Determining the top or bottom of Virtual Money requires a comprehensive analysis combining technical indicators, on-chain data, market sentiment, and cyclical patterns. Here are the key methods and practical applications:

 

📊 1. Technical Analysis Indicators

Trading volume and open interest

Top Signal:

The price has reached a new high, but the trading volume has shrunk, forming a "top divergence," indicating a depletion of buying pressure.

The sudden drop in open interest and the increase in trading volume suggest that bulls are taking profits, and the trend may reverse (for example, open interest dropped by 15% when ETH rose to $4800).

Bottom signal:

The price has hit a new low, but trading volume has shrunk significantly (extremely low volume), or there may be a rebound in volume after a panic sell-off (such as a single needle bottom).

The surge in open interest and the stabilization of prices suggest that short sellers may cover their positions (e.g., BTC rebounds after hitting a bottom of $30,000).

2, Long-Short Ratio and Funding Rate

Top Signal:

The long and short account ratio is extremely high (e.g., >2), retail investors are overly bullish, and the main players may reverse and harvest.

The funding rate remains positive and high, with the perpetual contract premium being excessively high, indicating overbought risk.

Bottom Signal:

The long and short position accounts are extremely low (e.g., <0.5), retail investors are panic selling, and the market may be nearing the bottom.

The funding rate is significantly negative, and shorts need to pay high fees, which may trigger a short covering rebound.

 

⛓️ 2. On-chain data and market sentiment

Exchange Capital Flow

Top signal: A large number of tokens transferred to exchanges (such as a surge in BTC reserves) indicates an increase in selling pressure.

Bottom signal: Tokens are net flowing out of exchanges, or the supply of stablecoins is rapidly increasing, indicating that funds are waiting to enter.

sentiment indicator

Fear and Greed Index:

Extreme Greed (>80): The market is overheated, and the risk of a top is high;

Extreme Fear (<20): Market panic, the bottom may be near.

Google Search Popularity: Retail Investor Attention Surge (e.g. "Chinese Aunties Enter the Market") Often Accompanied by Market Tops.

Practical Case

Top case: In 2025, ETH rose to $4800, the holding volume plummeted + trading volume shrank, and then it crashed.

Bottom case: When BTC dropped to $30,000, the open interest increased from 0.6 to 1.5 (shorts liquidated + longs bottom fishing), and then it rebounded.
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