Crypto Market Flow

Intro to using CVDs & Understanding market data

Table of contents:

Introduction

Aggr

KingFisher

CVDs

Delta divergences

Market offers

Imbalances

Introduction

Welcome to my first write-up on dynamic market constructs and influential market flow.

So what is all this talk about CVDs, Delta, imbalances and offers, these terms refer to how market participants are played by “smart money” also give traders great opportunities to spot directional flow.

In this write up I will be diving into the corresponding sections of aggr and how to define what flow is present, how to position yourself, and how to use my aggr templates to your advantage.

In light of my partnership with KingFisher and their products, we will be combining tools to enhance your trading experience for future insight & edge into the crypto market.

All will be available from thekingfisher.io

Aggr — V3

v3.aggr.trade — 52kskew Template

What is Aggr?

Aggr (aggregate) is an open-source project led by Tucsky, to provide open market data in a dynamic dashboard.

(https://github.com/Tucsky/aggr)

This dynamic dashboard enables a more clean insight for traders into the market at any given moment via the various preset indicators and custom indicators I will provide alongside KingFisher.

These indicators include:

CVDs

Volume Delta

Liquidation data (CLD)

Cumulative Trades Delta (CTD)

&

Moving Averages (MAs)

Bollinger Bands

Regression averages

KingFisher

Kingfisher.io is a vital platform to finding edge in crypto specifically through the use of their:

Liquidation Mapping
OEMS (Order Execution Management) System
OI (Open Interest)
GEX
IchiPMS

These tools will aid your stratiegies in a flow dominant market.

I highly recommend you read their documentation and medium.

Documentation
https://docs.thekingfisher.io/

OEMS
https://the-kingfisher.medium.com/kf-oems-example-trades-7cf01a41857f

Liquidation Maps
https://the-kingfisher.medium.com/the-kingfishers-liq-maps-fundamentals-bcf1ad128559

GEX
https://the-kingfisher.medium.com/kf-gex-gamma-vanna-exposure-and-iv-e919bbfdeb95

CVDs (bottom)— Volume Delta (top)

Delta
Delta is calculated through the difference between buyers and sellers, which aggressor is more reflectively dominant. (Displayed in Volume delta & CVDs)

Positive Delta reflects a higher volume of aggressive buys
Negative Delta reflects a higher volume of aggressive sells

CVDs
CVDs (Cumulative Volume Delta) like Volume Delta just represent off the cumulative change between buyers & sellers.

Most of the edge in aggr comes from CVDs; reason being the skew (direction) of the line indicates when Perpetual markets, Futures markets and Spot market is bearish or bullish.

Most important CVDs are Spot (Binance Spot, FTX spot & Coinbase) as they are directional to the true value. Leverage markets (Perps & Futures) drive prices above or below spot market prices (trap set ups). Often aided with the use of OI (Open Interest) which will be provided by KingFisher.

CVD flow Definitions:

When the Spot CVDs are skewed up this means net buyers are dominant vs when Spot CVDs are skewed down net sellers are dominant.

Perps & Futures CVDs represent how leverage traders are positioning based off market structure.

Perps + Futures + Spot CVDs skewed in same direction = Balanced market otherwise it’s imbalanced.

This can be for both risk off and risk on.

(left) Bullish skew — dominant buyers / Bearish skew — dominant sellers (right)

Delta Divergences

These divergences are strong indicators towards the market changing direction with intra-day trading or weekly trend. Leads to a point of absorption between buyers & sellers.

  • Bearish divergences at peaks (exhausted buyers & shorts taking control)
  • Bullish divergences at lows (exhausted sellers & buyers stepping in)
(left) Large Delta volume — Bearish Spot CVD divergences / Bullish Spot CVD divergences (right)

These opportunities present as points of taking profits/Hedge and mean reversion.

Mean Reversion + Bearish CVD Divergences

Adding CLD (Cumulative Liquidation Delta) and on chart Volume Delta signifies the strategy further as shorts get liquidated + Large buy delta volume or longs liquidated + large sell delta volume.

Some refer to this as liquidity grabs, meaning price rejects/bounces of areas of high liquidity + fills (asks-bids).

Market Offers

A market balance is really just taking advantage of a unique situation between market participants using my aggr templates + Delta Div strategy, to spot where the Perps or futures are most vulnerable…. potentially trapped shorts and longs.

These offers lead to passives eating up the aggressive positioning (shorts or longs) and lifting prices off Spot prices.

Many see this as premiums vs discount trading:
Coinbase trades higher than Bybit = Bullish (limit chasing)
Bybit trades higher than Coinbase = Bearish (bids are sold into)

Thus a squeeze or liquidation event follows.

Red lines + curves point to passive buyers trapping aggressive shorts (post long liquidation event)
Supported lows + trapped shorts = Short Squeeze

Often these moves are driven by Maket makers providing sufficient liquidity for smart money to take advantage of imbalance exchanges and takers to accept the risk.

Imbalances & Balances

Imbalances and Balances define when the market is unsure (imbalanced) or in aggreeance to begin a trend(rally-sell off) which occurs during a point of balanced drive.

You are able to define points of imbalances or balances using CVDs and OI(open interest) or GEX (all provided by Kingfisher)

Balance is clearest in which Spot CVDs will cause a market wide sell off or rally.

Imbalances however are more notable in Perpetual CVDs & Futures CVDs

Perp imbalances vs Spot Market

In this aggr example of Perp market CVDs vs Coinbase CVD you can see:
- Aggressive net longs before spot market sells off (Moonboys)
- Aggresssive net shorts into lows when Coinbase buyers are in control (Panicboys)

Balanced Risk off between all CVDs — sellers climax

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