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31 October 2019

Crypto Broker Weekly Rotation Report Week 44

Simon Tobler

Simon Tobler

Head of Trading 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

What a week!
At the end of last week we encountered one of the biggest moves ever in bitcoin. From the Friday morning level at around 7,400, it started to move higher in the afternoon, and hit 8,600 in the early evening. After a couple of hours of consolidation, the move continued during the night, topping out at around 10,500. Since then, the price has been consolidating between 9,000 and 9,600.

As usual, during such sharp moves, altcoins moved in sympathy and with high correlation in USD terms, but lost massively relative to BTC. E.g., the FTX altcoin index lost about 19 percent versus bitcoin in just a couple of hours. Since the very first reaction, the higher-ranked altcoins were able to gain back most of the losses, whereas the lower-ranked altcoins are still struggling.

It’s always difficult to judge what exactly triggers such a large move. In this case, a lot of market participants saw the Chinese blockchain initiative as the main reason. One might challenge this reasoning, but the outperformance of Chinese-related coins has been massive. NEOBTC gained more than 50 percent within three days; QTUMBTC 60 percent; and TRXBTC also more than 40 percent. As a trader, I don’t really care about reasoning, I’m just glad that we are seeing some decent moves and lower correlations across the coin universe.

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

2 Altcoin Futures Basis Analysis

Last week, we mentioned that not much leverage and hope was left in the system. This proved to be the perfect foundation for the large price rally we witnessed.

All future bases turned back into the deep green area. Led by bitcoin, all coins are in contango versus USD. Most of the altcoins are trading flattish or in small backwardation versus bitcoin, with XRP being the only exception.

Also interesting to see are the differences in the bases across the different platforms. Throughout all coins, Bitmex shows the highest basis and Kraken the lowest, with FTX inbetween. As there seems to be no obvious rational reason for such differences, it might show the different user basis of those platforms.

 

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

 

ETH is losing ground

The massive recovery in BTC late last week put some pressure on the ETHBTC cross. ETH was not able to hold the support at 0.0210 and dropped down to 0.0189, only shy above the second support line at 0.0185. Since then, the cross is consolidating between the range of 0.019 – 0.0205.

The 4h chart is now looking rather neutral. Price would need to regain the 0.0210 level to get me bullish again. On the downside, the 0.0185 support is now even more important. If it gets taken out, there is not much support left. This is the most visible on the daily chart, where the only level left is the recent low at 0.0165.

View the charts: ETHBTC 4h chart   |   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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