In the stock market in general, and in the cryptocurrency sector in particular, traders are always looking for reasons to explain the price history of an asset, which means that it is important to emphasize that there is no possibility of inference. logically a causal relationship between securities and cryptocurrencies, or solely based on the observed association or correlation between them.
While it is easy to link a pending governmental or legal statement to the outcome of the price of an asset, there is not 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 have happened throughout history.
For example, Bitcoin’s rally to $ 48,200 on October 1 could be related to statements made by Fed chairman Jerome Powell on September 30th. When asked to provide his comments on the central bank’s digital currency (CBDC), Powell confirmed that the Fed had no plans to ban cryptocurrencies.
Another plausible reason for the current rally is that Bitcoin’s average 7-day hash rate has risen to 145 exahashes per second (EH / s), the highest level since the sudden crash in early June when China’s crash fell hard Taking action in crypto mining is increasing.
Finally, growing expectations of US Securities and Exchange Commission approval of Bitcoin ETFs may have played a role in recent bullish bets from traders.
What is clear is that several factors could have led to the rally above $ 49,000 last week and the bulls appear to be working to recapture $ 50,000 today. So let’s take a look at 3 indicators that show a “buy” signal prior to the most recent price action.
UNI rebounded strongly after dealers turned their attention to DeFi. had directed
Uniswap price chart (left) vs. Bitcoin (right) | Source: TradingView
UNI, the native token of the Uniswap exchange, rallied a few hours before the market-wide rally on October 1. The rally started at the end of the monthly candle, initially from $ 23 to $ 24.2 at 5%. The move was followed by another 4% rally to $ 25.2 3 hours before BTC broke above $ 45,000.
Interestingly enough, the volume of DEXs traded rose sharply after China tightened its crackdown on Bitcoin and the crypto sector last week. One possible explanation for this move could be that investors are beginning to understand that the country’s actions 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. The only decline in the Chinese market was OTC and Crypto / RMB transactions.
Short orders 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, Bitcoin’s long-to-short ratio on OKEx has dropped from 1.25 (long preferred) to 0.72 (short preferred), a decrease of 28% in less than two days.
This may sound counter-intuitive at first as the whales are increasing their bearish bets, but when market expectations are broken, extreme price movements tend to occur. If most traders expected a positive price swing, the outcome could have been priced in.
Bitcoin long-to-short ratio on OKEx | Source: OKEx
Open interest peaks in Binance futures
Regardless of the underlying, long (buyer) and short (short seller) orders on a futures contract are constantly executed. This means that there is no way to predict which side these investors will lean to.
However, the Open Interest (OI) increased, which reflects the total number of contracts still executed, which reflects the confidence. The higher the face value, the higher the stake.
Open Bitcoin Futures on Binance | Source: Binance
Note that there was an increase in both open positions in perpetual and USDT-based contracts in the 4 hours leading up to the bull run at 3 a.m. local time. It is interesting that even with an additional stake of $ 400 million, the price of Bitcoin suffered a significant drop after the peak of the OI.
In reality, no one can figure out what exactly started the rally, but by tracking similar patterns in the future, traders can predict rallies. Of course, there is no guarantee that all three of these indicators will repeat, but it is important for traders to keep an eye on the data.
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According to Cointelegraph