Sonic Labs has launched a new points program to drive DeFi growth and reward users. 

The S&P 500 gained 0.11%, led by utilities, financials, and materials, as lighter inflation eased yields. Focus shifts to December's inflation report and financial earnings. Coindesk Indices, an index measuring broader cryptocurrency market performance was up by 3.03%, with Bitcoin and Ether rising by 3.14%  and 3.24%, respectively in the past 24 hours.

Today's top performer is A8, which surged 29.7% following the launch of Ancient8 SuperApp V3, an all-in-one platform for simplified Web3 management.

Ancient8 (A8), founded in 2021, is a gaming-focused Ethereum Layer 2 network using Optimism and Celestia to enable fast, affordable EVM game development with community-driven developer support. 

, a streamlined platform for managing Web3 activities. It combines staking, token swapping, liquidity management, an NFT marketplace, cross-chain asset bridging, and game discovery into a single user-friendly interface. The app simplifies processes, enhances security, and helps users maximize the potential of their digital assets, catering to both newcomers and experienced users.

Check Out the Latest Prices, Charts, and Data of 

 a new points program to drive DeFi growth and reward users. The program includes three types of points: Passive Points for holding whitelisted assets, Activity Points for deploying assets as liquidity on apps, and App Points (Sonic Gems) for developers to distribute as rewards via their apps. The initiative also features an airdrop of 200 million S tokens and incorporates Rings, a yield-bearing stablecoin protocol that provides liquidity to DeFi apps. Sonic's points program offers a dynamic way for users and developers to enhance their DeFi experience while contributing to the growth of the platform.

Yesterday, the BTC Spot ETF data showed a total flow of $9.7 million, with $0.0 million from GBTC and $9.7 million from non-GBTC sources.

, offering participants a chance to receive tokens as part of the platform's decentralization journey. The airdrop rewards key contributors, including early adopters, active community members, and global partners. Registration is open until January 18, 2025, and participants can claim tokens before the Token Generation Event (TGE) in Q1 2025. Plume's mission is to build a unified onchain economy that connects real-world assets with crypto, and the airdrop is the first step toward that vision. More details and eligibility information can be found on their official website.

Beginner

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Sonic Labs Launches Innovative Points Program to Drive DeFi Growth and Reward Users

GAME by Virtuals (GAME) is a leading AI agent development framework enabling quick creation and deployment of autonomous agents for web3, gaming, and social media.

Few people will argue with the notion that 

 (AI) is the fastest-growing sector in the world of business. This also applies to the 

 industry. Within the broader AI field, however, there's one area that particularly stands out with its growth rates — the niche of 

. Self-contained, autonomous AI workers are growing increasingly popular on blockchains, with leading AI agent cryptocurrencies posting head-spinning price increases.

 (VIRTUAL) and several tokens related to the platform, including GAME by Virtuals (GAME). Leveraging the underlying Virtuals Protocol, GAME is a development framework that lets developers quickly build and deploy autonomous AI agents suitable for various transactional environments. The GAME framework allows AI agents to make complex decisions based on the information supplied, lifting the overall sophistication of such agents to an entirely new level.

Launched in October 2024, the GAME token has appreciated over 3,000% as of January 2025, entering the list of the top 10 AI agent cryptocurrencies by market cap.

 (GAME) is an AI agent development framework powered by the Virtuals Protocol. 

It lets developers quickly build modular, autonomous AI agents and deploy them to various environments, such as gaming, entertainment and social media platforms.

At the core level, GAME is supported by the Virtuals Protocol, a decentralized platform on the 

 Layer 2 chain that’s designed to power tokenized, co-owned AI agents with revenue-generating capabilities. Virtuals Protocol provides an environment for tokenizing and using AI agents for various use cases.

