Quant Explains How Bitcoin On-Chain Data Can Identify Peaks Vs Shakeouts

A quant explains how Bitcoin on-chain data may be used to identify whether a high was because of peak formation or due to a shakeout. Open Interest, Funding Rates, And LTH-SOPR May Signal Whether A Peak Vs A Shakeout As explained by an analyst in a CryptoQuant post, a combination of different on-chain indicators may be able to identify whether a high means the price is forming a peak or if it’s just a shakeout. The relevant Bitcoin indicators here are the open interest, the funding rates, and the LTH-SOPR. Before considering the trend of each, here are some quick explanations of what these metrics are. The open interest is an indicator that shows the total amount of open positions currently on derivative exchanges. It includes both long and short positions. Funding rates are the periodic payments that futures traders make between each other. Positive values of the metric mean long traders are currently paying a premium to keep their position while negative ones mean short traders are the ones paying. Finally, the LTH-SOPR, or the Long-Term Holder SOPR, highlights the degree of profit taking from long-term holders. SOPR here stands for Spent Output Profit Ratio. Now, here is a char that compares the trend of each of these indicators against the Bitcoin price: The relation between these indicators and the peaks and shakeouts | Source: CryptoQuant The quant has marked important points on the chart where peaks or shakeo...