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03 October 2019

Crypto Broker Weekly Rotation Report Week 40

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

It feels like everybody is staying on the sidelines.

Seriously, there is currently not much to analyse. If you look at the MACDs and the correlation, you will see what I mean. The MACDs have nearly been a flat line for a week now. And on the correlation graph, you can see that all coins are glued to the upper right-hand corner.

Volatility bounced off of the 50% level, but only marginally after the recent, large price drop. There is actually not much more to say than to remain on the sidelines until the market makes a decisive move.

2 Altcoin Futures Basis Analysis

We have further extended our basis table with a new exchange called FTX. We already showed you the charts of their indexes (Alt, Mid, and Shit) and now we have also integrated their prices of the most common pairs into our basis table. We received some feedback regarding the readability of this table and we have to admit that we need to reformat it a bit. Our enhanced table will come in a few weeks.

It is a bit unfortunate that the big basis move happened just one week before the contracts will be rolled. The consequence for our 7-day change comparison is that we do not compare likes for likes (different maturities). Nevertheless, I will try to give you an idea of how the basis has changed over the course of last week.

Let’s focus on the 27-Dec-2019 maturities as those are the ones we can compare to last week’s report. In terms of the altcoin futures, we saw a recovery of the basis, meaning that it moved from backwardation into contango again. Only LTC$ and XRP$ are still in backwardation. What is also worth mentioning is that the BTC$ (or XBT$) basis is continuously contracting and moving further towards backwardation. Just for good order, the changes on the FTX exchange are equal to the current basis as we just started with the snapshots.

To me it looks like the market took a first deleveraging wave, but we not seeing any real capitulation yet. It is almost like that traders are undecided which way they want to place their bets and everyone is staying on the sidelines. This behaviour is also reflected in the lacklustre trading and the sideways trading of the major coins.

The indexes remain bearish. They all look similar and, if anything, the alt index has the most potential to attack the first resistance line at around 555.

View the charts: Altcoin index (4-hour)Midcap index (4-hour)  |  Shitcoin index (4-hour)

 

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

 

The market decided to visit the upper liquidity pool at 0.02150.

ETH respected the Ichimoku cloud and pushed through the upper band, which kept the cloud bullish (green). Prices consolidated at around 0.02150, which was expected as it is a large liquidity pool.
0.02200 seems to be a tough resistance to crack. If we do break it, I expect a swift move back up to the 0.02500 level, which is the lower leg of the large ascending triangle.

To put this sentiment change from bearish to bullish into perspective, I have also posted the link to the daily chart. Here things looks a bit more like a correction of the prevailing downtrend. But the warning signs of a potential bigger sentiment shift has started to show up. For example, prices broke into the daily Ichimoku cloud. Additionally, we are getting close to the extended upper leg of the triangle (dotted line).
ETHBTC 4h chart (above)
ETHBTC daily chart

 

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.

More information about and contact details for Crypto Broker AG are here.

Download the Rotation Report as a PDF here.

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