrid design for a rollup network. Thanks to the platform's architecture, users can take advantage of low transaction costs, fast transfers and great scalability while enjoying the benefits of high security delivered by ZK proofs and AI-driven mempool monitoring. AI-based monitoring for fraudulent transactions is a particularly notable feature of the platform and is undoubtedly among the most advanced technologies employed in the blockchain industry.

User security combined with faster and cheaper transactions for the Ethereum network — all in one package — is now feasible, thanks to Zircuit's innovative technology and unique approach!

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What Is Zircuit (ZRC): Where Performance Meets Cutting-Edge Security

Bybit is celebrating its sixth anniversary with the #Super6Bybit event, offering a $1.2 million prize pool and focusing on its bbSOL token.

Daily Top Performer — Virtuals Protocol (VIRTUAL)

On Wednesday, the S&P 500 fell 0.38% as tech stocks dropped and inflation data reinforced a hawkish Fed outlook. Coindesk Indices, an index measuring broader cryptocurrency market performance was down by 0.40%, with Bitcoin and Ether dropping by 1.86% and 1.79%, respectively in the past 24 hours.

Today's top performer is VIRTUAL, which surged 53.6% following the launch of the $MUSIC token by Agentstarter, featuring AI-driven music video capabilities and community-focused tokenomics.

Virtuals Protocol (VIRTUAL), founded in 2021, allows users to invest in and co-own AI-driven virtual assets like companions and influencers. Its model fosters community ownership, transforming AI agents into revenue-generating assets across platforms like Roblox and TikTok. The platform attracts contributors from AI and gaming to drive innovation in virtual economies. 

, using AI to create music videos and offering features like animated videos, voice mimicry, and karaoke tracks. The tokenomics allocate 60% for airdrops, 20% for liquidity, and 10% each for the development team and Virtuals Protocol.

Check Out the Latest Prices, Charts, and Data of 

Bybit is celebrating its sixth anniversary with the 

, offering a $1.2 million prize pool and focusing on its bbSOL token. Launched in September 2024, bbSOL is the first exchange-backed Liquid Staking Token on Solana, providing liquidity and staking rewards. The campaign, running from November 28, 2024, to January 6, 2025, invites participants to build, transform, and supercharge their bbSOL through tasks, leaderboards, and community milestones, increasing rewards. The event combines gaming mechanics, community engagement, and opportunities to win prizes while promoting innovation and growth in the crypto space.

Yesterday, there were no flows in BTC Spot ETFs, including GBTC and non-GBTC categories.

. Stake BNB on Lista's portal to get slisBNB, then deposit it into Astherus to earn airdrop points with multipliers (3X for Lista, 1.15X for Astherus). No lockup is required, and slisBNB is the most efficient option.

Beginner

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Bybit Celebrates 6th Anniversary with $1.2M Prize Pool and bbSOL Supercharging Campaign

Trading

The true strength index (TSI) is a momentum oscillator to determine the strength and momentum of a market's trend. We show you how to utilize TSI to identify if trend reversals are approaching.

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The true strength index (TSI) is often overshadowed by 

 (RSI). But the truth tells that TSI can be incredibly reliable to determine the trend strength and direction. It is beneficial for traders to initiate new positions or determine when an existing trend is about to end to close positions. Overall, the TSI indicator can be used on all time frame charts and is especially useful in crypto because the trends can last a long time. 

This guide will walk you through step-by-step to apply the TSI indicator and how to interpret the trade signals based on the overbought and oversold levels and crossovers.

What is the True Strength Index?        

The true strength index (TSI) is a momentum oscillator used in 

 to determine the strength and momentum of a market’s trend. TSI helps determine if a market is changing trends and if a market is 

When interpreted correctly, a trader can initiate new positions in the direction of the new trend or exit an old trend while hanging on to profits.

Without the true strength index, crypto traders may hold on to stale trends too long, which could lead to unnecessary drawdowns — or missing out entirely on a new trend.

Interpreting the True Strength Index Indicator

There are several different ways to interpret the meaning of the true strength index indicator. In technical analysis, traders can use it to help determine the direction of the market’s trend. Additionally, the TSI indicator can be used to gauge the strength of the trend. Lastly, it can provide signals of an imminent reversal that may develop.

