Every once in a while, a new indicator pops out that can be used to detect price tops and bottoms in the market. This assertion is even more evident in cryptocurrencies because the data comes from exchanges and on-chain data extracted from the blockchain.
These indicators are constantly monitored and commented on by analysts and traders. Some of the lesser-known metrics use data from altcoin derivatives volumes and the Bitfinex U.S. dollar lending rate.
Altcoin volumes in futures markets indicate overheat
The futures contract volume is usually triple that of, or even five times higher than, regular spot markets. This phenomenon is not exclusive to cryptocurrency markets, as these contracts allow leverage trading, but the comparison isn’t exactly fair because the contracts are synthetic products, while Bitcoin (BTC) is digitally scarce.
By measuring the market share of Bitcoin, Ether (ETH) and the remaining altcoins, it is possible to analyze exactly what traders are focusing on.
Bitcoin, Ether and altcoins futures volume. Source: Coinalyze