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July 29 — August 04 Weekly Report: Bitcoin remains the preferred asset during the interim with altcoins facing substantial uncertainty
The short-term outlook for the segment remains neutral, yet bullish for Bitcoin. The weekend showed a marginal increase in BTC dominance levels with weekly daily volume sliding 33% to $13.9B on Sunday July 29th from their Tuesday July 24th levels of $21B. Market sentiment suggests a better balance of risks as market participants expect an ETF approval by Q4 2018/ Q1 2019. In more exciting news, the largest anomaly of the week came in Ethereum’s trade volumes. Ethereum trade volumes surged seven-fold from 1.7B on Friday to more than $12B on Saturday. The spike was accompanied by a surge in global trade volume of $16B to $38B. With that said, short interest in Ethereum remains aggressively high at 70% on Bitfinex as volatility has returned to the asset class, with structural and cyclical factors favoring Bitcoin accumulation instead of Ethereum.
Following our previous report, leading sentiment and technical indicators show clear signs of a bullish narrative in BTC with institutions leading the demand ahead of the expected ETF approval. Here at Caviar, as of July 29th — our analysis on exchange activity shows a 91% likelihood of a 3–8% daily directional move upwards in BTC in the coming days. This real-time tool incorporates 1) bid/ask exchange information across both North America and Asia exchanges; 2) leading technical analysis on blockchain-level analytics and; 3) social media activity — to predict short-term market movements. The tool provides a scenario analysis on the likelihood of short-term reversal of the current market trend. The outcome registered an “91%” likelihood that BTC moves higher in the next 3–4 days.
Futures Markets, COT Report
The release of the COT report on each Tuesday serves a tool to identify crowded speculative trades as it provides insights to institutional positioning. Above is the most recent COT report, which was issued last Friday July 27th, but is based on data from Tuesday July 24th. As of last Tuesday, there were 3,977 short bitcoin futures positions and 2,326 long bitcoin futures positions held by what is defined as non-commercial traders. Non-commercial traders are those who are betting on the speculating on the price of Bitcoin and are NOT using the futures market for hedging purposes. As such, non-commercial traders were 63% net short. Here at Caviar, we are analyzing the sideways pattern of net-short percentage over time as a signal that institutions and retail alike, are targeting BTC accumulation.
Market Cap Year-to-Date
BTC dominance is currently at its 200-day high of 47%. As such, the market share of altcoins continues to decline as investors continue to dump their alts in favor of Bitcoin. Bitcoin presents moderate but positive returns as it remains the preferred asset in crypto with a strong defense of both short-term economic and fundamental catalysts that firmly support its position in the market. As per our analysis, given our view that BTC dominance will continue to increase at a rate above that of the overall market — we find it appropriate to show how rarely BTC dominance trends reverse as the graph above clearly shows both the emergence and continuation of the trend on April 30th to July 29th.
Bitfinex BTC/USD Shorts from July 5th to July 29th
BTC shorts came down slightly this past week as traders are seeing an overreaction in BTC demand. On the fundamental front, expectations for an ETF approval continue to support the institutional narrative of BTC accumulation. The market is showing a bearish retracement for altcoin accumulation as the segment’s performance continues to be lower than that of BTC.
– Structure Long-Short trading position to benefit from $7,000 / $9000 BTC
– Long Exchange tokens to benefit from a break-out in current channels of the volatility curve
This report has been compiled by Caviar for informational purposes only. The views expressed within are Caviar’s in its entirety. The information within this report is our own opinion only and is not to be used in making a decision for investment. We are not financial advisers, you should consult your own investment adviser before taking any action to acquire or deal in, or follow a recommendation (if any) in respect to any of the financial products or information mentioned in this report. Whilst Caviar believes everything contained in this report is based on information which is considered to be reliable, its accuracy and completeness are not guaranteed and no warranty of accuracy or reliability is given or implied, and no responsibility for any loss or damage arising in any way for any representation, act or omission is accepted by Caviar or by any officer, agent or employee of Caviar or its related entities. Caviar makes no judgements or representations about the legal status and/ or compliance of any company, cryptocurrency or token mentioned in this report. Caviar may at this time, or at any time in the future, without further notice, open positions in any of the cryptocurrencies or tokens discussed in this report.