BTCUSDT Market Depth Ratio - What does it mean?
Okay, let's look at the MDR, Market depth ratio. Simply put, this is a ratio of the bids/asks in a relative manner.
What I want to highlight for some of you is that the MDR had a high spike to +32% on 2/22 at 7 AM. Shortly after at 1 PM, the price fell, and then MDR hit a monthly high of +67.7% at 2/23 7 AM. Around this time the price was 46.2K. What was happening?
Let's take a look at the yellow circle around Feb 22. I want to point put out that, yes there was a lot of demand around 2/22 @ 7 AM due to a +32% MDR, but the price went down first then it went rocketing upwards. (45.8K to 50.3K). At that lowest point was when we saw the MDR hit +67.7%. This is called stop loss hunting. Typically if there is a ATH MDR happening on the weekly or on the monthly timeframe, this is a good sign to buy in, because it is indicating the demand is very high, and prices will go up. But that DOES NOT MEAN the stop loss hunt WILL NOT happen. The example we saw around Feb 22 is the MDR hitting highs on the last month. Demand was high as it it 32%, stop loss hunt happened, and the MDR then went even higher, doubling the past high, just because there was so much sell off happening (you can see the blue circle on the volume underneath).
Now what if we move into the 3 month time frame? Can we see a similar example?
1/19 @ 7 PM we see MDR spike to +26.8% and then once again the price went down first (from 36K to 30K), then we see a second spike happen in MDR of +26.7% on the 1/27 and again +41.6% on 1/29. During these times, there were large buys at the lows, and large sell offs when the price had gone back up. After the last +41.6% spike on 1/29 the price climbed from 36.8K to
46K 11 days later.
Now we saw the stop loss hunt happen, but we also saw the MDR indicator working as it should after, saying that during these crazy ATH spikes in the monthly timeframe, the price is supposed to move up, and it does.
But what is the point of it now? I gave you the quick historical catch-up, but what do we do now?
Currently on the weekly timeframe, the ATH MDR is +34.2% which happened on 3/15 @ 6 AM. This should indicate the price moving higher , and it did. As we see 4 hours later price went from 56K to 57K. Now could we have experienced a stop loss hunt from March 15 - 16 as the price went from highs around 60k to 55k? I am not certain. Because of the news that a whale "allegedly" transferred 11BN to an exchange, it caused panic sell-off amongst some, but was later denied by Gemini as it was just internal transfers and was fake news. Or could this have been a stop loss hunt that was aiming to load for a new ATH? Time will tell.
Until then, I urge you to go into websites such coinmarketflow.com and look at these graphs yourself. I have posted the link below.
coinmarketflow.com/coins/bitcoin-btc
What I want to highlight for some of you is that the MDR had a high spike to +32% on 2/22 at 7 AM. Shortly after at 1 PM, the price fell, and then MDR hit a monthly high of +67.7% at 2/23 7 AM. Around this time the price was 46.2K. What was happening?
Let's take a look at the yellow circle around Feb 22. I want to point put out that, yes there was a lot of demand around 2/22 @ 7 AM due to a +32% MDR, but the price went down first then it went rocketing upwards. (45.8K to 50.3K). At that lowest point was when we saw the MDR hit +67.7%. This is called stop loss hunting. Typically if there is a ATH MDR happening on the weekly or on the monthly timeframe, this is a good sign to buy in, because it is indicating the demand is very high, and prices will go up. But that DOES NOT MEAN the stop loss hunt WILL NOT happen. The example we saw around Feb 22 is the MDR hitting highs on the last month. Demand was high as it it 32%, stop loss hunt happened, and the MDR then went even higher, doubling the past high, just because there was so much sell off happening (you can see the blue circle on the volume underneath).
Now what if we move into the 3 month time frame? Can we see a similar example?
1/19 @ 7 PM we see MDR spike to +26.8% and then once again the price went down first (from 36K to 30K), then we see a second spike happen in MDR of +26.7% on the 1/27 and again +41.6% on 1/29. During these times, there were large buys at the lows, and large sell offs when the price had gone back up. After the last +41.6% spike on 1/29 the price climbed from 36.8K to
46K 11 days later. Now we saw the stop loss hunt happen, but we also saw the MDR indicator working as it should after, saying that during these crazy ATH spikes in the monthly timeframe, the price is supposed to move up, and it does.
But what is the point of it now? I gave you the quick historical catch-up, but what do we do now?
Currently on the weekly timeframe, the ATH MDR is +34.2% which happened on 3/15 @ 6 AM. This should indicate the price moving higher , and it did. As we see 4 hours later price went from 56K to 57K. Now could we have experienced a stop loss hunt from March 15 - 16 as the price went from highs around 60k to 55k? I am not certain. Because of the news that a whale "allegedly" transferred 11BN to an exchange, it caused panic sell-off amongst some, but was later denied by Gemini as it was just internal transfers and was fake news. Or could this have been a stop loss hunt that was aiming to load for a new ATH? Time will tell.
Until then, I urge you to go into websites such coinmarketflow.com and look at these graphs yourself. I have posted the link below.
coinmarketflow.com/coins/bitcoin-btc
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