GAME by Virtuals supports low-code, efficient creation and management of AI agents that can easily be plugged into various web3 platforms and even interact in real time with other agents. By default, AI agents developed using the GAME framework are deployed as X (formerly Twitter) agents. In this capacity, they can serve varied purposes for crypto users and 

 (DApp) operators. This could include community building, market monitoring, news and trading signal aggregation, data collection and even API-based integration with external trading platforms.

Thanks to the framework's modular design, a GAME-based agent can include different functions that are easily plugged into and out of it. Additionally, GAME allows developers to create non–X AI agents from scratch to integrate into other environments, such as blockchain games, messaging networks like Telegram and other types of applications. In essence, the programming tool kit provided by GAME allows developers to specify sophisticated agent characteristics and autonomous behavior. For example, GAME-based autonomous agents might operate in gaming, virtual reality (VR) and virtual world applications, providing immersive experiences and carrying out complex tasks.

The development of X-based agents via GAME is a simplified process. Developers can utilize an Agent Sandbox, a test environment provided by the Virtuals Protocol, to specify the key characteristics of their AI agent on X. This is a streamlined way to quickly and efficiently launch a basic social media agent without having to create an agent token. 

After deploying the agent to X, developers can easily add or remove its functionalities to adapt the agent to their specific use cases.

For applications beyond X, developers can build an agent from scratch using the GAME framework's programming functions. In the project's terminology, this is called GAME-as-a-Service. Within this mode, the agent's decision-making rules and characteristics are specified via API calls. For those familiar with AI-based programming, GAME-as-a-Service provides a more powerful and flexible way to build AI agents, with high levels of functional sophistication, as compared to the Agent Sandbox.

To build and launch an AI agent, developers must specify three categories of attributes that define their agent’s behavior and autonomous decision-making: Agent Definition Prompts, High Level Planner (HLP) Context and Low Level Planner (HLP) Context.

— These include the agent’s goal, character card and world information. In essence, this trio of attributes determines the agent’s overall behavior, memory traits, personality, background, tweeting style and the specifics of its virtual environment.

— This high-level tool establishes the input information to provide a dynamic context for the agent's decisions.

— This is a set of instructions for the agent’s expected outputs to execute various actions and functions within its environment.

To build and deploy agents via GAME-as-a-Service, you’re expected to be familiar with technologies like JavaScript and JSON. The Virtuals platform also provides an agent-building software development kit (SDK) in Python.

The GAME by Virtuals framework’s associated crypto token is also known as GAME. As of early January 2025, the project has provided scant information regarding the token’s utility beyond its basic supply specifications. In general, AI agents launched via Virtuals Protocol are monetized using project-specific tokens. Thus, it’s expected that agents built via the GAME framework are monetized using the GAME token, and that the GAME token might also support additional use cases in the future.

For each token on the Virtuals Protocol, including GAME, there’s a corresponding liquidity pool in which each token is paired with VIRTUAL, the protocol’s native cryptocurrency. This facilitates monetization and trading opportunities for AI agents built using the framework.

The GAME token was launched on Oct 26, 2024 and features a maximum, total and circulating supply of 1 billion. Similar to VIRTUAL and other platform-specific tokens on the Virtuals Protocol, GAME has been issued on the Base blockchain.

You can buy the GAME token on Bybit’s Spot market as a trading pair (

Additionally, through Jan 23, 2025, 9AM UTC, you can take advantage of Bybit's campaign dedicated to the GAME token to grab a share of the 

. New users who complete basic identity verification can earn GAME rewards by accumulating a deposit volume of at least 500 GAME, or depositing at least 100 USDT and trading 100 USDT worth of GAME via their first trade using their Bybit account. Existing users can also qualify for rewards by trading at least 500 USDT worth of GAME on Bybit’s Spot market. The more you trade, the larger your share of the prize pool. 

As of Jan 15, 2025, the GAME token is trading at $0.1922, which is 51% lower than its ATH of $0.3918 on Jan 2, 2025, and 7,190% higher than its ATL of $0.002634 on Nov 20, 2024.

