What signals are behind the surge in BTC holdings on exchanges?

1. Extreme market sentiment

A surge in holdings is usually a manifestation of extreme market sentiment. If prices continue to rise or fall, accompanied by a surge in holdings, this usually means that the market's bullish or bearish sentiment has entered an over-expansion stage. If long positions surge and prices are close to historical highs, it may be a sign of a market bubble, meaning that once prices encounter resistance, the risk of a pullback increases greatly; conversely, if short positions surge, market sentiment may be too pessimistic, and once short positions are closed, the possibility of a rebound will also increase.

2. Large-scale entry of funds

A surge in holdings often means a large-scale inflow of funds, especially when prices fluctuate sharply. At this time, we need to pay special attention to the flow of funds. If a large amount of funds pour into the contract market, especially the futures market, it is likely that institutional funds or large funds are being laid out. The intervention of large funds may cause market prices to rise or fall rapidly, so investors should closely track the movements of these funds, understand their intentions, and avoid blindly following the trend.

3. Premonition of price breakthrough

When the open interest increases sharply and the price breaks through the important support or resistance level, it often means that a new trend is about to start. This situation is usually accompanied by the divergence of technical indicators, especially the simultaneous growth of indicators such as trading volume and open interest. At this time, the price breakthrough may not be a short-term rebound, but the start of a long-term trend. Investors can use this signal to adjust their positions and make arrangements in advance.

4. Signs of market manipulation

Sometimes, the surge in open interest may not be due to changes in the natural supply and demand relationship in the market, but is manipulated by a few large funds or "bankers". These large funds manipulate the order flow in the market to create false market fluctuations, thereby guiding retail investors to make wrong decisions. At this time, the surge in open interest may be part of a "lure to buy" or "lure to sell" strategy. Investors need to be alert to these signals and stay calm to avoid being swayed by market sentiment.