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 10 to June 17, 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 continued to see price declines. Across the last week, Bitcoin’s price hovered around monthly lows, leading to more than $150 million of liquidations in long positions in just a few hours. Traders are bracing for further corrections as miners appear to be taking profits amidst reduced revenues.
- Paradigm launches $850 million early stage fund — Crypto venture capital firm Paradigm has raised $850 million for its third fund, dedicated to investing in early-stage crypto projects. The firm believes that crypto will be a significant technological and economic shift and has previously invested in companies like Uniswap and Flashbots. Paradigm is also engaging in crypto policy after appointing a government affairs lead.
- US falls behind in crypto developer race — Fortune 100 companies in the US have seen a 39% year-over-year growth in onchain initiatives, with mentions of bitcoin and stablecoins in SEC filings reaching new highs in Q1. However, the US has lost out to international counterparts in terms of homegrown talent for developing blockchain-based systems, with only 26% of crypto developers being US-based. This decline in developer share may be attributed to the cheaper cost of hiring Web3 developers from outside the US.
Chart of the Week
Inflation isn’t going away.
Credit: Ecoinometrics.
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 70.0 and 74.0, 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”:
- ETH Downtrend: Predominant at the beginning of the week, with recommendations to apply short strategies on ETH and increase allocation to BTC.
- ALT Downtrend: Observed towards the end of the week, with recommendations to continue short strategies on altcoins and increase allocation to BTC.
Smart Money Exposure
- BTC: Smart money exposure in BTC showed an increasing trend towards the end of the week, indicating a strategic positioning by institutional players.
- ETH: Exposure remained extremely high compared to retail throughout the week, suggesting strong confidence in ETH by smart money.
- ALT: Smart money exposure in ALTs generally decreased, indicating a cautious approach towards altcoins.
HTF Metrics Analysis and Recommendations
HTF metrics provide a broader perspective on the market’s overall health and direction, focusing on long-term trends rather than short-term fluctuations. Here’s a breakdown of the HTF metrics observed this week:
- BTC: Smart money is increasingly exposed to BTC, suggesting confidence in its short-term performance.
- ETH: Smart money remains extremely more exposed than retail, indicating strong institutional confidence in ETH.
- ALT: Smart money exposure is decreasing, showing caution towards altcoins.
Funding Rates and Market Sentiment
- Normal Funding Rates: Predominantly normal funding rates throughout the week indicated a stable market environment with no extreme long or short biases.
- Low Funding Rates: Occasional low rates signaled bullish sentiment, providing opportunities for strategic long positions.
- High Funding Rates: Brief periods of high funding rates suggested caution as these could indicate potential market tops and the need for tighter risk management.
Conclusion
The HTF metrics highlight a week characterized by strategic positioning and trend-following opportunities.
The consistent exposure of smart money in ETH and the varying exposure in BTC and ALTs suggest a market adapting to prevailing trends while remaining vigilant of potential overextensions.
Traders should focus on trend-following strategies, supported by stable funding rates and the observed smart money movements, to navigate the market effectively.
Keeping an eye on HTF metrics will be crucial in anticipating longer-term shifts and maintaining a robust trading strategy.
BTC Analysis
This week has been notably bearish for Bitcoin, with the price falling from $70,000 to the current level of $65,000. While this decline might not seem drastic in absolute terms, it has significantly impacted altcoins, which are showing considerable weakness. The overall market sentiment has turned bearish.
Technical Analysis
Based on our technical analysis, today’s price action could be pivotal for Bitcoin. We are on the verge of losing the 50-day Simple Moving Average (SMA) on the daily chart. For our trading strategies, this is a crucial indicator. As regular readers know, we use regime filters to adjust the weights of our systems, and the 50-day SMA is a key component.
Losing this level would likely signal a temporary bearish phase. Consequently, we are preparing for potential further declines, while carefully examining order books to identify upcoming support levels and current liquidity.
Range and Key Levels
Bitcoin has been trading within a range since March, fluctuating between $60,000 and $72,000. Should we lose the 50-day SMA, the next levels of interest are $64,000 and $61,000, based on our chart analysis.
Order Book Analysis
Our deeper dive into the order books from major exchanges like Binance and Coinbase reveals that $65,000 is a critical level to maintain. If Bitcoin fails to hold this level, we anticipate the next significant support points to be at $64,000, $62,800, and ultimately $60,000.
Current order book data indicates a bullish skew, with more sell pressure than buy pressure. We only see notable selling interest at $70,000 and $72,200, suggesting potential resistance at these levels.
Key Insight of the Week
While prices might be tumbling, whales are buying, and absorbing a lot of the sell orders. Below the price line at the top is whale accumulation for Bitcoin. The second are smaller investors, showing that the recent bearish trend is proving popular among major BTC holders.
Conclusion
As we navigate this potentially bearish phase, our strategy will adapt based on these technical indicators and order book analyses. Keep an eye on the $65,000 level, as its breach could lead to testing the next supports at $64,000, $62,800, and $60,000. Stay tuned for further updates and detailed analysis as the situation unfolds.
Key Supports:
- SMA 50, around $66,200
- $64,300 as immediate level
- $61,000 and $60,000 as key supports
Key Resistances:
- $70,000
- $72,000
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!
