7 key crypto market signals every trader should track

During periods of crypto market volatility, traders often frantically search for accurate signals to navigate the turbulence. Unfortunately, it’s precisely during these periods that a myriad of conflicting signals may emerge, adding to the challenge of trading in a volatile environment. Wild price swings, social media hype, conflicting analyst opinion and sensationalist financial news published by many platforms can make the job of spotting quality signals extremely difficult. 

In order to ride out such volatile periods, traders are advised to concentrate on a small set of time-tested signals and measures to avoid the dilution of focus and direct their attention to things that truly matter. In this article, we cover seven trading signals to pay close attention to during times of market volatility.

Key Takeaways:

• During periods of high crypto market volatility, many traders are overwhelmed by the numerous signals in their search for the correct action.

• To avoid information overload and scattered focus during such events, it’s advisable to closely track seven crucial trading signals: funding rates, open interest, perpetual contract basis, options skew, volume breadth, stablecoin flows and liquidity pockets.

1. Funding Rates — Spotting long/short extremes

Funding rates are periodic payments distributed on trading platforms between holders of long and short perpetual futures contracts. When the funding rate is positive, longs pay shorts; when it’s negative, shorts pay longs. The payments push the perpetual futures price toward the spot price. When funding rates are extremely positive, meaning that the market is leaning strongly toward long, there’s a heightened risk of short-term pullback. On the other hand, when the rates get extremely negative, it signals a potential squeeze that may ignite a price spike. As such, funding rates can indicate market sentiment extremes that drive significant price action.

2. Open Interest (OI) — Measuring market commitment

Open Interest (OI) is the total value of all currently open perpetual and futures positions on a trading platform. It can act as a powerful signal of market commitment. Sudden increases in OI indicate over-leveraging, and hint at a continuation of the current trend. 

At the same time, when OI nosedives, it can be a signal of potential large-scale capitulation by traders in the face of losses. In such cases, the current trend might be weakening or about to experience a reversal.

While OI by itself is a simple and effective signal, it’s best to analyze it in conjunction with funding rates in order to form a more defined picture of the positioning being adopted by traders.

3. Perpetual contract basis — Gauging directional bias

Perpetual contract basis is the difference between the perpetual futures price and the spot price of the asset. When the perpetual price is higher than the spot price, it’s defined as a positive basis. Conversely, a negative basis occurs when the spot price is above the perpetual price.

Positive basis is an indicator of long dominance, while negative basis is a sign of dominant short action. The magnitude of the basis difference can serve as a good gauge of market sentiment strength. In addition, basis can act as a powerful trend confirmation signal. 

When a positive basis is rising, it indicates a continuing bullish trend. In turn, a falling negative basis often confirms a bearish trend. Basis and its magnitude can be helpful for estimating market leaning before price action confirms it.

4. Options skew — Understanding market fear and greed

Options skew refers to the difference in implied volatility across different strike prices (out-of-the-money (OTM), at-the-money (ATM) and in-the-money (ITM)) for options contracts with the same expiration date. It can be a valuable indicator for gauging the market's sentiment. OTM options typically have higher implied volatility than ATM and ITM options.

High skew points to the market’s expectations for extreme fear or greed. If OTM puts have a much higher implied volatility than calls, it signals fear sentiment. On the other hand, if OTM calls’ implied volatility are significantly higher than puts, it may be indicative of greed. If the OTM puts and calls’ implied volatility are higher than that of ATM, a smile skew will occur, signaling a highly volatile market which may move sharply in either direction.

5. Volume breadth — Confirming conviction

Volume breadth is a measure of how widely trading volume is distributed across exchanges. It essentially indicates whether market movements are driven by broad participation or concentrated trades. Broad volumes indicate real market conviction and action. If volumes are broad, you can be certain that the ongoing volatility is genuine. In contrast, narrow volumes may signal possible manipulation or isolated, hype-driven actions.

