Open Google and type: CryptoQuant
This shows the trending metrics for the last 24 hours. Let's break them down to understand how to read this and why it's needed.
Let's go:
1. MVRV Ratio (1.5849, -4.95%)
This, roughly speaking, compares the current market capitalization of Bitcoin with how much money has been invested in it overall (realized capitalization). Simply put, it shows how "overheated" the market is. A high value may indicate that the asset is expensive and could start to be sold off, while a low value suggests it is undervalued. Here it is 1.58, meaning the current market value is 1.58 times higher than the "fair" value. The fact that it has dropped by almost 5% (-4.95%) indicates that the market is cooling off slightly or there have been profit-taking. For a beginner, this is a signal to be cautious.
2. Exchange Reserve (2.3677M, -0.47%)
This is the total number of Bitcoins stored on all exchanges. This is a very important metric! If the number of Bitcoins on exchanges decreases, it is usually a good sign: people are withdrawing coins to their personal wallets for long-term storage. That means they do not intend to sell. If it increases, it means that coins are being brought to exchanges, and people are preparing to sell. In our screenshot, there is a slight decrease (-0.47%), indicating a slight outflow. This is a bullish (positive) signal.
3. Exchange Netflow (Total) (-11.0423K, +0.86%)
This is the difference between how many Bitcoins came to exchanges and how many left them. A negative value (like ours, -11.0423K) means that more Bitcoins left exchanges than came in. This is a strong bullish signal because it confirms: people do not want to sell, they are moving coins to "cold storage."
4. Funding Rates (0.009352, +96%)
This is more about futures. Simply put: this is the fee paid by those who bet on growth (longs) to those who bet on decline (shorts), or vice versa. A positive value, especially with a rise of 96%, indicates that very many people are betting on further Bitcoin growth. This can be a sign of strong optimism as well as that the market is "overly optimistic" and a sharp drop may soon occur (the so-called "long squeeze"), when the price falls to flush out all these optimists.
5. Spot Average Order Size
This is the average size of a spot order. In the screenshot, we see the text "Big Whale Orders," and it is highlighted in green. This metric shows how large the trades on regular (spot) exchanges are currently. We, as regular traders, make small orders. But if the average order size skyrockets, it means that the same "whales" or institutional investors have entered the game, buying or selling in very large chunks.
If it is rising (as indicated by the green text), it means that the market is being driven by big money. They may be buying coins despite high prices or, conversely, taking profits in large batches. In any case, this is a signal: attention, big players are actively working! The price may start to move very sharply in the direction of these large orders.
6. Open Interest (31.6626B, -1.88%)
Remember we talked about high Funding Rates (metric 4)? Well, Open Interest (Open interest) goes hand in hand with them, it's like volume in the futures market. This is the total amount of money that is currently "locked" in active (not closed) Bitcoin futures contracts. It literally shows how much speculative capital is at stake.
In our screenshot, $31.66 billion is at stake. That's a lot. A slight decline of -1.88% means that some traders have closed their positions. Why is this important? As I mentioned, when Funding Rates soar (everyone is betting on growth), high Open Interest is huge fuel for a Long Squeeze. If the price falls, all these positions will start to get liquidated, leading to a cascading decline. A slight decrease in Open Interest can be the first sign that the market is somewhat "unloading," but as long as it remains at such high levels, the risk of a sharp decline persists.
7. Exchange Whale Ratio (0.9518, +1.02%)
"Whales" are the largest wallets. This metric shows what percentage of all incoming deposits to exchanges is made by whales. When this coefficient is below 0.95, it is usually considered normal. When it rises above 0.95 and starts to grow, it means that whales are actively bringing their coins to exchanges, which is often a preparation for a large sale. In our screenshot, it is 0.9518 and is growing by +1.02%. This indicates that whales are starting to show activity, and one needs to be very careful.
So what does this tell us in simple words?
The market is cooling down (MVRV is falling), but at the same time, people continue to withdraw Bitcoins from exchanges for long-term storage (Netflow is negative, Reserve is falling) – this is good. But! There are two "red flags": Funding Rates are very high (the market believes too much in growth), and Whales have activated (Whale Ratio 0.9518).
For a beginner, the conclusion is this: CryptoQuant helps to understand what other market participants are doing. One should not blindly buy or sell just by looking at the price. Look at how many coins are on exchanges, who is moving them, and how much everyone believes in growth. When everyone is too optimistic, and whales start to stir, it is often the most dangerous time to buy.
This is just a tool, but it adds depth to not just guess but see real money movements. This is true, meaningful crypto trading.