Long-term price forecasts for GAME are mostly bullish.DigitalCoinPrice 

 of $0.65 in 2027 and $0.99 in 2030, whileCoinCodex 

 at around $0.202 in 2027, and rise to $0.629 in 2030.

GAME isn't the only AI agent token on Virtuals Protocol. The protocol supports a variety of applications and use cases that focus on AI agent technology, each of which may have its own token. Excluding the main platform-wide cryptocurrency, VIRTUAL, the leading tokens within the protocol's ecosystem include 

As of Jan 14, 2025, GAME is the second-highest-ranked token in the Virtuals ecosystem by market cap, behind AIXBT, the token of the AI agent-based market intelligence solution AIXBT. However, if ranked by 

 (TVL), GAME is actually the top token on the protocol, with a current TVL of $24.85 million.

GAME by Virtuals is a convenient tool for blockchain developers to launch powerful AI agents — intelligent objects that can perform diverse functions on social media platforms, gaming environments and within a wide variety of other applications. Its framework makes it easy to create X-based agents, and for other platforms and more sophisticated needs a skilled developer has numerous functions and utilities within GAME to play with.

The crypto market also seems impressed with GAME by Virtuals, judging by the GAME token's early performance. As the AI sector, particularly its AI agent niche, continues to flourish and capture the business world's attention, the GAME framework is likely to find more use cases and eager adopters in the AI developer community.

Advanced

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GAME by Virtuals (GAME): Your Gateway to Advanced AI Agent Development

Bitcoin liquid staking is a DeFi mechanism that enables BTC holders to earn passive yields. Learn more about how it works in this article.

The rise of Bitcoin liquid staking marks a significant evolution in cryptocurrency yield generation. At the core of this innovation is Babylon, a non-custodial infrastructure that serves as the foundation for Bitcoin liquid staking protocols like Lombard and pSTAKE. By building on Babylon, these protocols enable BTC holders to earn staking rewards while maintaining liquidity, BTC holders to earn rewards while retaining their assets’ liquidity, bridging the gap between Bitcoin's store-of-value proposition and yield opportunities within 

This article explores how Bitcoin liquid staking works, examines its advantages and risks, and considers whether it’s worth trying. We also analyze the leading Bitcoin liquid staking platforms driving adoption in this rapidly growing ecosystem.

Bitcoin liquid staking is a DeFi mechanism that enables BTC holders to earn passive yields by participating in 

 (PoS) networks and receive tradable tokens that maintain their Bitcoin's liquidity and utility in the broader DeFi ecosystem.

Liquid staking protocols open new yield-bearing opportunities in the Bitcoin ecosystem. While Ethereum liquid staking generates yields through network validation rewards, Bitcoin liquid staking creates returns by securing other blockchain networks, and through 

 that expand the utility of BTC beyond its primary function as a store of value.

Bitcoin liquid staking operates through a straightforward process that bridges traditional Bitcoin holding with DeFi functionality. When users stake their Bitcoin, they interact with specialized DeFi protocols that generate yield while maintaining liquidity.

First, users deposit their Bitcoin into a liquid staking protocol, where it's securely stored using various methods, which can include multi-signature wallets or other security mechanisms depending on the platform.

Users begin by depositing their Bitcoin into their chosen liquid staking protocol, which secures deposits through various methods like 

 or other security mechanisms. In return, they receive 

 (LSTs) representing their staked BTC on a 1:1 basis.

These LSTs can be used across various DeFi applications while the underlying Bitcoin works to secure PoS networks through protocols such as 

. The staking rewards are generated through point systems, protocol incentives or network fees, depending upon the specific Bitcoin liquid staking platform used.

, users' staked Bitcoin helps secure their networks. Rewards are typically distributed daily through the protocol's native tokens, which users can claim while holding their LST positions.

The unstaking process is equally straightforward — users can redeem their LSTs for their original Bitcoin whenever they choose, subject to any applicable unbonding periods or protocol-specific conditions.

