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31 Januar 2019

Crypto Broker Weekly Rotation Report CW 05

Patrick Mehrhoff

Patrick Mehrhoff

Marketing und Kommunikation bei Crypto Finance AG

Über den Autor

This is our Crypto Broker Weekly Rotation Report, directly from the Crypto Broker trading floor to provide extensive insights into the crypto asset market, including quantitative data analysis, macro market comments, technical chart analysis, and rotation (sector) analysis. All in all, this gives a good overview of different practices to help you evaluate different market sectors. A PDF version of the report can be found at the bottom of this page.

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Contents

1 Rotation Analysis

2 Market Analysis

3 Top Ten Comparison

4 Volatility and Correlation Comparison

5 ETHBTC 4h Technical Chart Analysis

6 Market Cap Overview

Glossary

1 Rotation Analysis

When looking at the performance table (Table 1), there are three coins which are more prominent than the others. XRP and TRX are the outperformers of the week with over 4 percent in positive performance versus BTC. For XRP, it is worth mentioning that we have moved up more than 11 percent in the past 24 hours. We have, at the same time, seen XLM declining almost 14 percent versus BTC. Volatility is still under pressure (Table 1 and Figure 1): it is declining across almost all top 10 currencies. BTC versus USD volatility is getting close to the lows we saw in November 2018. Do not get me wrong, absolute numbers are still high compared to any traditional financial asset out there. For all portfolio managers we have good news. Correlation (Table 2 and Figure 2) is still spreading out further. Across the board, we are seeing a declining correlation between the top 10 tokens. And, as mentioned in our last report, there are even some tokens that are negatively correlated to each other. Turning now to our last chart (Figure 4), we are still getting clear signs of weak altcoins versus BTC. The MACD for BTC is still in positive territory (green surface), where the MACD for ranks 2 to 10 is still under pressure (red surface). Also, the MACD for ranks 11 to 50 has cooled off, and has just flipped into negative territory. The advance decline line is also indicating to stay out of altcoins. Especially the smoothed line (purple) keeps printing below the 0.5 line.

2 Market Analysis

After crypto prices have followed a narrow range over the past week, consolidating sideways, we saw another damper at the beginning of the week with markets feeling increased pressure from the bears. Bitcoin hit its lowest level in more than a month as we struggled to overcome some key resistance levels that would have brought a certain relief to the market. Consequently, most altcoins were dragged along, some of them showing up deeply in red. The ongoing crypto winter over the past month has also led to a trend reversal compared to 2017 in terms of bitcoin and cryptocurrencies as a store of value, with investors prioritising traditional safe haven assets such as gold as the world continues to face geopolitical issues. Despite the correlation of traditional equities and cryptocurrencies still showing up near zero, the bear market has left some scars in the traditional world. Chip maker Nvidia had to take a hard hit this week after cutting Q4 sales guidance by $500mln. While the decline in demand for crypto miners was cited as being negative for the company, the real reason for the plunge is attributed to a cooling customer base in the gaming industry. At a time where some of the early movers face increased headwinds, we see others taking the opportunity to enter the space. Kudelski Security founded a Blockchain Security Centre (BSC) with the aim to make the company’s cryptography experience available to the ever-increasing number of Blockchain developers around the globe. Also Fidelity, which administers over $7.2 trillion in client assets, seems to be moving forward with its plans to launch trade execution and custody services for digital assets for institutional investors as early as March.

Litecoin creator Charlie Lee declared that he will focus on making the currency more fungible and private by adding the feature of confidential transactions, which would certainly be a groundbreaking change in the protocol, and, eventually, put some pressure on „big brother“ bitcoin. Often discussed is the BitTorrent token (BTT), which finally went on public sale on Monday, and was sold out within minutes. Despite some technical difficulties, roughly 59.8 billion BTT worth $7.2 million found new ownership.

3 Top Ten Comparison

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

Table 2: Data source: Coinmarketcap; change to last week in parentheses

4 Volatility and Correlation Comparison

Figure 2: Correlation comparison; Data source: Coinmarketcap

5 ETHBTC 4h Technical Chart Analysis

Figure 3: Data source: Bit1nex; Chartsystem: Tradingview

 

ETH/BTC took out the recent low

Last week we were calling for lower levels on ETHBTC on the back of a possible break to the downside of the recent low from December ‚€ˆ. The break has happened and we pushed quickly … percent lower before we started to consolidate. Reactions down there were hefty due to the combination of ETHUSD just trading at around USD €€. There is a large liquidation just below the €€ USD mark, which is keeping the market on its toes and sparking sudden moves. One of these sparks pushed ETHBTC back above the recent low line (grey). We would not call it a turnaround just yet, but ETH is de1nitely showing some signs of life at around these levels. Altcoins are still losing against BTC in general, but the momentum is fading. Therefore, we are getting more cautious, and will not increase the weights in BTC. Nevertheless, we are staying overweight in BTC versus underweight in altcoins.

ETHBTC chart 4 hours

6 Market Cap Overview

Figure 4: 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.

Source Section 2 Market Analysisvision&

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