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06 Februar 2020

Crypto Broker Weekly Rotation Report Week 6

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

Rotation in action
The overall market is bullish, and rotation between coins and sectors is occurring. The resistance level between 9,000 and 9,250 has been broken and retested. The next level to watch is the 10,200 mark.

A rather healthy consolidation is currently taking place at almost every resistance level. Therefore, a higher level can be expected. Implied volatility levels have not changed a great deal, and remain roughly at the same levels. Overall derivatives volume and open interest in Futures and Option contracts are stable.
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 70   /   Resistance 76.5       /    Alt 4h Chart
Mid:  Support 70   /   Resistance 77          /    Mid 4h Chart
Shit:  Support 67   /   Resistance 77         /     Shit 4h Chart

All three indices have clearly broken the resistance level, and within the next few days we should see another consolidation to continue the uptrend. The sector winners have been Platform, IoT, and Interoperability. SoV, Privacy, and Exchange were the sector losers. The top performing coins were AION, BTS, XEM, DENT, NANO, WTC, ICX, LOOM, and REN. The IOTA coin seems to be slowing down and consolidating around the resistance level.

Comparing the USD performance of the constituents of the three indices, there were only three coins performing negatively. ZEN lost 6.8%, DASH 1%, and LEO 0.2%. All other coins closed positively.

Alt, Mid, and Shit indices have outperformed BTC. MACDs for BTC still indicate a bullish sign, and coins ranked above are overbought.

Figure 1: Sector rotation

2 Altcoin Futures Basis Analysis

There was another push in the Futures basis. The basis of almost every coin widened again and remains high, as it has been especially in the front months. The overall premium of the contracts should decline towards expiry as there is only two months to go. The exchanges still indicate a high open interest in derivatives.

In general, we have approached levels we saw during the China spike at the end of October 2019.

A correction of the basis can therefore be expected.

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

 

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

 

Figure 4: Correlation comparison; Data source: Coinmarketcap

 

5 ETHBTC 4h Technical Chart Analysis

 

Figure 5: Data source: Bitfinex; Chartsystem: Tradingview

The bulls showed me their horns!

Remember when I said that a symmetrical triangle usually represents a continuation pattern of the previous trend? Usually does not mean always. The bulls have demonstrated this loud and clear.

However, the breakout was textbook as it pushed through the upper leg with increasing volume, and retested the line later on. After that, ETHBTC took off like a rocket and pushed through the next resistance level of 0.0210. It is now close to reaching 0.0220.

The trend is your friend, and, therefore, I will only play from the long side – as long we stay above the 0.0190 level.

View the charts:  ETHBTC 4h chart

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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