6. Stablecoin flows — Tracking capital rotation

Stablecoins are among the most critical assets to track, both in general and during times of market turbulence. When volatility is rising, it's essential to closely monitor the inflows and outflows of major stablecoin assets, such as Tether (USDT), USDC (USDC) and Binance USD (BUSD). Large inflows into these assets often indicate buying pressure, while outflows may hint at profit-taking behavior or risk aversion. 

Monitoring of these capital flows — as well as using volume breadth — can provide insight into whether the current volatility is driven by real action or speculative hype.

7. Liquidity pockets — Recognizing trap zones

Liquidity pockets are areas along the price chart where a lot of buy or sell orders are clustered. Some of these pockets are concentrated around prior highs/lows, or support and resistance levels. Particularly popular pockets form around round numbers, e.g., the price of Bitcoin (BTC) at $100,000, $110,000 and so on. The psychological bias of round numbers is well-known in finance, particularly in the crypto market; many traders plan their actions around round-number price points, resulting in clearly defined liquidity pockets.

Asset prices often stall, spike or suddenly reverse near these trap zones. Therefore, it's essential to be aware of these areas and pay close attention to them. It may also be useful to analyze the depth of the order book or OI concentrations to understand whether the current price action is driven by traders rushing to these trap zones. 

Case studies

Case study A: November 2025: Whales offloading Bitcoin 

What happened

In November 2025, several crypto news outlets reported on a trend that had been occurring since the early months of the year: some long-term "OG" Bitcoin holders, with wallets that had remained dormant for over seven years, had been regularly selling large amounts of BTC. This had been observable for most of the year. On-chain data analysis showed regular outflows of $100 million to $500 million.

Why it matters (signals) Such large outflows entering the market create potential downward pressure, often around the liquidity pockets/trap zones. They may also lead to new spikes in Bitcoin’s volatility.

This long‑term holder activity signaling distribution rather than accumulation is often a precursor to reversal or consolidation. Nevertheless, the market largely held up, absorbing this significant activity throughout the months. 

This development clearly demonstrated the importance of using signals like stablecoin flows, volume breadth and liquidity pockets. By using these signals, a smart trader would protect themselves from overreacting to these events.

Besides using these signals, it pays to set alerts for significant wallet moves and examine support levels to recognize when absorption is weak.

Case study B: Flash crash triggered by macro and whale move

What happened On Nov 4, 2025, Bitcoin fell below the psychologically important $100,000 level after a roughly 20% slide from its recent high, which was triggered by macroeconomic factors, such as the strong US dollar and the sell-off in technology stocks.

Along with these developments, there were large sell‑offs by whales to the tune of hundreds of millions of dollars.

Why it matters (signals) Funding rates and OI likely spiked, making leveraged longs vulnerable. On a perpetual basis and with options skew, directional bias may have been evident, trending negative ahead of the crash. The combination of on‑chain and macro signals created a perfect storm scenario that likely hit many traders who had neglected these signals. 

This case study demonstrates how layered signals (macro, on‑chain and derivatives) align. If macro signals look weak, funding rates are extreme and liquidity is thin, the most sensible course of action is to either reduce exposure or stand aside while the market slide is unfolding.

Toolkit — Dashboards and alerts

Besides being aware of the key signals we’ve covered above, it’s also critical to set up dashboards to track them. By using automated alerts in your dashboards, you can closely follow funding rates, OI, skew, volume, and stablecoin flows in real time. These alerts can be set for extreme levels in order to notify you of significant action, reducing the need to manually watch the market.

Such dashboards and triggers can easily be set on various platforms, such as Bybit’s trading terminal, TradingView and major crypto data aggregators.

Pro tip: Set automatic alerts for extreme funding rates or unusual stablecoin inflows so you can receive early warnings before prices move sharply.

Closing thoughts

When market volatility increases, information overload becomes your primary enemy. By focusing on the seven high-value signals described above, you can distinguish meaningful trends from noise, make more calculated decisions — and protect your capital while still capturing opportunity.

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