One-sentence conclusion: Don’t short shitcoins. When market makers transfer coins into exchanges, it’s a signal for you to close your long positions, not a reason to open short positions.
I. Why “market makers transferring coins into exchanges” cannot be treated as a short signal
Many people monitor on-chain activity: when they see large amounts of tokens transferred into exchanges, they assume market makers are about to dump and rush to open shorts.
The problem is that too many people are watching on-chain activity. Once market makers transfer coins, retail traders move before the market makers do, effectively taking money from the market makers’ pockets. Market makers won’t allow that to happen; instead, they may push the price up and liquidate this group of “smart money” shorts.
$BANK The $Lobster over the past few days also rose instead of falling after coins were transferred into exchanges, quickly rebounding several times, liquidating shorts first before completing the distribution.
📌 Note: On-chain transfer signals have already been seen by too many people. Signals that everyone can see are often tools market makers use to harvest liquidity.
II. When a dump is really coming, on-chain activity is instead very quiet
Several days before dumping, market makers stop withdrawing coins from exchanges to the blockchain and directly accumulate the tokens needed for the dump on the exchange. They may not even need to accumulate: for example, if they bought $10 million worth of coins at the bottom and only withdrew $5 million, the rest was already left on the exchange.
Features on the chart:
🔹 The rally is faster than at any previous time
🔹 Yet there is almost no on-chain activity
🔹 The amount of short liquidations is growing
📌 Note: The quieter the on-chain activity, the faster the rally, and the more shorts get liquidated, the more cautious you should be of a late-stage rally.
III. Example
Over the past few days, Lobster rose from 0.035 to 0.11, then plunged to 0.059 within two hours. These signals had actually appeared before the plunge:
1️⃣ Funding rates remained excessively high for a long time. Lobster’s funding rate stayed at 0.08–0.10 for more than a dozen hours. Longs were extremely crowded, so any loosening would trigger a stampede.
2️⃣ The price hit a new high, but open interest declined. No new funds entered the market; the rise was driven by existing positions pushing the price higher.
3️⃣ Contract CVD did not rise. The price tripled, but aggressive buying barely increased. The rise was not driven by buying pressure.
4️⃣ It encountered major resistance. With resistance on the 1-hour and 4-hour timeframes, combined with the previous three signals, the plunge was only a matter of time.
IV. Taken together, several signals that a shitcoin has topped
✅ On-chain activity is quiet, but the rally is getting faster
✅ The amount of short liquidations is growing
✅ The price hits new highs while open interest declines
✅ The price surges, but contract CVD does not rise
The more of these appear, the more you should take profits.
V. Corresponding actions
🔸 For spot holders: Use these signals as a reference for taking profits in batches
🔸 For holders of contract longs: Keep your trailing stop-loss tight, and close part of the position when the price reaches resistance
🔸 For those considering a short: Don’t. No one can accurately predict the top of a shitcoin, and getting it wrong once can result in liquidation
Look at $BTW ’s constant wicks; if you can avoid trading contracts, don’t trade them.
If you absolutely must, make sure to set your take-profit and stop-loss orders!
I. Why “market makers transferring coins into exchanges” cannot be treated as a short signal
Many people monitor on-chain activity: when they see large amounts of tokens transferred into exchanges, they assume market makers are about to dump and rush to open shorts.
The problem is that too many people are watching on-chain activity. Once market makers transfer coins, retail traders move before the market makers do, effectively taking money from the market makers’ pockets. Market makers won’t allow that to happen; instead, they may push the price up and liquidate this group of “smart money” shorts.
$BANK The $Lobster over the past few days also rose instead of falling after coins were transferred into exchanges, quickly rebounding several times, liquidating shorts first before completing the distribution.
📌 Note: On-chain transfer signals have already been seen by too many people. Signals that everyone can see are often tools market makers use to harvest liquidity.
II. When a dump is really coming, on-chain activity is instead very quiet
Several days before dumping, market makers stop withdrawing coins from exchanges to the blockchain and directly accumulate the tokens needed for the dump on the exchange. They may not even need to accumulate: for example, if they bought $10 million worth of coins at the bottom and only withdrew $5 million, the rest was already left on the exchange.
Features on the chart:
🔹 The rally is faster than at any previous time
🔹 Yet there is almost no on-chain activity
🔹 The amount of short liquidations is growing
📌 Note: The quieter the on-chain activity, the faster the rally, and the more shorts get liquidated, the more cautious you should be of a late-stage rally.
III. Example
Over the past few days, Lobster rose from 0.035 to 0.11, then plunged to 0.059 within two hours. These signals had actually appeared before the plunge:
1️⃣ Funding rates remained excessively high for a long time. Lobster’s funding rate stayed at 0.08–0.10 for more than a dozen hours. Longs were extremely crowded, so any loosening would trigger a stampede.
2️⃣ The price hit a new high, but open interest declined. No new funds entered the market; the rise was driven by existing positions pushing the price higher.
3️⃣ Contract CVD did not rise. The price tripled, but aggressive buying barely increased. The rise was not driven by buying pressure.
4️⃣ It encountered major resistance. With resistance on the 1-hour and 4-hour timeframes, combined with the previous three signals, the plunge was only a matter of time.
IV. Taken together, several signals that a shitcoin has topped
✅ On-chain activity is quiet, but the rally is getting faster
✅ The amount of short liquidations is growing
✅ The price hits new highs while open interest declines
✅ The price surges, but contract CVD does not rise
The more of these appear, the more you should take profits.
V. Corresponding actions
🔸 For spot holders: Use these signals as a reference for taking profits in batches
🔸 For holders of contract longs: Keep your trailing stop-loss tight, and close part of the position when the price reaches resistance
🔸 For those considering a short: Don’t. No one can accurately predict the top of a shitcoin, and getting it wrong once can result in liquidation
Look at $BTW ’s constant wicks; if you can avoid trading contracts, don’t trade them.
If you absolutely must, make sure to set your take-profit and stop-loss orders!