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16 January 2020

Crypto Broker Weekly Rotation Report Week 3

Patrick Heusser

Patrick Heusser

Senior Trader at Crypto Broker AG

About the author

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

Strong markets with very strong sectors

The overall market remains strong and the Privacy and Store of Value sector rallied further to outperform massively. Short-term support in BTC seems to be at around 8,500. Another upmove towards 9,000 is to be expected.

Altcoins rallied and took out the resistance line with ease. Recovery has occurred, and the current situation is overbought; short-term consolidation would heal some wounds. Volatility levels increased in general: some coins such as BSV, BCH, and DASH experienced very high implied levels. Very active future trading on all trading platforms are allowing the future premium to grow steadily. Correlation is clearly decreasing, and MACDs and the advanced decline lines indicate a mixed and diverse picture. Coins ranked within the Top 10 are overbought, whereas coins ranked from 10 to 50 remain weak on low levels and are still oversold. BTC is showing a rather neutral picture.

In the charts below, you can see the technical analysis for the Alt/Mid/Shit Indices. The overall picture has changed in the Alt and Mid Indices, where the resistance line has been taken out. The situation for the Shit Index has remained the same compared to last week. Here is our short-term view on support and resistance levels for all three indices:

Alt:   Support 57 / Resistance 64      /    Altcoin index (4-hour)
Mid:   Support 54 / Resistance 59   /     Midcap index (4-hour)
Shit:  Support 70 / Resistance 77    /     Shitcoin index (4-hour)

As announced last week, the Crypto Broker AG Team has started to analyse the sector moves with its constituents compared to the relevant Alt, Mid, and Shit Indices. The Top 3 outperforming sectors by far, which are also responsible for the upmove, have been 1. Store of Value with 52.59%, 2. Privacy with 27.43%, 3. Entertainment 19.85%.

SoV coins are represented in all three indices. The relevant coins are BSV, BCH, RVN, GRIN, DGB, BCD, LTC, DCR, and BTG.

Top performing coins in the privacy sectors were ZEC (ZCASH) and XZC (ZCOIN). REP was the top coin in the entertainment sector. Another top performing coin within the payment sector was DASH, with a weekly absolute contribution of 130% in the Mid Index.

Figure 1: Sector rotation

2 Altcoin Futures Basis Analysis

Short-term derivatives have been trading actively. The future basis, especially of the March Future, increased to a peak of nearly 4% within the overall rally. Overnight, the situation has normalised again, and the future basis is again trading at a healthier level for the market participants at approx. 2%. The open interest has increased massively and remains quite high. Liquidations of positions have not happened so far.

The overall future basis has been very volatile during the trading week, and at peak times represented an annualised yield of approx. 15%.

The situation has calmed down a bit, but due to the high open interest we expect a further volatile period in the coming days.

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; Data source: Coinmarketcap

 

Figure 4: Correlation comparison; Data source: Coinmarketcap

 

5 ETHBTC 4h Technical Chart Analysis

 

Figure 5: Data source: Bitfinex; Chartsystem: Tradingview

A typical crypto move

We have zoomed out a bit to show you a clearer picture of what happened.

The turnaround in the price of ETHBTC came quite swiftly. Especially the second wave was an almost straight up candle, even through our 0.019 resistance level. However, the consolidation afterwards was then below that level. The price did manage to stay above the long-term bearish trendline (dotted line), which could be an indication that “the bashing” is now over.

We need to see prices consolidating above the 0.019 level. This would be an indication that we have formed a higher low (at around 0.017). There is a possibility that the liquidity pool of the trading range of 0.021-0.022 will work as a magnet. In case we manage to break through the upper band of that trading range (0.022), the next level to attack is 0.025. That will be a tough nut to crack, though, as it is the horizontal leg of that massive descending triangle we drew on the daily/weekly chart.

The entire bullish case will fall apart if we break lower through the 0.017 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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