If the signals are interpreted correctly, traders can use the TSI indicator to enter new crypto positions or exit current ones.

To better understand how to read the indicator, it’s important to gain a high-level view of how the indicator works. Don’t worry, though — we’ll keep the math minimal. The formula itself is relatively simple:

True Strength Index = 100 × (Double Smoothed PC / Double Smoothed Absolute PC)

The base formula of the TSI calculates the change of price from the current candle relative to the previous candle, also known as price change (PC). If today’s close is greater than yesterday’s, then the change will be a positive number. Conversely, the price change will be negative if today’s close is less than yesterday’s close.

The change of price is recorded for each candle period generating a series of numbers. Then, a 25-period exponential moving average is applied to the number series, creating a new series. Following this, a 13-period exponential moving average is applied, creating another new number series — the double-smoothed price change series.

Lastly, another series is created using the absolute values of the price change, which is run through the same double smoothing process of applying a 25-period EMA, and then another 13-period EMA on top of it. This additional series becomes the double-smoothed absolute price change series.

The formula creates a ratio of the double-smoothed price change to the double-smoothed 

 price change. Therefore, the indicator will be bound between −100 and +100.

The true strength index can be a positive or negative value, and the indicator oscillates around the zero line.

This zero line is also called the centerline, which is important to determine the direction of the trend. As a result, many traders will focus on the true strength index’s centerline to bias their trade direction.

In October 2020, Bitcoin’s TSI crossed above the centerline, suggesting the indicator was turning positive and developing an uptrend. In strong trends, the indicator will remain to one side of the centerline for long periods. Once the indicator breaks below the centerline, it creates a sell signal.

Once the true strength index falls and holds below the centerline, the indicator suggests the market has transitioned to a downtrend. Once in a downtrend, the market is more likely to continue lower so long as the TSI is below zero.

The true strength index is a bounded indicator with values between −100 and +100. Due to the nature of its calculation, it’s rare for the indicator to reach the high and low portions of this range. However, there are instances where the indicator may reach extremely high levels and is considered overbought or extremely low levels and considered oversold.

For example, if the indicator reaches extremely high levels, then each new candle is experiencing a large positive increase over the previous candle. Therefore, if the TSI begins to move lower, the size of the increases is decreasing.

A trader can use a declining TSI from extremely high readings as a sell signal — or an increasing TSI from extremely low readings as a buy signal.

On the Bitcoin 4-hour chart above, the TSI indicator retreats below −25 to signal the market is in oversold conditions. Once TSI climbs above −25, a trader may interpret that behavior as part of a bullish pattern.

About one week later, the TSI indicator moved above +25 into an overbought condition. As the indicator crosses below +25, a trader is alerted to the loss of momentum to the upside and may react accordingly. 

The TSI indicator does a great job of alerting traders to trend direction and strength. TSI can also generate signals, helping traders time entry into and out of positions.

The TSI indicates the size of recent price changes. When the TSI line is growing and getting larger, it suggests the trend is moving higher. Traders can use the TSI line and its positioning on the chart to signal potential turns in the market.

One common tool traders apply to indicators is a signal line. The signal line is essentially a 

When a signal line crossover occurs (TSI line crosses the signal line), a signal is created in the direction of the cross.

In the chart above, when the blue TSI line crosses below the red signal line, a bearish sell signal is generated. On the other hand, when the TSI line crosses above the red signal line, a bullish buy signal is created.

Using signal lines has benefits, such as identifying when a trend’s strength and momentum are slowing.

TSI can also generate buy and sell signals based on the crossing of the centerline. A cross below the centerline creates a sell signal, while a cross above the zero line is a buy signal.

Also, a cross below an overbought reading like +25 generates a sell signal. Likewise, a cross above an oversold reading of −25 creates a buy signal.

#Strategy 1: Multi Time Frame Analysis and Centerline Crossovers

One of the most effective tools of the TSI indicator is centerline crossovers. Traders can build a strategy around this strength by conducting multi-timeframe analysis (MTFA).

First, on a daily chart, identify the direction of the trend. Simple price action analysis or using the TSI centerline analysis will help you determine the daily trend’s direction.

