Want to gain an edge in the crypto market? Smart traders are always on the lookout for useful information and indicators.#BinanceFuturesalso provides users with many indicators such as open interest, long/short ratio, active buy/sell volume, crypto fear and greed index and basis, which are all treasure troves of information.
By staying on top of these indicators and their impact on cryptocurrency prices, traders can make smarter, more strategic decisions, thereby improving their chances of successful trades.
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What is open interest and why is it important?
Open interest refers to the total number of derivative contracts (such as futures or options) that have not yet been settled or closed. It is a key metric often referenced when trading.
importance:
Open interest reveals market activity: an increase in open interest indicates new money coming in and a continuation of a trend, while a decrease indicates waning interest and potential weakness. A sudden drop could indicate that traders are closing their positions and could foreshadow a reversal in the market.
Learn more 👉 https://buff.ly/3AN1x7J
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Long-Short Ratio: Helping You Understand Market Sentiment
The long-short ratio is a market sentiment analysis tool that compares the number of long positions to short positions in the market. A higher ratio generally indicates bullish sentiment and vice versa.
How to calculate the long-short ratio?
It is calculated by dividing the number of long positions by the number of short positions. For example, if there are 80 long positions and 40 short positions, the ratio would be 2 (80/40).
Therefore, a ratio above 1 indicates more long positions and positive market sentiment, while a ratio below 1 indicates more short positions and negative market expectations.
Learn more 👉 https://buff.ly/3X4921G
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Bitcoin long-short ratio example
Let’s look at the example below, which shows the long-short ratio of the BTCUSDT perpetual contract on Binance Futures. In this chart, we set the period of each bar to 1 day and show the data for the past 30 days.
For example, on March 21, 2023, the long-short ratio of BTCUSDT closed at 0.77, as 56.46% of all Binance Futures accounts holding BTCUSDT open positions were net short, while another 43.54% were net long.
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Taker volume: Interpret market trends and predict potential price movements
Taker volume refers to the volume of transactions where takers buy an asset, indicating the demand for the asset at the current market price.
importance:
Monitoring taker buy and sell volume can predict short-term price movements; a surge in taker buy volume may indicate rising prices, while a surge in taker sell volume may indicate falling prices.
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Crypto Fear & Greed Index: The Ultimate Tool for Measuring Crypto Market Sentiment!
Ranging from extreme fear to extreme greed, the Crypto Fear & Greed Index brings together various factors such as volatility, market momentum, social media trends and surveys to provide a score from 0 (extreme fear) to 100 (extreme greed).
importance:
Market Sentiment Insights helps traders understand market sentiment. Extreme fear signals buying opportunities, while extreme greed signals a possible market correction. Measuring sentiment helps in risk management and avoids impulsive decisions.
Learn more 👉https://academy.binance.com/en/articles/what-is-the-crypto-fear-and-greed-index
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Basis: Helping traders make informed decisions
Basis is the difference between the contract price and the price index at a specific point in time.
Basis = Contract Price - Price Index / Basis Rate = (Contract Price - Price Index) / Price Index
importance:
Traders can use the basis to hedge against price fluctuations in the spot market, exploit price differences for arbitrage, and gain insight into market expectations and future price movements.
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