Bitcoin liquid staking offers unique opportunities for yield generation, but it comes with its own set of risks that investors should carefully evaluate.

The Bitcoin liquid staking landscape offers diverse options for BTC holders seeking yield opportunities. Following are the top platforms.

Lombard transforms Bitcoin into a yield-generating asset through its LBTC token on Ethereum, with over $1.5 billion in 

 (TVL). The protocol integrates with established DeFi platforms like Morpho, Pendle and Symbiotic, enabling LBTC holders to access lending, borrowing and 

 opportunities. A 5% fee applies to staking rewards.

Following a successful private beta that attracted $230 million from over 4,000 institutional and individual users, Lombard has entered its public beta. Lombard maintains strict security standards through regular audits and a self-custodial model, ensuring LBTC remains fully backed by Bitcoin at a 1:1 ratio.

Recently launched by the Core Foundation, LstBTC is an 

 blockchain. The protocol enables daily rewards in CORE tokens through a dual staking model, whereby users can stake both Bitcoin and CORE tokens for enhanced yields.

Since its launch in April 2024, Core has attracted over 5,500 BTC (around $500 million) in staked assets and built a comprehensive 

 ecosystem. The protocol leverages Bitcoin 

 power for security, with about 55% of miners contributing to network stability.

 integration, allowing users to earn rewards from Layer 2 activity. The protocol converts deposited BTC into stBTC tokens for DeFi applications, enabling its users to earn daily Lightning Network routing fees without managing node infrastructure.

With over 105 active channels and the capacity to process over 18,000 

 (TPS), Stroom Network is secured by established validators, such as P2P.org and Allnodes. Stroom' 

 structure and multisig system ensure decentralized governance while managing Lightning Network integrations.

Babylon is an infrastructure protocol that enables Bitcoin holders to secure PoS networks through BTC staking without requiring 

 or third-party custody. The protocol has accumulated nearly 24,000 BTC in its ecosystem since launching in 2024.

Babylon’s platform prioritizes security through its innovative timestamping protocol, and partnerships with established validators like P2P.org. Though offering more conservative yields than competitors, Babylon's self-custodial model and robust security features have attracted institutional users seeking to put their Bitcoin to work while they maintain control of their assets.

 simplifies BTC yields through Bitcoin staking on Babylon's infrastructure. With over $35M in TVL, the platform offers two core offerings: a fixed-yield earn product (similar to Bybit Earn) accessible to all users and a Bitcoin LST, called YBTC, that offers tailored Bitcoin yield solutions to institutions.

Users can earn staking rewards from Bitcoin-secured networks by staking native BTC through 

. YBTC, a yield-bearing ERC-20 token on Ethereum backed 1:1 by BTC, connects with BNB Chain, Corn, B Squared, and Bitlayer through LayerZero integration.

Institutions can use YBTC in the BTCfi ecosystem to generate additional yields from DeFi protocols focused on restaking, yield farming, and more. PSTAKE — the protocol's incentivization, governance, and staking token — trades on exchanges like Bybit and can be staked on the Base L2 chain to earn Bitcoin rewards for participating in protocol and community activities.

Bitcoin liquid staking is worth considering if you:

Before participating, investors should carefully evaluate platform security, understand the technical aspects of liquid staking and assess their 

. Additionally, smart contract vulnerabilities and LST price fluctuations present real risks that need to be considered against potential rewards.

Choose a platform that aligns with your expertise level and goals. Established protocols like pSTAKE suit experienced DeFi users, while newer participants might prefer user-friendly platforms, such as Core's LstBTC. Start with smaller amounts of assets to familiarize yourself with the mechanics before committing significant capital.

Bitcoin liquid staking represents a significant evolution in Bitcoin's utility, offering holders new ways to earn yields while participating in the broader DeFi ecosystem. While the technology and protocols are still being developed, growing market adoption and continued innovation suggest a promising future for the Bitcoin liquid staking sector.

