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 28 to June 4, 2024, we dive once more into the cryptocurrency markets. Here are the top highlights from the crypto space this week:
- Bitcoin & Ethereum investment funds see significant growth — Bitcoin and Ethereum investment funds saw significant inflows of capital last week, with Bitcoin funds receiving $148 million and Ethereum funds receiving $33.5 million. This marked a turnaround in investor sentiment for Ethereum, which had previously experienced 10 weeks of outflows totaling $200 million.
- Binance CEO starts jail term — Binance founder Changpeng “CZ” Zhao has begun serving a four-month prison sentence in California for failing to implement a proper KYC program at the exchange. Zhao, with a net worth of $36.5 billion, is the richest person to go to prison in the U.S.
- Solana surges — In May, Solana saw a significant increase in the number of tokens launched on its blockchain, with 455,000 tokens compared to Ethereum layer 2 network Base’s 177,000 tokens.
Chart of the Week
Fidelity Investments director of Global Macro posted a fascinating chart plotting the Presidential cycles against the performance of the S&P 500. According to the chart, the rest of the year looks bullish with prices expected to surge.
Market Overview
The Fear and Greed Index
The Fear and Greed Index has recently shown a steady increase, maintaining a position in the 70s. This high level indicates a prevalent sentiment of greed in the market, suggesting increasing optimism among investors.
High Time Frame (HTF) Analysis
- Bitcoin (BTC) — HTF analysis for BTC highlights significant strength, suggesting a BTC season with a strong buy recommendation. This indicates BTC is leading the bullish movement in the market, consolidating its dominance.
- Ethereum (ETH) — ETH is also showing positive signals, although not as strong as BTC. ETH season has been observed with a buy recommendation for both BTC and ETH.
- Altcoins — Altcoins have shown signs of recovery after previous significant declines, with some indications of bullish momentum returning.
Current HTF Market State
The current market state oscillates between BTC season and ETH season, with alternating recommendations to buy BTC or both BTC and ETH.
Low Time Frame (LTF) Analysis
- Bitcoin (BTC) — LTF analysis continues to emphasize BTC’s strength, showing prolonged bullish momentum, although recent data suggests BTC might be cooling off.
- Ethereum (ETH) — ETH is also trending upwards, with an ETH solo rally being observed. Recommendations include playing the ETH trend and potentially rotating to Altcoins if the momentum is bullish.
- Altcoins — Altcoins are showing an improving trend, though they are still not as strong as BTC and ETH. Recent data indicates a significant increase in bullish momentum.
Current LTF Market State
The market state for LTF remains primarily bullish with specific attention to ETH’s performance and a cautious outlook for BTC as it cools off after a strong run.
Market Momentum
- Bitcoin (BTC) — Momentum for BTC is in a neutral to bullish phase, with recent prolonged bullish momentum suggesting strength. However, there’s a note of caution as the market may be cooling off.
- Ethereum (ETH) — ETH has shown signs of a bullish reversal, with increasing momentum over the past week. The market trend remains overextended but still bullish.
- Altcoins — Altcoins have seen a bullish shift, especially in the last week, indicating potential continued growth. The market momentum for altcoins is not over-extended, suggesting the potential for emerging trends.
Overall Momentum Phase
The overall market is overextended but remains bullish. Strategies focusing on trend-following are recommended as the momentum is not over-extended.
Whale vs. Retail Insights
- Bitcoin (BTC) — Smart money’s exposure to BTC has been fluctuating. Recent data indicates a decrease in exposure despite BTC’s strength.
- Ethereum (ETH) — Large investors continue to hold significantly higher exposure in ETH compared to retail investors, indicating strong smart money interest in Ethereum.
- Altcoins — Altcoins have attracted more exposure from large investors recently, reflecting a recovery in interest from major market players.
Funding Rate Insights
- Positive and Negative Funding — Funding rates have remained mostly normal, with occasional negative rates indicating potential market bottoms and opportunities for short squeezes.
- Recent Funding Trends — Positive Funding Rates: Rare but can indicate market tops. Negative Funding Rates: Observed for certain assets, indicating potential for bullish sentiments and market bottoms.
Insights
The funding rates have generally normalized, indicating a reduced risk of extreme market conditions. The data suggests a potential bottoming phase for altcoins and Ethereum, with a growing trend for Bitcoin. Despite BTC’s recent cooling-off, smart money is increasingly exposed to ETH and Altcoins, indicating bullish sentiments.
BTC & ETH Analysis
Price Action
ollowing a substantial surge triggered by the ETH ETF announcement, the cryptocurrency market has undergone a period of consolidation as prices stabilized. Bitcoin encountered pivotal levels at $67,000 and $70,000 during this phase.
Bullish Triangle Emergence
BTC has formed a conspicuous bullish triangle pattern, signaling a potential breakout to the upside. This pattern suggests a plausible target of $71,300 on the 4-hour timeframe.
Moving Averages Support
Bolstering the bullish sentiment, BTC’s price currently resides above critical Simple Moving Averages (SMAs), adding weight to the notion of a continued upward trajectory.
Orderbooks and Selling Pressure
Resistance Zones
• Binance and Coinbase: Notable resistance barriers are evident around $71,500 and $72,000.
• Prominent Barrier: A significant hurdle is observed at $75,000.
Support Levels
• Vital Thresholds: $66,000 and $65,000 serve as crucial support levels in the event of downward price movements.
ETH Dynamics
Ethereum (ETH) faces its major resistance at $4,000, with support levels at $3,700, $3,600, and $3,500.
Orderbook Sentiment
ETH’s orderbooks exhibit a more bullish sentiment compared to BTC, with higher demand for ETH currently attributed to the ETF news.
Price Range and Compression Dynamics
A noteworthy observation is the constricted price range, confined within the $70,000 to $66,000 bracket for BTC and $4,000 to $3,500 for ETH. This tight trading range underscores a period of price compression, hinting at an imminent directional breakout.
Market Outlook
Despite prevailing selling pressure indicated by the order books, a bullish stance is maintained, underpinned by several factors:
- Impending Bullish Breakout: The formation of a bullish triangle pattern for BTC and key resistance levels for ETH suggests potential upward surges.
- Support from SMAs: BTC’s price trajectory remains supported by key SMAs, reinforcing the bullish bias.
- Target Projections: Short-term targets align around $71,300 for BTC and $4,000 for ETH, with potential resistance levels at $71,500, $72,000, $75,000 for BTC, and $4,000 for ETH.
Monitoring support levels at $66,000 and $65,000 for BTC and $3,700, $3,600, and $3,500 for ETH is prudent, as breaches below these thresholds could prompt a reassessment of the bullish outlook.
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!
