What is Quantor?
Quantor is an LLM that gives us an overview of what is happening in the crypto markets.
How does it work?
We have built multiple models to measure the state of the market for BTC, ETH, and an
Altcoin Index. For each model, we get a score and our system gives us an insight based on a decision tree system.
Then, we feed our Quantor LLM with the current and past data and the current and past insights.
Each week Quantor produces a report, and each week we will be sharing that with you.
Below you’ll find this week’s summary.
The Week’s Crypto Ecosystem Highlights
Dear Aqtivators,
In this edition of our newsletter, covering the period from June 4 to June 10, 2024, we dive once more into the cryptocurrency markets. Here are the top highlights from the crypto space this week:
- Bitcoin’s bumpy ride — Bitcoin, Ethereum, and other top cryptocurrencies experienced a sudden price drop on Friday afternoon, resulting in a significant amount of liquidations. Within an hour, approximately $285 million worth of long positions and $12 million in short positions were liquidated. Things have stabilized since then, but markets have become cautious.
- Robinhood acquires Bitstamp — Stock-trading app Robinhood is diving deeper into the cryptocurrency realm with the acquisition of crypto exchange Bitstamp. Robinhood on Thursday said it expects the final transaction value to be around $200 million and the deal to close in the first half of 2025.
- New York Attorney General files $1 billion crypto lawsuit — New York Attorney General Letitia James has filed a billion-dollar lawsuit against crypto scammers NovaTech and AWS Mining for defrauding investors. The lawsuit alleges that the companies engaged in illegal pyramid schemes, targeting immigrant and religious communities.
Chart of the Week
The amount of ETH on exchanges is at its lowest since 2015, with 3.9 million ETH (or 3.2% of total circ. supply) being withdrawn from exchanges the past week.
Hat tip to Pluid for the chart.
Market Overview
This past week, the cryptocurrency market exhibited significant variability across several key indicators. Below is a general analysis of the main features and trends observed.
General Market Index
The General Market Index fluctuated between 72% and 78%, indicating a lack of clear direction despite some growth spurts. This behavior suggests the market is in a consolidation phase, with periods of overbought conditions followed by corrections.
Market Seasons
The week was marked by transitions between different market “Seasons”:
- BTC Season: Observed at the beginning and end of the week, with recommendations to buy BTC and consider rotating into ETH under favorable conditions.
- ETH Season: Predominant mid-week, where the trend favored ETH, with recommendations to follow the ETH trend and rotate into ALTs if momentum was bullish.
- ETH Downtrend: Towards the end of the week, the advice was to increase BTC allocation, due to the Friday dump. Risk-off weekend.
Smart Money Exposure
- BTC: Smart money exposure in BTC showed an increasing trend towards the end of the week after an initial decrease.
- ETH: Exposure remained extremely high compared to retail throughout the week.
- ALT: Smart money exposure in ALTs was generally decreasing, with some mid-week exceptions.
Momentum Analysis and Recommendations
The market is perceived as overextended but still bullish, with general recommendations to follow trend-following strategies. No significant momentum extensions were observed, which favored trend-following strategies throughout the week.
Funding Rates and Market Sentiment
- Funding Rates: Mostly stayed at normal levels, with occasional days showing low rates (indicating bullish sentiment) and high rates (suggesting a possible market top).
- Market Sentiment: Overall, the market showed a bullish sentiment with periods of correction, maintaining a perspective of following prevailing trends.
Conclusion
The week showed transitions between different market phases across BTC and ETH. Smart money exposure and momentum indicators suggest continued volatility, offering strategic opportunities in both assets. Traders need to stay alert to rapid changes in market conditions and adjust their strategies accordingly, following trends and observing changes in smart money exposure.
BTC Analysis
Price Action
During the past week, Bitcoin broke out of the triangle pattern that had been compressing its
price between $68,000 and $66,000. This bullish breakout led to a target of $71,400, which was reached over several days, with $72,000 acting as a significant resistance level.
On Friday, a substantial increase in the value of the USD caused risk assets, including Bitcoin, to drop in price during the US trading session. The weekend then experienced a period of low volatility, resulting in a relatively narrow trading range.
Key Levels
• Resistance: $71,400 and $72,000
• Supports: $68,600 and $67,000
Orderbook Analysis
Reviewing the orderbooks, we see considerable demand down to $65,000, suggesting that institutions are likely employing a dollar-cost averaging (DCA) strategy within this range.
However, there isn’t a standout level within this demand zone. On the selling side, clear resistance levels are evident at:
• $72,000
• $73,000
• $75,000
These levels are the key targets to watch for potential rejections or breakouts.
Current Market Sentiment
The orderbooks across all exchanges are balanced, indicating no clear edge in either direction. However, some critical insights can be drawn:
• Support Importance: Holding above $65,000 is essential to maintain the bullish sentiment for Bitcoin. A drop below this level could signal a bearish shift.
• Resistance to Watch: Breaking above $72,000 is crucial for any further bullish movement. Successfully breaching this level could pave the way for a move toward $75,000, with an intermediate target of $74,500.
Conclusion
Bitcoin’s current price action and orderbook dynamics suggest a cautious yet optimistic outlook. Maintaining above $65,000 is crucial for sustaining the bullish trend, while breaking above $72,000 could lead to significant upward momentum. Monitoring these key levels will be essential for navigating the market in the coming days.
Optimized Portfolio Allocation
Based on the latest data and the market status of “Neutral, no extreme conditions,” we have adjusted our portfolio allocation accordingly:
- Momentum: 30% Allocation
- Breakout: 20% Allocation
- Trend Following: 40% Allocation
- Mean Reversion: 10% Allocation
This allocation strategy aims to navigate the current neutral market conditions effectively.
With a higher allocation to trend-following strategies (40%), we position ourselves to capture potential sustained movements in the market, allowing us to adapt to emerging trends.
The 30% allocation to momentum strategies enables us to leverage ongoing and stable market movements, capitalizing on the persistence of those trends.
Additionally, the 20% allocation to breakout strategies allows us to capitalize on any emergent trends or significant market movements that may arise, giving us the flexibility to respond swiftly to new opportunities.
Finally, the 10% allocation to mean reversion strategies provides a hedge against potential market corrections or reversals, ensuring that we can potentially benefit from price moves toward the mean.
This balanced and diversified approach ensures that our portfolio remains adaptable and resilient, poised to weather market fluctuations while capitalizing on emerging opportunities across various market phases.
Stay tuned for our upcoming updates and detailed analysis. See you next week with more market insights and opportunities!
Trade safe,
The Quantor
AQTIS Investment Management
