These 3 indicators blinked bullish ahead of the recent Bitcoin price pump

In the stock markets and crypto industry, traders are always looking for a specific reason for an asset’s price action, which means it’s ...


In the stock markets and crypto industry, traders are always looking for a specific reason for an asset’s price action, which means it’s important to stress that correlation does not imply causation.

While it can be easy to link a regulatory statement or pending legislation to the outcome of an asset’s price, there isn’t always hard evidence that these are the exact drivers. Some indicators described below may be due to sheer luck, although the coincidence continues throughout history.

For example, Bitcoin (BTC) The $ 48,200 pump on Oct. 1 may have been linked to the Sept. 30 remarks by U.S. Federal Reserve Chairman Jerome Powell. When asked to clarify his comments on central bank digital currencies (CBDCs), Powell claimed that the FED has no intention to ban cryptocurrencies.

Another plausible reason for the current rally is Bitcoin’s 7-day period average hash rate jump at 145 exahashs per second (EH / s), its highest level since the brutal crash in early June when the mining crackdown in China escalated.

Finally, the growing expectations of a Bitcoin Exchange Traded Fund (ETF) Approval by the US Securities and Exchange Commission (SEC) may have played a pivotal role in traders’ recent bullish bets.

What is clear is that several factors could have driven last week’s pump to $ 49,000, and today the bulls appear to be making an effort to collect $ 50,000. So let’s take a look at 3 indicators that gave a buy signal before the recent price move.

UNI grabbed an offer after traders turned their attention to DeFi

Uniswap (UNI, left) against Bitcoin (BTC, right). Source: TradingView

UNI, the decentralized exchange token for Uniswap, kicked off hours before the market resumed on October 1. Altcoin started its price increase just around the time of the UTC monthly close, initially 5% to $ 24.20 from $ 23. This move was followed by another 4% pump to $ 25.20 three hours before Bitcoin Escape above $ 45,000.

With curiosity, DEX volumes started to soar after China imposed additional restrictions on Bitcoin the previous week. A reasonable explanation for this move could be that investors are starting to understand that China’s action would not impact trade volume. By migrating to DEX, the ability for governments to control or limit the adoption of cryptocurrency is drastically reduced.

Shorts on derivatives exchanges edged up

Some exchanges provide useful information on clients’ net exposure by measuring their positions or consolidating spot and derivative market data. For example, the long / short ratio of OKEx Bitcoin traders fell from 1.25 (favoring long) to 0.72 (favoring shorts) by 28% in less than two days.

It may seem counterintuitive at first, showing the whales increasing bearish bets, but when market expectations are shattered extreme price movements tend to occur. If most traders had expected a positive price change, the outcome probably would have already been reflected.

Long / short ratio of OKEx Bitcoin derivatives. Source: OKEx

The open interest in futures on Binance suddenly increased

Regardless of the underlying asset, a futures contract has long (buy) and short (sell) positions matched at all times. This means that there is no way to anticipate if these investors are biased to one side or the other.

However, the sudden increases in open interest, which reflects the total number of contracts still outstanding, reflects confidence. The higher the notional involved, the higher the stakes.

Binance Bitcoin futures open interest. Source: Binance

Notice how, in the 4 hours leading up to the 6:00 UTC bull run, the open interest peaked on both the perpetual USDT and the coin-based contract. Interestingly, even with the additional bets of $ 400 million, the price of Bitcoin was not significantly affected until after the peak in open interest.

The truth is, one might never find out what exactly triggered the rally, but by watching for similar trends going forward, traders might be able to predict price pumps. Of course, there is no guarantee that all three metrics will repeat themselves, but the cost of tracking data is minimal.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trade move involves risk. You should do your own research before making a decision.