28 Dezember 2020

Market Commentary: When the king moves, do the others follow?

Patrick Heusser

Patrick Heusser

Head of Trading bei Crypto Broker AG

Über den Autor

Bitcoin showed us once again that if the „king“ is on the move, nothing else has the power to move…

The liquidity vacuum bitcoin creates when it moves is astonishing. It is a reminder to everyone who thinks they can make more money by placing their bets on an altcoin.

However, the current market conditions do open a nice window of opportunity if you want to move some of your bitcoin profit into altcoins. First, picking tops and bottoms is something you should never do. Luckily, the current term structure presents you with a stressed scenario, with a basis that is at the upper band of the usual range.

BTC March Future contract trades are roughly $1,400 above spot, which is about 20% annualised implied yield.

If you believe that bitcoin should take a breather, you can short the basis through two future contracts (buy the perpetual versus selling the March contract). And if you feel brave, you can even start to switch a first leg of your bitcoin profits into altcoins.

I believe it is not very easy to spot a good entry into altcoins (the way it was in some of the previous altseasons). But with a bitcoin market in overheated territory and a fairly cheap hedge for a price pullback, it is a good opportunity to execute the first leg of getting some altcoin exposure.