19 März 2020

Crypto Broker Rotation Report Week 12

Patrick Heusser

Patrick Heusser

Senior Trader bei Crypto Broker AG

Über den Autor

This is our weekly Crypto Broker Rotation Report, directly from the Crypto Broker trading floor, with extensive insights into the crypto asset market, including quantitative data analysis, macro market comments, technical chart analysis, and rotation (sector) analysis. A PDF version of the report can be found at the bottom of this page.

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Contents

1 Rotation Analysis

2 Altcoin Futures Basis Analysis

3 Top Ten Comparison

4 Volatility and Correlation Comparison

5 ETHBTC 4h Technical Chart Analysis

6 Market Capitalisation Overview

Glossary


1 Rotation Analysis

Is there a way out?

All markets were hammered last week. The current situation is definitively comparable to the financial crisis of 2008. The situation is actually one that the world has never experienced before, and all market indicators are in alarm mode. Governments and central banks alike are in a constant state of trying to ease the current situation and bring back confidence. In such a distressed state, all asset classes have correlated and only minimal rotation has occurred.

Derivatives implied volatility jumped notably, and overall traded volume increased to record highs. Massive liquidations have taken place.

In the charts below, you can see the technical analysis for the Alt/Mid/Shit Indices. Below you will also find our short-term view on support and resistance levels for all three indices:

Alt: Support 70.00 / Resistance 79.50 / Alt (4h)
Mid: Support 63.00 / Resistance 72.50 / Mid (4h)
Shit: Support 76.40 / Resistance 89.50 / Shit (4h)

The Alt, Mid, and Shit Indices are still trading within the support and resistance range against BTC. Overall, all three indices lost around 35% in terms of dollar performance. The winning sector is Payment, with the coin STEEM. The STEEM community is planning a hard fork to remove Justin Sun’s Steemit Inc. The hard fork will result in a new blockchain called Hive. Aside from the sectors Exchange and Entertainment, all others were among the losing sectors, down between 30% and 40%.

MACDs for BTC show a slightly overbought situation, whereas coins ranked between 2 and 10 are slightly oversold. Coins ranked between 11 and 50 indicate a neutral zone.

The current market situation in all asset classes will stay highly volatile as all investors and intra-day traders are very responsive to any and all global news from governments and central banks. Only time will tell if cryptocurrencies are able to decouple and follow the fundamental idea of store of value.

Figure 1: Sector Rotation

 

2 Altcoin Futures Basis Analysis

The March 2020 expiry is right around the corner, and the overall market situation has changed dramatically. The derivatives contracts experienced a wild ride over the course of the last few days. Currently, all future contracts are trading in backwardation. BTC June 2020 is being traded with a discount of around 1%. The overnight funding rate is currently trading in a neutral zone. Both the perpetual and future contracts were on a roller coaster ride during the sell-off.

Basically, the majority of the March 2020 contracts have been closed or rolled as we head towards the expiry. All exchanges noted record high volumes, especially on Thursday, March 12, and Friday, March 13. BTC options flow has been more balanced, whereas the ETH options flow was in favour of call options.

September 2020 futures contracts are now available on all exchanges; they are also trading in backwardation.

Figure 2: Altcoin Futures Basis Overview

 

3 Top Ten Comparison

Table 1: Data source: Coinmarketcap; change to last week in parentheses

 

Table 2: Datasource: Coinmarketcap; change to last week in parentheses

 

4 Volatility and Correlation Comparison

Figure 3: Volatility Comparison; Datasource: Coinmarketcap

 

Figure 4: Correlation comparison; Data source: Coinmarketcap

 

5 ETHBTC 4h Technical Chart Analysis

Figure 5: Data source: Bitfinex; Chartsystem: Tradingview

 

It’s been a crazy week with crazy moves!

The first target was reached within a few hours of releasing last week’s Rotation Report. The 0.0225 level showed some relevance, and we bounced back up from it to retest the breakout point of 0.0250. After that, we came back down fairly quickly and started to settle in the 0.022 region.

Sentiment has not changed from last week. The market is still bearish and we are looking for lower levels towards 0.0190. The key level to break on the downside will be the recent low of around 0.0210. If that level gives way we might drop down very quickly to 0.0190.

 

6 Market Capitalisation Overview

Figure 6: Market capitalisation overview; Data source: Coinmarketcap

 

Glossary

Advance Decline Line – the Advance Decline Line shows the ratio of coins for which the market cap increased relative to the market cap of BTC for each day.
ATH – all time high (maximum lookback period of 730 days).
Data source – tables and charts are based on daily close prices provided by Coinmarketcap.
EWMA – exponentially weighted moving average.
MACD – moving average convergence/divergence is a popular technical indicator to identify trends in the underlying instrument. It consists of the MACD and signal line, and the area shown in the background. The MACD line (strong) is the difference of two exponential moving averages, which are defined by the first and second parameter of the indicator. The signal line (weak) is the exponential moving average of the MACD line defined by the third parameter. The area in the background illustrates the difference between the MACD line and the signal line.
Pearson Correlation – quantifies the linear relationship between two variables.
Spearman Correlation – quantifies the monotonic relationship between two variables. As such, the Spearman Correlation is based on the ranked values of each variable and is used to detect non-linear relationships between the two.

More information about and contact details for Crypto Broker AG are here.

Download the Rotation Report as a PDF here.

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