Intermediate

bitcoin liquid staking.png

Bitcoin Liquid Staking: New Yield Opportunities for BTC Holders

BlackRock has launched the iShares Bitcoin ETF (IBIT) on Cboe Canada, offering Canadian investors access to Bitcoin through brokerage accounts.

The S&P 500 rose 0.16% as focus shifts to inflation data and earnings reports from major banks. Coindesk Indices, an index measuring broader cryptocurrency market performance was down by 0.16%, with Bitcoin and Ether dropping by 1.14%  and 4.65%, respectively in the past 24 hours.

Today's top performer is AAVE, which surged 4.3% after the announcement of Aave and GHO's expansion across networks for broader integration.

Aave (AAVE), founded in 2017, is a decentralized lending platform on Ethereum for lending, borrowing, and earning interest on 17 cryptocurrencies. It uses smart contracts, collateral for loans, and aTokens for interest, along with features like instant loans. Aave is 

 to multiple networks, with ARFCs passed for Linea, Celo, and World Liberty Finance, while Sonic, Mantle, BOB, and Rootstock are in earlier stages. GHO stablecoin is also growing, with expansions to Avalanche and Base already approved. Aave and GHO aim for widespread integration.

 the iShares Bitcoin ETF (IBIT) on Cboe Canada, offering Canadian investors access to Bitcoin through brokerage accounts. The ETF mirrors Bitcoin's price performance by investing in the U.S. iShares Bitcoin Trust ETF, which holds long-term Bitcoin assets. This launch highlights BlackRock’s focus on innovation and simplifying Bitcoin exposure by addressing operational and custody complexities. Cboe Canada, known for pioneering financial products, emphasizes its role in expanding the crypto ecosystem. IBIT and IBIT.U join seven other iShares ETFs on Cboe Canada, enabling investors to trade via standard investment channels.

Yesterday, BTC Spot ETFs experienced outflows totaling $313.6M, including $89M from GBTC and $224.6M from non-GBTC sources.

 its governance token, $ANIME, in January 2025 with a total supply of 10 billion (7.69 billion initially circulating). Community allocation is 50.5%, including 2% for Hyperliquid stakers, Kaito yappers, and Arbitrum users. Completing Azuki's points tasks might help with eligibility for the airdrop.

BlackRock Launches iShares Bitcoin ETF on Cboe Canada for Simplified Crypto Access

Trading

The Money Flow Index is ideal for measuring the momentum of a financial asset by showing its asset inflow & outflow. But is it the same as RSI? Learn how it works.

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Technical traders and chart readers use oscillators to help identify the direction of trends and the momentum, or strength, behind those trends. There are hundreds of oscillators, and many other indicators, that a technical trader might use on their charts. The Relative Strength Index (RSI) indicator is arguably one of the most popular oscillators, widely followed by technical traders.

The Money Flow Index is a close cousin, with a formula to that of the Relative Strength Index, but with one key enhancement. In this guide, we’ll unpack what the Money Flow Index is — and how to use it to trade Bitcoin and other crypto assets. 

What Is a Money Flow Index (MFI) Indicator?

The Money Flow Index, or MFI, is a tool used in 

 for measuring momentum in a financial asset by showing the inflow and outflow of money into that asset over time.

The MFI analyzes both price and volume, and generates a bounded oscillator that indicates when the asset may be overbought, oversold or diverging from price. The MFI is easy to read since the oscillator appears as a separate window toward the bottom or top of the chart. Additionally, the MFI is versatile since it can be applied to any financial asset.

However, MFI is especially useful in crypto as the flow — or volume — of trading activity factors into the oscillator’s calculation. In addition, we can use this volume at the intraday level. As a result, many experienced traders consider the MFI to be a “volume-weighted RSI,” as it resembles the 

MFI is a bounded oscillator, with its values standardized between 0 and 100. The default setting is 14 periods and is typically viewed on the daily chart time frame. This is because the volume can be starkly different depending on the time of day. Therefore, daily time frames will automatically incorporate slow and fast trading sessions. 

