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18 Juli 2019

Crypto Broker Weekly Rotation Report Week 29

Patrick Heusser

Patrick Heusser

Senior Trader bei Crypto Broker AG

Über den Autor

This is our Crypto Broker Weekly 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

The market is taking a breather.

Many of our indicators are pointing to a pause in the current altcoin sell-off.

First, we have seen a bounce reaction on ETHBTC. Second, the altcoin futures basis tightened a great deal and has stopped at neutral levels – or in other words, at a flat curve.

Also on our MACD charts (Figure 5), we see a slowdown of the sell-off. Both sectors are close to changing directions. The advanced decline line shows a clearer picture. It is still volatile (the grey line), but this indicates some positive momentum to the upside. The smoothed line (purple) needs some more time to show a turnaround. And this makes sense, as we do not expect an immediate turnaround, or a so-called altseason.

The correlation matrix still shows a healthy mix, which leaves the door open for further decoupling. It is important to keep in mind, however, that this can go in both directions.

 

2 Altcoin Futures Basis Analysis

The basis was crushed this week!

We barely managed to stay in contango. This is not surprising me at all, given the entire bearish price action we saw across the altcoin sector. Now, we are in neutral territory. Those altcoin futures bases have not traded in backwardation for a long time. But I am curious to see if they turn when we get another push to the downside in price terms across the general altcoin sector.

Looking at the current situation of the basis in combination with the ETHBTC chart analysis, I see a slowdown in the altcoin sell-off.

 

Figure 1: Altcoin Futures Basis Overview

 

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: Volatility comparison; Data source: Coinmarketcap

 

Figure 3: Correlation comparison; Data source: Coinmarketcap

 

5 ETHBTC 4h Technical Chart Analysis

Figure 4: Data source: Bitfinex; Chartsystem: Tradingview

An interim low was printed.

0.0199 showed a strong reaction. In combination with large ETHBTC buy orders on Binance, we saw the price spike from the lows to around 0.022.

The bearish trend is still intact, but now we have another support level to watch: the recent low of 0.0199. If we break it to the downside, it could trigger another selling wave. Those large buy orders add up to roughly 300k ETH (roughly $65 million USD). I am not sure if that buyer will hold their position if prices start to push through their buying level.

With this recent spike, we will be taking our foot off the pedal a bit and reducing the allocated risk capital on the short position.

 

6 Market Capitalisation Overview

Figure 5: 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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