Hi, bratha welcome.
This write-up talks about the data that QuantVAT generated.
Our cross market report comprises plenty of data (tickers and numbers) to glue over.
At first they wouldn’t make sense, why would they?
You might have noticed that we even went as far as labeling some indicators that in reality doesn’t entirely function on their own in the financial market space.
But those biased labelling, their purpose is to help us first make sense of what we are looking at before we start digging deeper into the actual numbers and why behind the move (it doesn’t matter the direction).
Think of them as a starting point, not a trading signal carved in a stone promised to you thousands of years ago.
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Here is how to read the report.
We will begin with:
Bullish Squeeze
Bullish squeeze is when you look at the data from both sides, and notice that the Open Interest is positive while Funding Rate is negative.
In layman term, it means new leverage positions are being opened on that token, while the negative funding rate suggests that a large or let's say significant portion of the market is leaning toward short positions, meaning people are shorting the hell out of that token.
That creates the conditions for a potential squeeze.
If price starts moving against those shorts, they may be forced to close their positions by buying back the token at a higher price.
And that buying can accelerate the move and create the sharp price expansion that is called a "short squeeze."
But here is the catch, Open Interest and Funding Rate alone are useless on their own.
They are best used alongside other data points to come to a sound (I know in market there is no sound decision most of the time) decision that won't put your capital in guillotine.
If the spot demand is genuine, and futures demand is in alignment with that, then the future move is more likely to affect the spot token's price.
And you know what?
Same thing applies to a situation where Open Interest and Funding Rate are both positive.
But being positive alone is not enough; let's say the market activity and data is backing those green numbers.
This time around, it wasn't shorts that are going to be squeezed because everybody is going long (buying) and the token is appreciating in percentages.
And there is good probability that the trend will continue going in that one direction (for the time being).
At the same time, that positive OISS and Funding Rate is telling us that everyone is bullish and the market is becoming increasingly expensive to maintain because longs are paying the funding rate to those holding their short positions.
Short Covering / Recovery
Here, Open Interest is falling while Funding is negative. Shorts are closing, so price can recover.
But declining Open Interest (OISS) also tells us that positions are leaving the market rather than fresh capital necessarily coming in.
So the recovery can be real in price, while still being weak underneath.
And that usually happens when the token is going to slump into correction. For each upward move or downward move, there is a correction.
Flatline
Let's say Open Interest (OISS) is unchanged, which could be 0, and Funding Rate is positive. That means the market appreciates greatly in one direction, which is usually upward.
So, here we are stuck with a lack of new capital flowing in, minimal movement is being recorded, and the ongoing trend paused while funding fees still accumulate.
We have 2 scenarios: either the price corrects, or maybe it continues the advance. But usually, when there is no one going long, then taking profit is the answer.
Keep in mind that these 2 indicators tell you a portion of what is going on. Without doing a deep dive, if you take a trade because of them, I'll have to leave you with the market!
Bearish Dump
Is a situation where Open Interest is negative while Funding Rate is positive.
And that means longs are exiting their positions aggressively, or in other words, they are being liquidated.
And that liquidation will be in favor of short sellers because price will drop sharply.
But still, you have to look at other data points to connect the dots. OISS and Funding Rate alone will lead your capital astray.
Why VTMR of All Sides Matter
If you only look at one side of the market, you can easily miss what is actually driving the move.
This is why QuantVAT's cross-market report compares Spot and Futures activity.
1. The Divergence Signal — Spot vs. Futures
If a token's Futures market volume is huge, let's say 8x, while Spot activity remains relatively low, the price is being driven heavily by leverage and speculation.
There may be a lot of money moving around, but that doesn't necessarily mean there is strong demand for the underlying asset.
That kind of market can be fragile for spot-only traders.
Expect violent wicks, sudden reversals and liquidation hunts.
Now, flip the above scenario.
If Spot volume is leading Futures volume, there is stronger evidence that participants are actually buying and selling the asset itself rather than primarily trading leveraged contracts around it.
That can point toward genuine accumulation and, all else being equal, a healthier and more sustainable trend.
2. The Heat Check
If VTMR is above 1x, that means the token is trading volume equivalent to more than its entire Market Cap within the measured period.
That means the asset is hyper-active.
Liquidity is moving fast. Traders are paying attention. Volatility can expand.
But, and this is important...
High VTMR does not automatically mean a pump.
A token can trade 2x, 5x or even 10x its market cap in volume and still dump.
Volume tells you that something is happening.
It doesn't, by itself, tell you what will happen next.
And that distinction is basically the whole point of the QuantVAT report.
Wrapping Up
We only provide the data. Connecting the dots, making sense of the data, and doing a deep dive remain your job.
Continuing to build the data-driven engine is our job. How you use it remains your routine.
By the way, this will help clear things up for someone new to the cross-market report.