In the stock market and cryptocurrency sectors, traders are always looking for specific reasons to explain an asset’s price movement, which means it is important to emphasize that correlations never occur.
While it is easy to associate a government or government agency pending statement with the outcome of the price of an asset, there isn’t always solid evidence that this is the exact dynamic. Some of the indicators described below may be the result of sheer luck, even if coincidences persist throughout history.
For example, Bitcoin’s (BTC) surge to $ 48,200 on October 1 could be related to statements made by Federal Reserve Chairman Jerome Powell on September 30.
When asked to provide his comments on the central bank’s digital currencies (CBDCs), Powell confirmed that the Fed had no intention of banning cryptocurrencies.
Another plausible reason for the current rally is Bitcoin’s 7-day average hash rate soaring to 145 exahashes per second (EH / s), the highest since the sudden crash in early June when China’s mine attacks increased.
Finally, growing expectations of the US Securities and Exchange Commission (SEC) approval of Bitcoin Exchange Traded Funds (ETF) may have played a major role in traders’ bullish bets.
What is clear is that many factors could have caused the last week to hit $ 49,000 and today’s bulls seem to be working to get back to $ 50,000. So let’s take a look at 3 indicators that show a buy signal before the recent price action.
UNI received an offer after dealers turned their attention to DeFi. had directed
UNI, the decentralized exchange token for Uniswap, pumped a few hours before the market rally on October 1st. The altcoin began to rebound as soon as the UTC end of the month ended, initially by 5% to $ 24.20 from $ 23. The move was followed by another 4% increase to $ 25.20 three hours before Bitcoin broke above $ 45,000.
Oddly enough, DEX volumes started skyrocketing after China imposed additional restrictions on Bitcoin last week. One possible explanation for this move could be that investors are beginning to understand that China’s actions will have no impact on trading volume. Switching to a DEX will severely limit the ability of governments to control or restrict the adoption of cryptocurrencies.
Shorts on futures exchanges are increasing
Some exchanges provide useful information about their clients’ net impressions by measuring their positions or by aggregating data from the cash and derivatives markets. For example, the long-short ratio of OKEx Bitcoin traders fell from 1.25 (prefer long buy) to 0.72 (prefer short sell) 28% in less than two days.
This may sound counter-intuitive at first and suggest that whales are increasing their bearish bets, but when market expectations are broken, extreme price movements tend to occur. If most traders expect positive price movement, the outcome is likely already factored in.
Open interest peaks in Binance futures
Regardless of the underlying asset, a futures contract is always long (buyer) and short (seller) trades. This means that there is no way to predict which side these investors will lean to.
However, the open interest rose sharply, reflecting the total number of contracts still executed, which is a reflection of confidence. The higher the face value, the higher the stake.
Note that in the 4 hours leading up to the bull run at 6 a.m. UTC, there was an increase in both open positions in perpetual contracts and USDT-based contracts. Interestingly, even with an additional $ 400 million stake, Bitcoin price was not significantly affected until after open interest peaked.
The truth is that you can never find out what exactly started the rally, but by tracking similar patterns in the future, traders can anticipate surge spikes. Of course, there is no guarantee that all three metrics will repeat, but the cost of keeping track of the data is minimal.
The views and opinions expressed here are solely those of author and do not necessarily reflect the views of Cointelegraph. Every investment and trading movement carries risks. You should do your own research when making a decision.