CRYPTO

This indicator has become brighter before the recent Bitcoin price pump


In the stock market and the crypto sector, traders are always looking for a specific reason to explain the price action of an asset, which means it is important that the relationship does not imply efficiency.

While it may be easy to attach a regulatory statement or pending law to the value of an asset, there is not always strong evidence that these were the right drivers. Some of the indicators described below may have happened due to pure luck, even if they continue coincidentally throughout history.

For example, the Sept. 1 comment by Jerome Powell, chairman of the U.S. Federal Reserve, regarding the 1 48,200 Bitcoin (BTC) pump reaching Oct. 1 may be related. Asked to clarify his comments about the Central Bank Digital Currency (CBDC), Powell confirmed that the FED has no intention of banning cryptocurrencies.

Another reasonable reason for the current rally is that Bitcoin has a 7-day average hash rate of 145 accesses (EH / second) per second, the highest level since China’s mining crackdown intensified after a sudden crash in early June.

Finally, the growing expectation of bitcoin exchange-traded funds (ETFs) approval by the US Securities and Exchange Commission (SEC) could play a significant role in traders ’recent bullish bets.

What’s clear is that multiple factors could take last week’s pump to 49 49,000, and today the Bulls seem to be trying to recover 50,000 50,000. So let’s take a look at 3 indicators that showed a ‘buy’ signal before the recent price change.

UNI held a bid after traders turned their attention to DFI

Uniswap (UNI, left) vs. Bitcoin (BTC, right). Source: Tradingview

UNI, Uniswap’s decentralized exchange token, pumped out hours before the October 1 market rally. Altcoin started to increase its price as soon as UTC closed monthly, initially from $ 23 to .20 24.20 to $ 5. Three hours before the breakout of Bitcoin above 45 45,000, the move pumped a further 4% to 25.20.

Curiously, DEX volume began to rise after China imposed additional sanctions on Bitcoin last week. A reasonable explanation for this move may be that investors are beginning to understand that China’s move will not affect trading volume. Moving to DEX significantly reduces the chances for governments to adopt or limit cryptocurrency.

Shorts have seen an upsurge in derivative exchanges

Some exchanges provide useful information about clients’ net exposure by measuring their position or by collecting data from the spot and derivatives markets. For example, the long-to-short ratio of OKEx bitcoin traders fell by 28% from 0.25 (in favor of longs) to 0.72 (in favor of shorts) in less than two days.

This may sound like the opposite at first, which makes whales look bearish, but when market expectations are broken, extreme price moves do occur. If most traders expected a positive price change, the result would probably be already priced.

OKEx Bitcoin Derivatives Long-Short Ratio. Source: OKX

The open interest on Binary Futures rose sharply

Longs (buyers) and shorts (sellers) are always matched in a futures contract, regardless of the underlying asset. This means that there is no way to guess whether investors are skewed on both sides.

However, the sudden rise in open interest, which still reflects the total number of contracts, reflects confidence. The higher the idea involved, the larger the partnership.

Binance Bitcoin futures open interest. Source: Beyonc

Notice how, within hours of running the 6: am0 UTC bull, the USDT is open interest on both permanent and currency-based contracts. Interestingly, even with an additional bet of $ 400 million, the value of Bitcoin was significantly affected only after the open interest was finalized.

The truth is that no one will ever be able to reveal exactly what caused the rally, but traders can predict the price pump by observing similar patterns in the future. Of course, there is no guarantee that all three indicators will repeat themselves, but the cost of data monitoring is minimal.

The opinions and opinions expressed here are only their opinions Author And don’t necessarily reflect Cointelegraph’s opinion. Every investment and trading move involves risk. You should do your own research when making decisions.