To understand how the index works, let’s first review the formula and how to calculate it. Fortunately, you don’t have to be familiar with math to use the indicator. Charting software automatically does these calculations for you, and there’s no additional work needed on your part.

If you’re not interested in the math behind the formula, you can skip to the next section of this article (How to Use Money Flow Index to Find Divergence).

The ingredients going into the calculation include:

There are three steps involved in deriving the formula. The first is to calculate the typical price, as defined below:

Let’s assume we’re using a daily chart for Bitcoin. The typical price for yesterday’s candle would be the sum of the high, low and close prices, divided by 3.

When using a 14-period input for the MFI, this means we’ll need the “typical price” for each of the previous 14 days, which a trader gets by making technical adjustments to the indicators to accommodate extremely large ranges and wicks.

Next, we need to incorporate the money flow into the typical price.

The total volume generated just for yesterday would get multiplied by the typical price for yesterday. Then, the total volume for the day before yesterday would be multiplied by the typical price for that day, and so on.

Next, we need to adjust the money flow, depending on whether the typical price increased or decreased from the previous day. If the typical price from yesterday was higher than the typical price from the day before yesterday, then yesterday is considered a positive money flow.

If the typical price from yesterday is lower than the typical price from the day before yesterday, then yesterday is considered to have a negative money flow.

At this point, we bucket all of the positive money flow together, and in another bucket group all of the negative money flows. The software will add up all of the positive and negative money flows, and then create the Money Ratio.

Money Ratio (MR) = Sum of Positive MF/Sum of Negative MF

Now we arrive at the final calculation for the MFI.

Now that we have these calculations in place, let’s apply the MFI to the charts to identify trading opportunities.

How to Use Money Flow Index to Find Divergence

Divergence is a silent but powerful alert which oscillators provide. Since the MFI includes volume within its calculation, traders would argue that the divergence witnessed in crypto using MFI may be even more powerful than divergence indicated by other oscillators.

Divergence simply means the price is moving in one direction, but the oscillator is moving in the opposite direction. The price is said to be diverging from the oscillator, alerting traders to a potential reversal in the market’s price.

On the Bitcoin monthly chart above, note how the price of Bitcoin keeps grinding lower through July of 2021. During this same period, the MFI creates a higher low (see red lines). This suggests that there’s not as much negative volume as there was back in May 2021.

A trader could use this divergence to buy Bitcoin. In divergence situations, I would recommend waiting for a bullish candlestick formation to appear, or for resistance levels to break.

In the image above, we can draw a resistance trend line covering the recent high prices for Bitcoin (blue trend line). When prices break above the resistance trend line 

 we see divergence with MFI, then we have a buy signal. Traders would place their stop loss just below the recent price low, and target at least twice the distance of their stop loss.

The divergence alert above eventually leads to a 100% rally in the price of Bitcoin.

Divergence can also be a bearish alert that the rally is losing momentum, and is about to reverse lower.

If we fast-forward to November 2021, Bitcoin has been experiencing several instances of bearish divergence. After the October 11 high, Bitcoin’s price keeps climbing higher, while the MFI is drifting lower. This suggests that large money investors aren’t adding to their positions, and may quietly be heading for the exits.

This divergence becomes more pronounced as Bitcoin pops one last time into a new all-time price high — while the MFI is well below its corresponding high.

This bearish divergence signals the potential for a bearish reversal. Therefore, traders seek out levels of support and determine a level that, when broken, suggests the trend is shifting from up to down. A 

 would be established just above the recent swing high.

Above, we can see a horizontal level of support which, when it breaks, leads to a 40% decline in the price of Bitcoin. This downtrend was alerted using divergence on MFI.

Using MFI Indicator to Identify Overbought or Oversold Conditions

Divergences are not the only alerts that MFI provides. We can use extreme readings of the oscillator to indicate when the market may be overbought and due for a correction, or oversold and due for a rally. 

