May 20, 2024
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 May 13 to May 20, 2024, we dive once more into the cryptocurrency markets. Here are the top highlights from the crypto space this week:
- Interest cuts dominate the headlines — The Federal Reserve has signaled interest rate hikes may be coming to an end. Jeremy Powell, the chair of the Federal Reserve has indicated the economy is moving in the right direction thanks to softer CPI data.
- Bitcoin hits highest price since halving — The world’s largest crypto asset gained more than 9% in value over the last week to hit a post-halving high of $67,845. But it still has a way to go to reach the previous all-time high of $73,737.
- Notorious hacker Pink Drainer retires after stealing $75 million — Pink Drainer, a wallet-draining service, has announced its retirement after stealing over $75 million from victims. The scam-as-a-service expressed gratitude to its customers, and phishing scammers, and assured them that any data would be securely destroyed.
Chart of the Week
China’s selling of treasuries and agency debt rises to a record. Beijing offloaded a total of $53.3 billion of Treasuries and agency bonds combined in the first quarter, according to calculations based on the latest data from the US Department of the Treasury. Belgium, often seen as a custodian of China’s holdings, disposed of $22 billion of Treasuries during the period.
Market Overview
The Fear and Greed Index
The Fear and Greed Index has shown a gradual increase, moving from moderately high levels toward the 70 zone. This rise indicates a growing sentiment of greed in the market, suggesting increasing optimism among investors.
High Time Frame (HTF) Analysis
High Time Frame (HTF) analysis highlights significant strength in Bitcoin (BTC), indicating a BTC season phase with a strong buy recommendation. This reflects consolidation in the market, with Bitcoin leading the bullish movement. Ethereum (ETH) is closely following BTC, showing positive signals, although it is not as strong as BTC. Altcoins, on the other hand, are responding well after significant declines over the past month, indicating a recovery.
Low Time Frame (LTF) Analysis
Low Time Frame (LTF) market analysis also emphasizes BTC’s strength, showing prolonged bullish momentum. While ETH is also trending upwards, it does not exhibit the same level of strength as BTC. Altcoins have started to show a shift towards bullish momentum over the past week, responding positively after significant drops in the previous month.
Market Momentum
The momentum for Bitcoin (BTC) has maintained a neutral to bullish phase, with prolonged bullish momentum underscoring its strength in the market. Initially, Ethereum (ETH) and Altcoins showed bearish momentum but have started to reverse this trend. Particularly, altcoins have seen a shift to bullish momentum during the last week, indicating continued growth potential.
This shows when the market is doing higher highs and higher lows in daily timeframes. We see that the metric is going up, so the market structure is starting to look bullish
Whale vs. Retail Insights
For BTC, whale investors are decreasing their exposure compared to retail investors, despite BTC’s current strength. However, for ETH, large investors continue to hold significantly higher exposure than retail investors, indicating strong smart money interest in Ethereum. As the week progressed, altcoins also began attracting more exposure from large investors, reflecting a recovery in interest from major market players.
Funding Rate Insights
Funding rates have remained normal for most assets. However, an extremely negative funding rate was observed for some assets, which could signal a market bottom and a potential short squeeze in certain assets. By the end of the week, funding rates normalized again, indicating reduced risk of extreme market conditions.
Overall, the data suggests a potential bottoming phase for altcoins and Ethereum, with a growing trend for Bitcoin. Smart money is decreasing its position in the new uptrend.
Funding rates have normalized, indicating a reduced risk of extreme market conditions. While momentum remains mostly neutral for BTC and has shown signs of bullish reversal for ETH and Altcoins, the lack of overextended momentum suggests the potential for new emerging trends.
BTC Analysis
During the past week, Bitcoin saw a significant increase in its price, finally neutralizing the selling pressure at the $65,000 level, which came from investors on OKX.
The market positioned itself above the daily SMA50, favoring a bullish exposure. Additionally, the trendline was broken, indicating a possible continuation of the higher highs and higher lows structure, with a target at $70,000.
Current Market Structure
After surpassing the $65,000 barrier, the Bitcoin market has shown bullish signals by reaching a new higher high. This move has solidified a breakout of the trendline, reinforcing confidence in the continuation of the bullish trend. Our target is to reach the $70,000 level.
Orderbooks and Selling Pressure
Analysis of the orderbooks reveals significant selling pressure from traders on the Coinbase spot trading platform. Key resistance levels are:
- $70,000
- $73,000
- $75,000
These levels should be closely monitored as we may face strong rejection at any of them if supply surpasses demand.
Regarding support, it’s crucial to observe the following levels:
- $65,000 (recently broken, now key support)
- $62,800
- $60,000 (must hold)
Exchange Activity
Taking a closer look at activity on different exchanges:
- Coinbase: Significant selling pressure is observed at $70,000, $73,000 and $75,000.
- Binance: Significant selling pressure is observed at levels near $68,000.
- OKX: Apart from support at $58,500, traders have shown interest in higher locations following recent purchases around $60,000.
Market Outlook
While the Bitcoin market seems to be in a renewed bullish trend, signs of over-leverage around $67,000 suggest it’s prudent to exercise caution. The recent consolidation might be preparation for a more significant move.
Opportunities in Altcoins
While Bitcoin takes a breather, altcoins have shown good performance, with several structural changes observed in major capitalizations. This suggests that while Bitcoin stabilizes its movement, there’s notable interest and momentum in the altcoin market, which may present additional opportunities for investors in the short term.
Conclusion
The absorption of selling pressure and positioning above the daily SMA50 reinforce Bitcoin’s short-term bullish outlook. However, the presence of sell walls at key levels demands attention and caution.
We will continue to monitor resistance levels at $70,000, $73,000, and $75,000 while observing possible expansions at support levels. Altcoin market behavior is also a positive signal, indicating a healthy and diversified environment for crypto assets.
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
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That’s all for now. Stay tuned for more exciting updates, and we’ll catch you in the next one!
