May 7, 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 1 to May 7, 2024, we dive once more into the cryptocurrency markets. Here are the top highlights from the crypto space this week:
- Coinbase faces new lawsuit over alleged investor deception — While the exchange is already locked in a legal battle with the SEC, a series of private investors brought a new case alleging the company had acted knowingly as a securities broker.
- Bitcoin jumps back above $65,000 — after the world’s largest crypto asset saw prices slump in April, things are looking more upbeat as the currency climbed above the symbolic $60,000 briefly peaking at $65,000.
- BlackRock courts Sovereign Wealth Funds and Pensions for Bitcoin ETFs — the world’s largest asset manager has said it is actively in conversation with several new players interested in dipping their toes in the crypto waters.
- Bitcoin reaches one billion transactions — The Bitcoin network processed its one billionth transaction. The network surpassed the historic milestone on May 5, 15 years, four months, and four days since the first genesis block was mined.
Chart of the Week
M2 money supply turns positive for the first time since late 2022. We were waiting for a spark to take us out of the range-bound lethargy and generally heavy price action for Bitcoin.
Between the Fed and US Treasury, that spark has been ignited and liquidity conditions in Q2 look set to be significantly easier. Added to this, after some lumpy ETF outflows, Friday saw net inflows of 378mio, including the first inflow into Grayscale. That would provide a significant sentiment and narrative shift to these markets should that sustain.
Market Overview
The Fear and Greed Index
The F&G Index has been increasing over the last seven days, indicating a shift towards a greed sentiment in the market.
High Time Frame (HTF) Analysis
The higher timeframe (HTF) market state suggests it’s ETH Season, with recommendations to buy BTC and ETH.
Low Time Frame (LTF) Analysis
The lower timeframe (LTF) market state indicates an ETH Downturn bottoming phase, with recommendations to prepare for closing short positions and look for reversal signals.
Market Momentum
The momentum for Bitcoin (BTC), Ethereum (ETH), and Altcoins has turned bullish, suggesting a potential bullish market with increasing momentum.
The momentum phase is bullish, and the momentum strength is not over-extended, indicating that trend-following strategies should be employed.”
Whale vs. Retail Insights
For BTC, whale investors are decreasing their exposure compared to retail investors. For ETH meanwhile, large investors continue to hold higher exposure rates than retail investors, which is a similar story for altcoins.
Funding Rate Insights
The extreme positive funding rate percentage for coins is normal. The extreme negative funding rate percentage for coins has decreased, suggesting a potential market bottom has been reached.
Overall, the data suggests a shift towards a bullish market sentiment, with increasing momentum and a potential market bottom reached for Altcoins. The smart money positioning favors ETH and Altcoins over BTC, with smart money being more exposed than retail investors. Funding rates have normalized, indicating a reduced risk of extreme market conditions. The recommendations align with the ETH Season, suggesting buying BTC and ETH while monitoring for reversal signals in the ETH market.
BTC Analysis
The Bitcoin market saw increased volatility this past week, with prices breaking below the crucial $60,000 support level.
After opening the week around $63,200, BTC tumbled to a low of $56,700 amid broader market jitters over the Federal Reserve’s latest policy moves.
However, the sell-off proved to be short-lived, with Bitcoin quickly regaining its footing and surging back above $60,000 over the weekend. The recovery was fueled in part by news that the Fed plans to maintain its current policy stance, providing some relief to risk assets like Bitcoin.
Since then, BTC has been trading in a tight range, with the $64,300 level emerging as a key resistance area. This price point has acted as a strong ceiling for over a month now, and a decisive breakout above it could signal a potential shift in momentum.
From a technical perspective, the market remains in a relatively weak position. Bitcoin is still trading below its 50-day simple moving average (SMA) on the daily chart, and the series of lower highs and lower lows remains intact for now. To confirm a potential trend reversal, we’ll need to see a higher high above $64,300, followed by a break above the 50-day SMA, currently sitting around $65,700.
On the altcoin side, most major tokens continue to underperform Bitcoin, with Ethereum and others struggling to keep pace with BTC’s recent recovery.
Checking the order books and the recent price developments, we can see that there is a tricky game between multiple exchanges.
Binance and Coinbase remain neutral, but we can see a big bid wall at $62.000 in BitMEX, while we also see a big wall of sells in OKX from $64.500 to $65.000.
Looking ahead, the key levels to watch are:
Resistance:
- $64,300 (immediate hurdle)
- $65,700 (50-day SMA)
- $68,600
- $71,200
Support:
- $61,000
- $60,000 (must hold)
Optimized Portfolio Allocation
Based on the latest data, we’ve observed a stable market without extreme conditions, signaling a balanced approach to our asset allocation. Thus, our portfolio distribution for the upcoming period is set as follows:
- Trend Following: 40% Allocation
- Momentum: 30% Allocation
- Breakout: 20% Allocation
- Mean Reversion: 10% Allocation
This balanced strategy is designed to capitalize on the prevailing market conditions, ensuring we remain poised to both seize growth opportunities and mitigate risks.
TL:DR
Data suggests a shift towards a bullish market sentiment, with increasing momentum and a potential market bottom reached for Altcoins.
The recommendations align with the ETH Season, suggesting buying BTC and ETH while monitoring for reversal signals in the ETH market.
Our portfolio distribution for the upcoming period is set as follows:
- Trend Following: 40% Allocation
- Momentum: 30% Allocation
- Breakout: 20% Allocation
- Mean Reversion: 10% Allocation
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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That’s all for now. Stay tuned for more exciting updates, and we’ll catch you in the next one!
