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.

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