deenfr

08 August 2019

Crypto Broker Weekly Rotation Report Week 32

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.

Should you wish to receive this weekly report by email, you may subscribe below.

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

Bitcoin staged a pretty impressive recovery run over the course of the last few weeks. And, as mentioned in our Tuesday TA analysis, alts are now again the lagging sector, exhibiting only meagre advances versus USD over the last seven days. This observation is backed by the data in Table 2, where BTC does not correlate with the “block” of alts on a closing basis. Exceptions: Ether, Monero, and Tezos (not in the Table). For Tezos, we do see the coinbase listing as a primary driver, and expect things to return to normal next week. Litecoin, with a negative correlation, is also an anomaly, triggered by the block halving and the volatility caused due to this event.

Volume has managed to pick up slightly but remains at rather low levels compared to recent daily averages.

Positive momentum for BTC is picking up in the MACD indicators in Figure 5. On the contrary, any recent strength in altcoins seems to already be waning, which hints at further difficult times for most alts.

We have talked about the possibility of altcoins developing higher beta and outpacing BTC in the coming days or weeks. This is clearly not the case. Concerns are now rising again about the ability of alts to defend their recent bottom building attempt, but indicators clearly do not offer much support. Currently, there is a lack of strength and positive momentum.

We realise that this is turning into a mantra, but we need to say it again: a so-called altseason is still not starting to unfold.

The correlation matrix shows no surprises. As we mentioned above, a few outliers are distorting the otherwise very uniform behaviour.

2 Altcoin Futures Basis Analysis

The basis in all covered altcoins (basically, where futures already exist) managed to pick up over the last week. Not surprising, though, is the weakness in the alt pairs versus bitcoin (XBT), signalling the outperformance of BTC vs. alts in terms of the widening of the basis.

Although the basis in the perpetual swaps doesn’t seem to be moving heavily, it nevertheless signals market conditions. A positive basis indicates that leveraged longs (perpetual buyers) are buying or at least keeping their positions running, whereas spot markets are seeing distribution (selling). This often equates to a very high funding cost for long positions, which is usually not sustained over longer periods (this could also be the case in oversold situations for shorts).

The bottom line: the basis for BTC indicates a strong bullish sentiment, with some further room for growth. It’s much too early to talk about warning signs. However, we will watch out for overstreched positioning (like the kind we witnessed in the move up to $14,000).

3 Top Ten Comparison

4 Volatility and Correlation Comparison

5 ETHBTC 4h Technical Chart Analysis

In our last analysis, we mentioned that a re-testing of the 0.021 support could be one of the possible moves ETHBTC could be up to. The pair did not manage to break the black negative trendline, and, consequently, nosedived and took out the 0.021 level, which was not offering much support at all.

ETH longs are still suffering in terms of funding for their perpetual swap contracts, and there is still no end in sight. Pressure from this side will continue and is clearly not helping ETH to outperform BTC. Longs in ETH are still paying an unsustainable high amount of funding every day, which is weakening their position continuously in terms of collateral.

The bearish trend is still intact (see black downtrending line), capping any attempt of ETH to strengthen vs. BTC. The break to the downside below 0.021 triggered the expected selling wave.

 

6 Market Capitalisation Overview

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.

Read more