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20 Februar 2020

Crypto Broker Weekly Rotation Report Week 8

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

Testing Supports and Resistances

The market has proven to be very volatile, testing the BTC support lines between 9,500 and 9,700, as well as the magical 10,000 and 10,200 levels, several times over last few days. Overall, we are more or less seeing a healthy consolidation at those levels. Long-term support is at 9,000, whereas the resistance is still at 10,500. Due to market moves, we have experienced a larger rotation within the sectors.

Implied volatility spiked in nearly all maturities, but especially in the front months. Derivatives volume increased, whereas open interest started to decrease for the first time in weeks. Overall traded BTC option volumes have been slightly in favour of calls, and the most traded terms were obviously the March 2020 contracts. ETH derivatives experienced the same patterns as BTC.

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 73.75   /   Resistance 82.30           /    Alt 4h Chart
Mid:  Support 70.00   /   Resistance 77.00          /    Mid 4h Chart
Shit:  Support 76.40   /   Resistance 89.50         /     Shit 4h Chart

The market looks very strong and invulnerable on the whole, and earlier it broke all resistance lines into uncharted territory. The current correction is being viewed as a consolidation, and the market is trading at normalised levels around the resistance lines, or, at least, between a bandwith. The sector winner was File Storage, with the coin SC; Exchange with KNC; and Payment with GNT. They are all represented in the Shit Index. The biggest sector loser was IoT, with several coins: WTC, NANO, GXC, DENT, and IOTA. The top performing coin within the Mid Index was XTZ, with a plus of 19.8% in dollar terms.

The overbought MACDs for coins ranked 2 to 50 started to react and turned to the downside a bit. MACDs for BTC represent an oversold situation, and are starting to turn around as well.

The coin EGT, which is in the Mid Index and categorised as Entertainment, underperformed the most in dollar terms with minus 32.7%.

Figure 1: Sector rotation

2 Altcoin Futures Basis Analysis

After reaching record highs last week the situation has normalised again after yesterday’s down move. The basis in the BTC March 2020 contract is being traded with a premium of 2.0%; June 2020 with a premium of 4.2%. Both are roughly 2% lower, and overnight funding rates have eased accordingly. Exchanges experienced a high turnover and a decreasing open interest in derivative contracts.

The expected correction in the future basis has taken place, and the overall situation continues to look stretched.

The market moved simultaneously with the future basis for the first time in days, and we estimate that this behaviour is a healthy consolidation so far.

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

A Healthy Correction

The situation has eased within the overall market correction, but may not have changed a great deal. We reached the last short-term resistance level and are trading around the 0.027 levels. ETH is currently owning the potential to rise towards further highs, but sooner or later it will need to consolidate again.

The built-up liquidity pool from the past needs to be absorbed in a healthy way, which we think should be between 0.025 and 0.035.

It will be very interesting to observe over the next couple of weeks, whether or not we can build long-term supports and resistances. In dollar terms, ETH performed with over 85%, and from the top with over 100% since the beginning of the year.

View the chart: ETHBTC 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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