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01 août 2019

Crypto Broker Weekly Rotation Report Week 31

Adrian Gut

Adrian Gut

Trader Senior chez Crypto Broker AG

A propos de l'auteur

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

On the whole, the market managed to consolidate and to even show some minor gains this week. BTC is lagging, but some larger alts are picking up slightly, and were able to post net gains vs. USD over the last seven days. This observation can be clearly seen in Table 2, where BTC does not correlate with the « block » of alts on a closing basis.

However, the summer doldrums are in full force. Volume has waned across the board, and there is no end in sight. Nevertheless, a positive momentum is also visible in our MACD indicators in Figure 5. As shown in Figure 3, the relative weakness versus bitcoin has changed towards outperformance, but unfortunately to a lesser extent than the current sell-off.

It has yet to be seen if alts will finally develop a higher beta and outpace BTC in the coming days or weeks. Our hints towards a possible bottom building (albeit not a solid one) did materialise, but alts are still far from being out of trouble.

This week, the positive momentum to the upside in alts is starting to materialise in the charts, but only to a very fragile and gradual extent. The smoothed line (purple) shows a turnaround. Nevertheless, we are basically missing any real bullish price action. As mentioned last week, a so-called altseason is still not starting to unfold.

The correlation matrix shows a continuation of a rather uniform price action amongst alts, with most correlations remaining at rather high levels.

2 Altcoin Futures Basis Analysis

The basis is still nearly flat and did not move in correlation over the higher marketcap alts, but rather at random. Things are still a mixed bag.

What we promised to monitor last week is essentially still exhibiting the prevailing pattern: the basis is not really doing what we thought anyway. Although alt trading was not really weak, the basis was coming off in almost every pair except for BCH. Nevertheless, futures managed to stay in small contango across the board for further expiry dates.

We are still in pretty flattish territory, but with an interesting resilience to fall into backwardation.

The bottom line: it somehow feels like we are waiting for bigger things to unfold – it is « the calm before the storm ».

3 Top Ten Comparison

4 Volatility and Correlation Comparison

5 ETHBTC 4h Technical Chart Analysis

In our last analysis, we mentioned that we had seen a halt for more than a week in the two-month slump of ETHBTC.

This is likely to be the only positive aspect of this analysis, since we have to assume a re-test of the 0.02 support. Although we have mentioned it a few times already, we still suspect that there are buy orders at some venues at that level. It will be very interesting to see if they can keep ETH from accelerating to the downside relative to BTC.

The bearish trend is still intact (see black downtrending line), capping any attempt of ETH to strenghten vs. BTC. If we break it to the downside below 0.02, it will most definitely trigger another selling wave. As indicated in our last market commentary yesterday, the longs in ETH are currently paying an unsustainable high amount of funding every day, which is weakening their position continuously in terms of collateral. In the past, the large buying around these levels flipped and liquidated quickly once under water. We want to warn our readers that we do not think these buyers will hold their positions if prices start to push through their buying level.

 

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.

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Download the Rotation Report as a PDF here.

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