Overbought zones are considered above 80 on MFI. This is generally associated with price and volume rising rapidly in a small amount of time. Overbought zones imply the market has risen too far, too fast, and is due for a correction.

Therefore, if MFI reaches above 80, then crosses back below 80, a sell signal is generated.

On the other hand, oversold zones for MFI are when the oscillator drops below a reading of 20. When MFI is this low, it means that price has fallen fast on rising volume. This behavior is generally thought to be bullish, as the price has moved too far and too fast to the downside.

When the MFI line pushes below 20, then crosses back above 20, a bullish signal is generated as the downward pressure is alleviated.

Note that the challenge with making trades purely based on the overbought and oversold regions is that crypto can rise or fall for long periods, creating extended periods of overbought and oversold signals.

Therefore, experienced traders will look for other symptoms of a reversal to combine with the overbought and/or oversold signal.

For example, if MFI moves into overbought territory, an experienced trader may then wait for a bearish divergence alert to appear. Returning to Bitcoin, in the above chart, MFI reaches overbought levels and crosses below 80, which typically becomes a sell signal.

However, many big reversals tend also to display the price and MFI divergence going into an extreme price reading. From March to April 2021, Bitcoin’s MFI reading falls from the overbought zone, then the price pops to one last new high on diverging MFI.

Another effective combination with MFI is looking for candlestick formations to help confirm the overbought or oversold signal. If we take a look at Ethereum during the March 2020 collapse, we’ll find that as MFI crosses into oversold levels, a bullish Harami is forming.

 is signaling support for the market after it’s reached extremely oversold levels. As we now know, Ethereum went on to increase 40x from that low.

The MFI and RSI (Relative Strength Index) indicators are very closely related, with many similarities.

For example, both oscillators are bounded between 0 and 100. This means the readings of both oscillators will not go below 0 or above 100.

Secondly, both oscillators are momentum oscillators that gauge the strength of the underlying trend. When divergences appear, they suggest the underlying trend is weakening and is about to reverse. When the oscillators are overbought or oversold, it suggests that the price has moved too far, too fast.

However, MFI and RSI are not the same, with two sharply contrasting differences.

First, MFI automatically calculates and uses the “typical price,” whereas the RSI formula is based solely on the close price of the candle. Traders can change the input of RSI to include “typical price,” but that input is not native to RSI’s calculation.

Secondly, MFI incorporates trading volume into its formula, while the RSI is purely price-based. Proponents of volume analysis believe MFI can forecast trends and warn of possible reversals in a more timely fashion than the RSI.

When we look at MFI and RSI next to each other on the same 14-period look-back setting, it’s obvious that most of the ups and downs in the oscillators are similar to one another.

There are some differences from time to time that can be attributed to the asset’s volume. For example, during the orange highlight above, notice how the right low on MFI is lower than the RSI low. This suggests that the volume to the downside during that period is heavier, causing the MFI to become oversold.

RSI doesn’t show the same strength to the downside. A trader would have caught a bullish signal using the MFI, but no such signal would generate for RSI.

On September 20, 2021 (blue highlights), MFI creates a secondary low that is equal to its first low. Meanwhile, RSI’s secondary low is lower than its first. This suggests that downside price action is strong, but MFI is telling us that the volume has been low during that downward slide.

Due to the additional input of volume, we can tell that a downward trend would likely prove temporary due to the lack of downside volume.

Some traders refer to the MFI indicator as an enhanced version of the RSI indicator. By including trading volume into its formula, the momentum of trends can be seen more clearly, since many experienced crypto traders believe trends follow volume.

As a result, MFI traders look for divergences between price and the MFI indicator to suggest a weak trend ripe for a reversal; or they trade extreme readings of the MFI, as the market appears to have moved too far, too fast.

How to Use Money Flow Index to Trade Crypto

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