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19 septembre 2019

Crypto Broker Weekly Rotation Report Week 38

Patrick Heusser

Patrick Heusser

Senior Trader 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

Another week of altcoin outperformance versus bitcoin.

Currently, conditions are very similar to what we saw happen the week before last. Bitcoin is trading sideways and the big market cap altcoins are outperforming.

Again, the main driver is ETH, which dragged the entire market of altcoins with it. The ETHBTC chart speaks a clear language with a positive performance of over 20%. The good buying interest we were referring to last week is still present. There are still big accounts out there buying ETH. Some statistics even suggest that these buyers are long-term investors, as we have seen net outflows of ETH combined on the biggest exchanges.

The wider basis across the altcoin futures space indicates that there is also some good buying interest from leveraged accounts. Our MACD indicators have turned for even the slowest one, with the advance decline line smoothed (purple line), switching sides from bearish to bullish.

On the back of our analysis, it is now time to change our call from neutral to underweight BTC.

 

2 Altcoin Futures Basis Analysis

Over the past seven days there was a pretty intense widening of the basis. This was mainly driven by the widening of BTC$ with the Dec19 contract moving out just shy of 1%.

Obviously, the basis of the altcoins have an additional catalyst, which is their bullish price behaviour. Please note that the Sep19 contracts will roll off the board on September 30, 2019. Therefore, we do not expect big movements for those, except if traders do some larger rolls from Sep19 into Dec19.

In our last report, we began posting the 4h charts of the alt, mid, and shit indices, which are tradable on the FTX platform. We have normalised them to BTC (instead of USD) to have a more useful comparison to our rotation analysis, which is all versus BTC: Alt index (4h) | Mid index (4h) | Shit index (4h)

It can clearly be seen that the alt index (ETH, EOS, XRP, BNB, TRX, LEO, BCH, BSV, and LTC) and the mid index (with 25 coins) were able to make a turnaround and change some of the moving average indicators from bearish to bullish.

Follow this link for the index calculation and constitution.

The shit index is not out of the woods yet, and I am a strong believer that those coins are doomed, and that this index will go down to zero.

 

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

 

What a run by ETHBTC!

This is what you call a sharp recovery. We have moved 30% over the past two weeks, and 20% alone just last week. Basically, we recouped the price fall from mid-August until mid-September.

The rally started to fade out in the high volume range (grey area) and has stalled just beneath that range. Most of the moving average indicators have changed from bearish to bullish, including the Ichimoku cloud, which has our greatest focus. From a horizontal line perspective, I will stay bullish as long we are able to hold above the 0.01990 level on a daily closing basis.

But I have to say I am surprised by the turnaround. I still have that large descending triangle in my mind, which we broke to the downside in July, with a target way lower than what we have seen so far. But nevertheless, looking at the 4h chart there is no doubt that this market looks strong. The only thing that is a bit worrisome is the parabolic move. It was almost vertical, which cannot be a sustainable trend.

On that note, I am expecting some retracements down, but a continuing trend towards the lower leg of that large decending triangle.

 

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.

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Download the Rotation Report as a PDF here.

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