An overview of the trading activities on the cryptomarkets. Studies on traded volumes, supply and demand situations, as well as periodic technical analysis of the most important crypto-currencies and indices, including the perspective of professional Traders.
Technical Analysis
Good Morning!
At the time of writing, Bitcoin (BTC) is trading at $59,900 after a week where bullish moves were mainly driven by overnight Asian demand.
Derivatives markets
The future markets have calmed down and contango is shrinking across all maturities on all the exchanges. On the CME, the 3-month annualized basis went from 9.25% on November 9, 2021, to 6.6% at the time of writing. Leverage is decreasing: Funding rates, which we know are mean-reverting, are turning back and starting to turn negative.
Realized Volatility (RV) steadily declines week after week, dropping below the 25th percentile for nearly every measurement window. While implied volatility (IV) is decreasing for most maturities from last week, the RV/IV relationship is holding up well, variance risk premium continues to be high and I keep seeing short-volatility strategies as a great opportunity, especially for the expiration of 31 December. If you are willing to play, be careful not to get squeezed.
I still see room for short-term price corrections before an explosive move to $70,000 which could come shortly if there is positive news.
The situation is similar for Ethereum (ETH) which is currently trading at $ 4,300 and ETH/BTC is at the psychological level of 0.7. The derivatives market is doing the same for ETH with the basis decreasing for all the different maturities leading to lower funding rates.
As the RV continues to drop, the IV continues to bet on new highs of ETH. I still believe that RV/IV is too high and there is a lot of potential for volatility sellers.
Average transaction fees are decreasing, but I still see room for a short-term price correction and I expect other L1 tokens to outperform ETH.
Pair trades
The market has done particularly well this week in terms of pricing the different coins in relative terms to other coins, but there are still some nice opportunities:
LINK/LTC: currently 0.1223
UNI/XRP: currently 22.8751
Happy trading!
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