Everyone’s watching price. Smart money watches liquidity, leverage, and liquidation flows. These metrics cut through the BS—and often give clearer market signals than price itself.
TL;DR
Two frameworks you need to master:
The Value of Money → Shows how aggressively people are using capital
Blood on the Streets → Shows where that capital gets obliterated
When read together, they reveal tops, bottoms, and high-probability entries most traders miss.
The “Value of Money” Framework
This one’s about reading how expensive it is to borrow—and what that says about market sentiment.
Key Metrics:
Stablecoin Supply Rate → What lenders earn for depositing USDC/DAI
Borrow Rate → What traders are willing to pay to borrow
Supply/Borrow Ratio → Relationship between available capital and leveraged demand
How to Interpret It:
Market Top Signal:
Borrow rates above 10–15% = overheated. Traders are desperate for leverage and paying up.
Even more powerful: a fast, sharp rise in borrow rates above baseline. The pace matters more than the level.
Market Cooling Off:
Falling borrow rates = fading conviction. Traders aren’t as eager to leverage up.
Bottom Signal:
Flat, low borrow rates (3–4%) sustained for 2–4 weeks = minimal risk-taking, weak demand = potential bottom formation.
🔥 Actionable Insight:
It’s not just about high or low rates—it’s about rate acceleration and duration. Tops come after rapid spikes, bottoms form after flat, low-rate periods.
The “Blood on the Streets” Framework
This one’s about watching where over-leveraged positions explode—and how the aftermath creates setups.
Key Metrics:
Total Liquidations: $ value of forced closures (margin calls)
Debt Change: Is total borrowing decreasing after the wipeout?
Repayments: Voluntary debt reduction (fear-driven but not forced)
How to Interpret It
Local Bottom Signal:
Large liquidation spike + falling total debt = capitulation
Best signals come when both are present
Example: August 2024 → one of the biggest liquidation days → triggered a major rally
Support Zones:
Areas with major liquidation clusters often act as support during sideways/ranging price action
🔥 Actionable Insight:
Don’t just watch for liquidations—look for liquidation spikes + net debt reduction. That’s when the market has purged the weak hands and may be ready to turn.
Complementary Metrics That Complete the Picture
Open Interest (OI)
Rising OI during flat or choppy price = leverage stacking without momentum
Combined with funding rates, this shows where the pressure is building
Funding Rates
Positive = Longs paying shorts (bullish crowding)
Negative = Shorts paying longs (bearish crowding)
Extreme negative funding often sets the stage for short squeezes
Extreme positive funding + high OI = long trap setup
Final Take
If you’re trading without this data, you’re reacting to price. Everyone else already moved.
Lending metrics show you:
When conviction turns to greed
When forced selling resets the board
When capital is frozen or flooding in
The best entries aren’t when price looks safe—they’re when these metrics say risk has already been flushed. That’s how smart money enters.
Stay ahead. ⚡️
-Team CryptoNuggs