April 30, 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
In this edition of our newsletter, covering the period from April 23 to April 29, 2024, we dive once more into the cryptocurrency markets. Here are the top highlights from the crypto space this week:
- Japanese Yen witnessed a steep decline in price against USD, leading to market turbulence across Asian and European markets.
- MicroStrategy, the world’s biggest holder of Bitcoin is eyeing up an S&P500 listing.
- Talos, a crypto trading software provider backed by heavyweights including Citibank and Andreessen Horowitz (a16z), has fully acquired Cloudwall, a crypto risk management platform.
- US inflation remains high, increasing risks of the world’s biggest economy entering an era of stagflation.
Market Overview
The Fear and Greed Index ranges from 65 to 72, indicating a slight decrease in optimism compared to the previous week.
High Time Frame (HTF) Analysis
The higher timeframe (HTF) market state suggests an ETH Season, with recommendations to buy BTC and ETH.
Low Time Frame (LTF) Analysis
The lower timeframe (LTF) market state indicates an Altcoin Downturn bottoming phase, with recommendations to prepare for closing short positions and taking long positions.
Market Momentum
The momentum for Bitcoin (BTC), Ethereum (ETH), and Altcoins is bearish, with a bearish market phase and momentum strength that is not over-extended. Trend-following strategies are recommended in this environment.
Whale vs. Retail Insights
For BTC, whales are increasing their exposure compared to retail investors. For ETH and Altcoins, whales are extremely more exposed than retail investors.
Funding Rate Insights
The extreme positive funding rate for coins is zero, indicating normal funding rates. The extreme negative funding rate percentage for coins is non-zero on some days, suggesting potential market bottoms.
Overall, the data suggests a bearish market sentiment with decreasing momentum. However, there are signs of potential bottoming in the Altcoin market. ETH and Altcoins are favored by whales compared to retail, while BTC exposure is increasing for whales.
Chart of the week
ETF net flows are slowing down. Crypto asset flows are down for the third week in a row, and the CME Open Interest is down 20% in the last month. This suggests the institutional momentum is gone and for now, the best outcome is to continue sideways for a new accumulation phase.
BTC Analysis
The market remained in a state of consolidation this past week, with Bitcoin continuing to trade in a relatively tight range. After briefly touching the $67,000 level, BTC has pulled back and is currently hovering around the $63,200 price point.
This choppy price action reflects an ongoing tug-of-war between the bulls and bears. On one side, we’re seeing buy pressure build up on Binance, while on the other, there appears to be significant selling coming from traders on Coinbase, who seem to be defending the $65,000 level. For now, the bears are winning since BTC is trading below the $64,000 level.
You can see the supply and demand checking the chart, where we plot the Binance order books in red and green, and Coinbase order books in orange and cyan.
This conflicting activity has left Bitcoin in a weak area, oscillating between the $61,000 support and the $64,300 resistance. However, the good news is that the $60,000 level — a crucial support zone — has continued to hold firm. In fact, reports suggest there is a large buy wall in place at this price on Coinbase, indicating the bears are struggling to breach this key floor.
So while the market remains range-bound for now, the longer-term bullish structure appears to be intact, provided Bitcoin can maintain its foothold above $60,000. A breakdown below this level could open the door for a deeper pullback.
On the altcoin front, the picture remains concerning, as many top altcoins have failed to keep pace with Bitcoin’s price movements. Ethereum, for instance, saw a brief weekend surge only to give up those gains on Monday, underperforming against BTC.
Looking ahead, the key levels to watch remain unchanged:
Support:
- $60,000 (must hold), $61,700
Resistance:
- $64,300, $68,600, $72,000
Optimized Portfolio Allocation
Based on the latest market data and conditions, we have optimized our portfolio allocation strategy as follows:
- Trend Following: 40% Allocation
- Momentum: 25% Allocation
- Breakout: 25% Allocation
- Mean Reversion: 10% Allocation
This optimized allocation strategy aims to capitalize on the current bearish trend while maintaining exposure to potential trend reversals and breakouts. The increased allocation to trend-following strategies (40%) reflects our focus on navigating the bearish market conditions.
TLDR
The crypto market remains in a bearish phase, with uncontrolled US inflation and swings in the Japanese Yen impacting sentiment. However, increased mainstream adoption and industry consolidation provide long-term optimism.
Our optimized portfolio allocation focuses on trend-following strategies (40%), momentum (25%), breakout (25%), and mean reversion (10%), positioning us to navigate the current market conditions while capturing potential reversals.
This week things look to stay on the turbulent theme. There’s news of interest rate decisions, earnings calls for some of the world’s biggest companies, and talk of an ETH ETF in Hong Kong. Hold on to your hats.
Stay tuned for our future newsletters, where we will continue to provide you with the latest market insights and strategic portfolio allocations.
Trade safe,
The Quantor
AQTIS Investment Management
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