The cryptocurrency market has entered a brand new bullish cycle. Following the Black Thursday crash in March 2020, greater than $900 billion have flooded the trade. A few of that cash has additionally been following a key crypto buying and selling technique.

The large capital inflow has been fueled primarily by the havoc that COVID induced on the worldwide economic system. And as institutional buyers attempt to hedge in opposition to inflation, this new asset class emerged as an alternative choice to the normal monetary system.

Nonetheless, dashing into this booming market isn’t with out severe threat. No matter present bullish situations, timing exhaustion factors for varied tokens is a essential talent.

By anticipating the best second to promote the highest and purchase the dip, crypto buyers and merchants can maximize their income whereas lowering the dangers.

Promoting the High, Shopping for the Dip

According to Alex Krüger, a famend technical analyst, timing execution in a bull market will be simple when using the correct technique. One such technique gaining traction amongst merchants is taking a look at perpetual swaps’ funding charges.

As a rule of thumb, favorable funding charges point out that market speculators are rising optimistic as lengthy merchants pay quick merchants’ funding. Conversely, damaging funding charges counsel that buyers are leaning bearish and quick merchants pay funding to lengthy merchants.

Krüger maintains that funding charges of 0.1% or larger each eight hours are “unsustainable.” When this occurs, market members have entered a state of euphoria, resulting in steep corrections.

He advises buyers to take partial income or chorus from opening lengthy positions when funding charges are excessive on account of this sign’s power in figuring out a neighborhood prime.

Nevertheless, when perpetual swaps’ funding charges hover round 0.01% or decrease each eight hours, it may be thought of a optimistic signal. Krüger believes that buyers should make use of technical evaluation alongside flat to damaging funding charges to purchase the dip.

“When perpetuals’ funding is flat to damaging (damaging is greatest) and/or perpetuals-spot foundation is damaging, one has a inexperienced mild for purchasing. Stagger orders if not sure in regards to the stage,” said Krüger.

Making use of Key Crypto Buying and selling Technique

When taking a look at Bitcoin perpetual swaps’ funding charges over the previous week, Krüger’s thesis holds.

On Jan. 19, BTC was buying and selling at a excessive of almost $38,000 when its funding fee on BitMEX peaked at a excessive of 0.102%. Since lengthy merchants had been funding quick merchants, a promote sign developed.

What got here subsequent was a 24% correction that pushed Bitcoin’s market worth under $29,000.

Following the huge bearish impulse, Bitcoin perpetual swaps’ funding fee on BitMEX dropped to -0.019%. As quick merchants had been funding lengthy merchants, the market was signaling that it was time to purchase the dip.

Subsequently, BTC’s worth rebounded by greater than 17% in direction of the $34,000 mark.

Ethereum seems to have had an identical worth response to its perpetual swaps’ funding fee over the previous week.

After Ether’s worth rose to a brand new all-time excessive of over $1,440 on Jan. 19, its funding fee on BitMEX skyrocketed to 0.53%. Such an elevated fee was a regarding signal for these buying and selling this altcoin because it recommended a excessive chance of a market prime.

Certainly, ETH reached exhaustion in its uptrend and shortly misplaced over $400 in market worth.

It was not till Jan. 22 that Ethereum’s funding fee on BitMEX dropped to 0.01%, indicating that it was time to purchase the dip.

Sidelined buyers who may reap the benefits of the bullish sign to reenter the market may have profited due to this technique. Since then, Ether’s market worth has risen by greater than 33% to make a brand new all-time excessive of $1,480.

Cryptocurrencies to Watch

Digital belongings analytics agency ViewBase offers a free-to-use instrument for merchants to make use of this crypto buying and selling technique of the highest 60 cryptocurrencies by market capitalization throughout a number of futures exchanges.

Primarily based on the info collected from this platform, Theta Community (THETA) may very well be presenting a chance for buyers to purchase the dip since its funding fee is at present damaging throughout the board. For example, THETA’s funding fee is hovering at -0.0007% on Binance, -0.0384 on FTX, and -0.0100% on OKEx. On Huobi, it sits at roughly -0.125%.

If this crypto buying and selling technique proves proper, then THETA may very well be getting ready to interrupt out of a symmetrical triangle the place its worth has been contained over the previous month.

By slicing by way of the sample’s higher trendline, the percentages will drastically enhance for a neat 42% upswing in direction of $3.00.

This goal is decided by measuring the gap of the symmetrical triangle’s widest vary and including it to the breakout level.

It’s value noting {that a} spike in promote orders that pushes Theta under the triangle’s decrease trendline will jeopardize the bullish outlook. Falling by way of the $1.70 assist stage may very well be catastrophic for this altcoin as it’ll seemingly result in a downswing to $1.00.

Disclosure: On the time of writing, this creator held Bitcoin and Ethereum.