Then, scroll down to a smaller time frame chart, such as 2-hour or 4-hour, to wait for buy and sell signals. When the daily trend is up, look for a cross over the centerline as a buy signal. When the daily trend is down, look for the TSI to cross below the centerline for a sell signal. If you get conflicting signals from the daily and intraday charts, then stand aside, as the signal’s validity can’t be confirmed.

On the Bitcoin chart above, TSI stays above the centerline, signaling a bullish trend from October 2020 to April 2021.

When zooming into a 4-hour price chart, we use signal line crossovers of the centerline as indications. As the direction of the daily trend is up from October 2020 to April 2021, we will filter the signals, only seeking buying opportunities. When a sell signal is generated, the long trade is closed, and initiating a short sell trade is ignored. 

While the daily trend is up, as we witnessed from October 2020 to April 2021, the trader will only be in a long position. While the daily trend is down, as the chart illustrates after April 2021, the trader will only be in short sell positions, ignoring all long signals.

#Strategy 2: MTFA with Overbought and Oversold Signals

This strategy has some resemblance to the first strategy but allows the trader an opportunity to grab an early entry into the trend. The risk to this strategy is that the trend might not develop, in which case the position is more susceptible to getting stopped out as a losing trade.

First, determine the daily trend direction, just as we’ve illustrated within the first strategy above. The same concept applies when we’re filtering our trade signals in the direction of the daily trend while ignoring entering into trades that run against it.

The trade signal is created when the TSI indicator crosses below the overbought levels of +25 or above the oversold reading of −25.

On the Bitcoin 4-hour chart above, let’s focus on the period from April–June 2021. It’s during this time that Bitcoin sustains a greater than 50% correction of price. The TSI indicator on the daily chart signals a bearish centerline cross on April 21.

From there, a trader would scale down to an intraday chart and look to initiate only short sell positions. Two signals are produced, with the first one in April and the second one in June, keeping the trader positioned for further weakness in Bitcoin.

#Strategy 3: Exit the Position on TSI Trend Lines

A lot of strategies in the marketplace are geared toward finding that “perfect entry.” However, many strategies don’t discuss in too much detail how to find a good exit.

If you feel like your exit strategy could be improved, consider using trend lines on the true strength index to help you.

The above example is an Ethereum 1-hour price chart. If a trader enters the position in late May, going long with a trailing stop loss, they can use the TSI indicator to help them determine when the trend has ended.

In the chart above, draw a trend line connecting common low points of the TSI.

When the TSI indicator breaks the trend line, we have a signal suggesting the previous trend is over, and it’s time to exit the position.

Many charting packages allow traders to set alerts based on certain readings the indicators provide. Setting an alert for when the TSI breaks the trend line is one way to keep informed without having to stare at the chart all day.

Perks of Using True Strength Index and RSI Together

As you can see, the TSI indicator has many benefits as a go-to tool for trading. It does an excellent job of determining the strength of a trend. Therefore, complementing the TSI indicator with the Relative Strength Index (RSI) 

 can be a powerful way to confirm divergences between price and momentum.

Going into May 2021, Ethereum is on a monster trend to the upside. Between May 4 and May 12, price divergences are appearing on the TSI. These divergences are confirmed with the RSI as well.

This hints that the risk of a price reversal is high. Over the next several days, Ethereum’s price falls 60%.

Though the true strength index indicator is an effective multi-tool for trading, it does come with limitations.

First, the indicator is calculated using price changes from candle to candle. Thus, the indicator is a derivation of price and may not accurately reflect what the underlying price is doing. Therefore, don’t take the signals at face value. Weigh them within the context of the larger trend.

Additionally, if the TSI is used on shorter time frame charts tend to generate more false signals. 

TSI can be effective at gauging trend strength and momentum, but can often generate false trading signals. When utilizing a signal line on the TSI, the propensity for false signals tends to increase.

One way to reduce the number of false signals is by incorporating the indicator on hourly or daily price charts.

TSI is an effective momentum indicator for helping traders determine trend direction, strength, and momentum. It does have its limitations and can be susceptible to false signals. However, if utilized properly, it can help traders identify an asset’s positive and negative territory and the potential turning points where positions can be initiated or closed. In addition, combining TSI and RSI indicators can be a powerful tool for corroborating divergences between price and momentum.

How to Use True Strength Index Indicator to Trade Crypto

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