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14 Mai 2020

Crypto Broker Rotation Report Week 20

Patrick Heusser

Patrick Heusser

Head of Trading 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

A new situation for miners

The bitcoin halving was the major event last week. The final block (629,999 with a subsidy of 12.5 BTC just before the halving) was mined by a Chinese mining pool on May 11, 2020 at 7:23 pm. The miner also included a message in its transaction, immortalising a NY Times article that highlighted the similarities between the 2008 financial crisis and today.

It will be interesting to observe the mining landscape in the near future and see what changes are in store, e.g. new miners, hash rates, and so on.

The dominance of bitcoin continues against altcoins, although there has been some interest in a few select coins, e.g. LINK, BAT, and ENJ versus BTC.

Aside from the halving event, we saw some interesting and positive news for the crypto community. J.P. Morgan has extended their banking services to include bitcoin exchanges by on boarding Coinbase and Gemini. Paul Tudor Jones II, a pioneer of the modern hedge fund industry, confirmed that he has invested between 1% and 2% of his assets in bitcoin.

Currently, the bitcoin market seems to be very well supported with short term-support at 8,750 and resistance at the magical level of 10,000. The 10,000 level was reached last Friday just a few hours before the halving.
In the charts below, you can see the technical analysis for the Alt/Mid/Shit Indices. Attached you will also find our short-term view on support and resistance levels for all three indices:

Alt: Support 57.00 / Resistance 65.00 / Alt (4h)
Mid: Support 58.00 / Resistance 65.00 / Mid (4h)
Shit: Support 69.50 / Resistance 78.00 / Shit (4h)

Both the Alt Index and Mid Index are still greatly underperforming BTC. Both indices are still trading at or below the support levels. The star of the trio is clearly the Shit Index, trading at the resistance level.

The outperforming sector is Entertainment. Another winner is the IoT sector. Losing sectors are File Storage, SoV, and Exchange. The remaining sectors performed alongside the Index.

The best performing coin is ZRX, a constituent of the Shit Index. ZRX gained 42% against USD, and other coins, e.g. SNT and REP 18%. All further coins performed in a range of minus 10% and plus 10%.

After another week of BTC domination, we would expect altcoins to recover and start reaching for new highs.

MACDs show a clear picture of an overbought BTC scenario, whereas the coins ranked between 2 and 50 are still in an oversold zone. This might just be the right time for a rotation.

The days during the halving were interesting for us, and are well prepared for the next halving in 2024.

 

Figure 1: Sector Rotation

 

2 Altcoin Futures Basis Analysis

Futures basis trading has not changed a great deal, and trading remains at a small premium between 0.5% and 1%. Overnight funding is also trading neutral. The current sticky situation has the promise of changing the closer we come to the June 2020 expiry. Futures basis trading in altcoins is similar.

BTC and ETH implied volatility is trading at the same levels as last week. The term structure in the front months is trading slightly as we approach the expiry and an expected larger market move.

Traded volume has been rather calm after the halving. Liquidations have not increased, and open interest remains at last week’s levels.

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

The force of BTC remains strong

ETH has put up a good fight, but so far it has not been successful. I zoomed out to have a look at the daily chart as I had the feeling that I was losing touch.

The daily chart looks much clearer to me. I can now see that a second potential symmetrical triangle is in the making. It looks fairly similar to the previous one. Another important finding is the support line at around 0.02050. If we trade below this line, I predict a grim future for ETH and also for other altcoins versus BTC. A move below that level would trigger a revision of our bullish altcoin outlook, which we announced in last week’s report.
The first resistance comes in at around 0.0225, but more important than that is in all likelihood the lower band of the Ichimoku cloud.

View the charts:
ETHBTC chart 4h
ETHBTC chart daily

 

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.

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Download the Rotation Report as a PDF here.

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