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13 February 2020

Crypto Broker Weekly Rotation Report Week 7

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

A Solid Bull Run

The market has demonstrated the same bullish patterns over the last few weeks. And, at the moment, it looks very strong and invulnerable. Overall rotation is still ongoing, but it is slowing down a bit. The 10,200 resistance level was taken out easily after retesting it several times, and all bearish attempts have been absorbed quickly. The important long-term resistance mark is 10,500.

Realised volatility decreased compared to the implied volatility, as a correction can be expected. Overall traded derivatives volumes increased massively, whereas the open interest in Futures and Options is, so far, still remaining high and neutral. Overall traded BTC option volumes have been slightly in favour of puts, and the most traded terms are the March 2020 contracts. ETH option volumes indicate higher traded amounts of puts, as ETH outperformed 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 uptrend looks unstoppable, and all indices are trading above or close to the resistance line. The levels reached so far leave us in uncharted territory, so it will be difficult to draw new reliable lines. The sector winner was Exchange, with the coins LEO, BNB, LRC, KNC, and BNT. The sector losers (yet again) were SoV and Privacy. The top coin in terms of dollar performance was EGT, with a plus of approx. 50%.

The MACDs for BTC still indicate a bullish sign, as the indicators for coins between 2 and 50 clearly show an absolute overbought scenario. It is a fair question ask if BTC is going to outperform and rotate positively against the other coins.

Only a few coins performed negatively, e.g. ETC, ABT, AION, and ICX. Since the beginning of the year, the performance of ICON is 380%. Ethereum Classic performed 240% since January 1, 2020.

Figure 1: Sector rotation

2 Altcoin Futures Basis Analysis

Overall Future Basis reached record highs. The basis in the BTC March 2020 contract is traded with a premium of 3.75%; June 2020 with a premium of 6.25%. The ETH March 2020 contract reached a premium of 5%. Overnight funding rates are at 25ps six weeks before expiry. Exchanges are reporting record traded volumes in derivatives, and retailers have been back in the market for a while now.

We are further expecting a correction in the Future Basis, as the situation is stretched massively at the moment.

It will definitively be very interesting to observe the current situation if markets start to correct.

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

Parabolic … once again!

I had to zoom out into a daily chart due to the parabolic upmove. We went straight through the 0.0220 and 0.0250 resistance without looking back. Currently, the price is sitting in a very old resistance/support zone that dates back to 2018.

Also, between 0.0250 and 0.0350 we have a very large liquidity pool, which was built up between September 2018 and September 2019. This might be the new range where ETHBTC can rest and consolidate.

If we do get a proper consolidation phase around the current levels, my confidence will spike that a solid bottom between September 2019 and February 2020 has formed.

View the charts:  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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