Directly say the conclusion, there are too many air forces in rave, and the long positions of the dealers cannot exit liquidity because there are no retail investors taking the long positions. When retail investors stop blindly shorting, that is when rave will truly fall.
Pure dry goods for staying up late, beginners should directly collect and screenshot!
Has the fluctuation of altcoins been large recently? If you want to understand the logic of volume and price, start with OI (open interest) to avoid taking half a year of detours! What exactly is OI?
Contract open interest = Long positions = Short positions (one-way calculation)
Each long position corresponds to a short position → Zero-sum game, if someone earns, someone loses. What does the rise and fall of open interest represent? OI continues to rise → Market enthusiasm is high, and new funds are entering in large amounts.
OI down → Someone is closing positions and leaving
OI stable → No new players, pure old funds in a game.
The four most basic volume-price patterns (core!)
The combination of price and OI directly tells you who is in control of the market.
Price↑ + OI↑ = Strong bullish position building (real money buying)
Price↓ + OI↑ = Strong short position building (large selling pressure)
Price↑ + OI↓ = Short covering/squeezing (old shorts stop-loss pushing up)
Price↓ + OI↓ = Long covering/multiple liquidations (old longs stop-loss selling)
These basic patterns can fit most normal markets, but don't rigidly apply them to trash altcoins controlled by manipulators, or it will end badly! The pits that beginners are most likely to fall into: Position 'value' vs Position 'quantity'
Binance's default display is the position value (trap!)
To really gauge popularity, you must look at the position quantity! Example: BTC rises from 90,000 to 100,000, the number of people remains unchanged, but the position value skyrockets → Illusion!
The real situation may be 'volume-less price increase', and can be hit down at any time.
(Recently PIPPIN is: value drops, but quantity rises → There are indeed people playing) Advanced: 'Distorted patterns' when operators control the market (favorite play of altcoins) False squeeze: Price↑ + OI↑ but funding rate extremely negative → Actually, it's all retail investors going short against the trend, being liquidated by the operator's spot market push.
False breakout: Price↓ + OI↓ but large holders' position ratio instead rises → The operator smashes the spot market to wash out retail investors, while they buy at low positions.
Vampire pattern: Spot remains unchanged, contract OI fluctuates wildly → The operator fights with themselves to wash volume, attracting you to enter before they kick you out of the spot market.
Final reminder: Look at spot CVD!
Spot is the cause, contracts are the effect.
Spot CVD and contract CVD are not synchronized = There are ghosts in the market, nine times out of ten the operator is harvesting retail investors. phemex.com
Understanding these, you officially enter the realm of volume-price analysis!
The basic pattern is suitable for large market value altcoins, while trash coins controlled by manipulators have a different logic (I will post later). After eleven years as an old investor, understand the operators and protect your capital.
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