An overview of what is happening in the crypto markets, summarised daily by Crypto Finance AG Senior Trader Patrick Heusser in the market commentary.
Market commentary
Good Morning!
Let's drill down into the structure of the the market: What exactly happened over the past 24 hours?
In terms of spot volume, we have not yet hit the amount we saw in November (but, we do have another 13 days to go). It will be interesting to see where we end up on December 31st. However, it does not look like we will be able to top November. To me, this is a first warning sign (see images below).
Especially in combination with what we see in the derivatives space. Funding rates for perpetual futures, but also the term future basis look very stretched right now. Current levels are definitely in the "FOMO" (fear of missing out) area (see images below).
With liquidity most probably worsening over the holidays, risk positions will be adjusted.
In case we have not yet seen the blow-off top, we could be in for a rotation out of bitcoin into altcoins. If this happens and the derivatives market cools off at the same time, I see no reason to liquidate too much of leveraged long positions. In fact, our desk is expecting to see just such a rotation.
If we look at the onchain analysis to see what is going on with the bitcoins that are changing hands, it looks like the buyers are happy with their positions. One indication for this is the fact that total exchange balances are not increasing, but rather decreasing. In less technical terms this means that more buyers are long-term investors, who are putting away their coins into off-exchange storage solutions (see image below).
In this kind of an environment, we believe that the smarter trades are as follows:
- Relative value trades (basis trades)
- Rotation trades (bitcoin - altcoin)
In case you have any questions, or would like to get into the market, do not hesitate to contact our trading desk.
Copyright © 2020 | Crypto Broker AG | All rights reserved.
All intellectual property, proprietary and other rights and interests in this publication and the subject matter hereof are owned by Crypto Broker AG including, without limitation, all registered design, copyright, trademark and service mark rights.
Disclaimer
This publication provided by Crypto Broker AG, a corporate entity registered under Swiss law, is published for information purposes only. This publication shall not constitute any investment advice respectively does not constitute an offer, solicitation or recommendation to acquire or dispose of any investment or to engage in any other transaction. This publication is not intended for solicitation purposes but only for use as general information. All descriptions, examples and calculations contained in this publication are for illustrative purposes only. While reasonable care has been taken in the preparation of this publication to provide details that are accurate and not misleading at the time of publication, Crypto Broker AG (a) does not make any representations or warranties regarding the information contained herein, whether express or implied, including without limitation any implied warranty of merchantability or fitness for a particular purpose or any warranty with respect to the accuracy, correctness, quality, completeness or timeliness of such information, and (b) shall not be responsible or liable for any third party’s use of any information contained herein under any circumstances, including, without limitation, in connection with actual trading or otherwise or for any errors or omissions contained in this publication.
Risk disclosure
Investments in virtual currencies are high-risk investments with the risk of total loss of the investment and you should not invest in virtual currencies unless you understand and can bear the risks involved with such investments. No information provided in this publication shall constitute investment advice. Crypto Broker AG excludes its liability for any losses arising from the use of, or reliance on, information provided in this publication.
