2024–03–18
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:
It’s been another busy week for crypto. As we head towards the end of the first quarter of 2024, market activity is heating up. This week, however, four key narratives are shaping the state of the play:
1. Ethereum’s Decun Upgrade — EIP-4844: The Ethereum network observed its largest fork since the Merge, indicating significant advancements in scalability and efficiency.
2. BTC Halving Countdown: As we edge closer, the halving event is merely a month away, setting the stage for potential market shifts.
3. The Resurgence of Game-Fi: Game-Fi narratives have surged back into the spotlight, with game tokens experiencing substantial growth. This revival underscores the narrative’s potential impact in a bull market.
4. Solana — The New Retail Favorite: Solana has emerged as a key player, drawing parallels with Ethereum’s 2017 journey, suggesting a prominent role in this bull run.
Comprehensive Market Analysis & Portfolio Allocation Strategy:
Our in-depth analysis this week takes a birds-eye view of the market, leveraging the latest data to strategize our portfolio for optimal performance. Here’s what we’ve gleaned from the recent market conditions:
- Momentum and Trends: The market is currently not displaying extreme conditions, offering a stable ground for diversified strategies. The trend acknowledges a steady build-up without the overextension in momentum, hinting at the importance of trend-following strategies. The trend-following strategies remain bullish on Low Time Frame (LTF) and High Time Frame (HTF). You can see a detailed analysis of the Trend-System LTF in the next section.
- Fear and Greed Index Analysis: Noteworthy increases in the Fear and Greed index point towards a growing bullish sentiment among investors, reinforcing the potential for strategic long positions.
- Whales vs. Retail Dynamics: A nuanced view of the whales’ activity across BTC, ETH, and ALT suggests significant movements. Smart money’s exposure varies, with a heightened focus on ETH, indicating a potential prioritization in the portfolio.
- Funding Rates Insight: The current funding rates present a balanced view of bullish sentiments, alongside cautions against potential market tops, suggesting a strategic allocation within the portfolio.
Understanding Quantor Charts
Below is one of the charts Quantor will be sharing each week. On the left-hand side, are three charts measuring the performance of BTC, ETH, and an index of Altcoins. On the charts to the right, meanwhile, is a model that measures the strength of the trend for each of these assets.
The charts on the right have both a lower and upper threshold. If the metric is above the upper threshold, that is, the upper black line, it indicates a strong upward trend. If the metric is below the lower threshold, it implies a clear downward trend. The area in the middle represents a sideways or indecisive market.
These measurements are made using daily trend information.
BTC Analysis:
The BTC/USDT chart displays a strong uptrend, with the price making higher highs and higher lows consistently. The upward momentum appears to be fueled by substantial buying pressure, as evidenced by the CVD and Order Books metrics.
At the current price level around 75,000 USDT, there seems to be a significant supply zone, with multiple large sell order lines clustered in that area. This supply zone has acted as resistance, temporarily halting the uptrend and leading to a recent pullback.
However, it’s important to note the presence of solid demand zones below the current price, particularly around the 60,000–65,000 USDT range, where numerous buy order levels are concentrated.
These demand zones have provided support during previous dips, suggesting a healthy buying interest at those levels.
Looking ahead, a decisive break above the 75,000 USDT resistance level, coupled with sustained buying pressure, could potentially reignite the uptrend and pave the way for further gains.
Conversely, if selling pressure overwhelms the demand zones below, it may lead to a more significant correction or consolidation phase.
As with any market, monitoring the evolution of these key support and resistance levels, as well as the overall supply and demand dynamics, will be crucial in anticipating potential trend continuations or reversals. Additionally, it’s essential to consider broader market conditions and external factors that could influence the price action.
Optimized Portfolio Allocation:
Based on our analysis, updating our portfolio weights aligns with the current market conditions, ensuring we capitalize on prevailing sentiments while mitigating risk. Here is the proposed allocation:
- Trend Following: 40% Allocation — Reinforces our position in capturing the gradual build-up in the market’s trend without overexposure to sudden shifts.
- Momentum: 30% Allocation — Balances our engagement with prevailing market movements, capturing the essence of current shifts.
- Breakout: 20% Allocation — Serves as a proactive measure to capitalize on potential sudden market shifts, optimizing for unexpected gains.
- Mean Reversion: 10% Allocation — Acts as a hedge against potential overextensions, ensuring our portfolio remains balanced amidst market volatility.
TLDR
This week, the crypto market witnessed substantial developments, from Ethereum’s update to the resurgence of Game-Fi.
Based on the dynamic market analysis, we recommend an updated portfolio allocation focusing on trend following (40%), momentum (30%), breakout (20%), and mean reversion (10%).
This strategy leverages current market conditions, ensuring a balanced approach to capturing gains while mitigating risks.
Happy Investing,
The Quantor. Stay Aqtivated!
