Crypto Analyst Explains Key Market Dynamics

CrediBULL, a well-known crypto analyst, pointed out common misconceptions about open interest (OI) and its price movement. cryptocurrency market, mainly in Hedera (HBAR). In a recent X post, analysts aimed to clarify some misconceptions they consistently feel about market dynamics.

CrediBULL specifically rejected the widely held notion that “open interest always increases every time the price goes up,” which most people consider to be a measure of healthy market movement. He emphasized that with the market going up, it may not be a wise move to sit back and wait for OI to rise. As proof of that, he used the example of HBAR’s recent price movement as a case story.

HBAR Market Trends: An Alarming Reduction in Leveraged Positions

CrediBULL discusses the market activity for HBAR and notes that the cumulative volume delta (CVD) of perpetual contracts is flat or negative, so participation in perpetual futures is almost non-existent and the price of HBAR is consistently rising. He pointed out that he was doing so. Surprisingly, even though prices rose, OI fell. This usually means a reduction in leveraged positions, which is interpreted as a step closer to market stabilization and maturity.

Source: According to chart credible

CrediBULL classifies this case as a “fully price-driven rally” and claims it is the most favorable type. Spot-driven rallies are primarily the result of actual purchases of cryptocurrencies, putting the spotlight on speculation rather than leveraged bets. Buyers of such rallies, typically referred to as “sticky,” tend to hold positions for longer periods of time and are less sensitive to short-term price fluctuations than leveraged users.

Additionally, analysts noted that spot buyers do not suffer from the same risks as permanent buyers, especially forced liquidations that can increase market volatility in bear markets. This distinction between spot-driven rallies and permanent-driven rallies provides an understanding of the nature of crypto markets and the different effects that market participation types have on price stability and market health.

The analyst’s comprehensive report is an educational tool for traders and market enthusiasts. The aim is to debunk myths and explain what defines healthy and sustainable price growth in the crypto space. His comments suggest that further research into types of market participation and their impact on price movements is needed for those interested in crypto markets.

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