Traders usually focus on the price action only. However, the following 11 charts give traders the understanding of the reasons behind the price changes.
Newcomers to Binance look at the same candlestick chart and assume it tells everything about the cryptocurrency market. They do not know the true reasons for the price change and fail to understand why it behaves differently sometimes. Traders who know why the price moves differently look at
11 charts listed below.
1. Open Interest
Open Interest (OI) refers to the total amount of outstanding futures contracts that have not been closed yet. The increasing price and OI indicate the appearance of new money in the trend – this is normal. If the price increases while the OI falls, it means the movement is based on short covering. Most beginners do not pay attention to this chart before making a decision to enter the market.
2. Funding Rate
When speaking about perpetual futures, the funding rate helps to see whether longs or shorts pay each other for holding their position. In case the funding rate is heavily positive, it indicates the crowd of longs
3. Liquidation Heatmaps
These depict regions of large concentrations of leverage positions that will have their positions forcefully closed once the price reaches a certain level. The price will usually gravitate towards such regions because it can be profitable for market makers and big players to trigger the cascade of liquidations. Trading with leverage without looking at this map means not knowing where the market will try to hunt the stops.
4. Exchange Net flow
It calculates how much of a coin is being transferred from/to exchanges (which is a good indicator of whether someone plans to dump the coin or accumulate it, respectively). A strong surge of a coin being transferred to Binance and other exchanges is often one of the earliest indicators of the forthcoming sell-off before the price itself starts falling.
5. Stablecoin Supply Ratio
It is a ratio between the overall market capitalization of stablecoins (such as USDT, USDC) and overall cryptocurrency market capitalization. An increase in the ratio means that there is more dry powder ready to buy – often a bearish signal.
6. Market Cap Dominance
Bitcoin dominance (BTC.D) measures the proportion of Bitcoin's market cap relative to the entire crypto market. Increasing dominance indicates that capital is flowing from altcoins and into Bitcoin – a sign of risk-off behavior. Meanwhile, a decrease in dominance suggests that the capital flows are heading towards altcoins, which is typically followed by altcoin rallies (altcoin trap).
7. RSI Divergence
Many people are familiar with the Relative Strength Index, but few actually pay attention to its divergence. When the price makes a new high but the RSI makes a lower high, momentum becomes weak despite the price action – this could be seen as a hidden warning of a coming reversal.
8. Volume Profile
A volume profile chart differs from the regular volume chart since it displays the volume of each individual price level. The result is that you can identify price levels, which received most of the trading activity, and these levels become support/resistance areas because there are many open positions in them.
9. Movement of the Whale Wallets
On-chain tools provide information on wallets that hold big amounts of tokens ("whales") and their movements – especially when transferring coins to the exchanges. If multiple
None of those charts will predict anything for the future. There is no such thing in crypto. But they will tell you the story of what is happening under the hood. They will show you the positions of traders, their leverage and the places where the market is structurally expected to react. The price will tell you what already happened. And those charts will tell you why it happened, giving you an opportunity to figure out what is building underneath the surface before it becomes visible on the price chart.
A Quick Note Before You Trade
This is not financial advice, and I am not a financial advisor, I provide educational concepts here. The cryptocurrency market is volatile, the usage of leverage increases both opportunities for profits and risks. Trading based on the chart analysis should be done carefully, with personal research and appropriate risk management.
Final Thoughts
Those traders who are successful in this market are those who are good enough at market structures to understand the state of the crowd and know whether it is overleveraged, overconfident or squeezed. Try looking at those 11 charts together with the price, and you will see the market differently from what it do.