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July 15–22 Weekly Report: 2018 lows in trading volume heighten expectation of a large directional move
The short-term outlook for the segment remains positive. The broad suggestions from the weekend showed a continuation of declining trading volume, however, without the same market cap drawdown as previous volume declines. Analyzing the month of July using June, given similarities in both sentiment and BTC trading ranges, we identify that on a MoM basis, net-long returns still negatively skewed to systematic-risk. Following our previous report, leading sentiment and technical indicators show tentative signs of a rebound with a modest improvement in regulatory guidance in both Asia and North America, leading the increase in market sentiment. Here at Caviar, as of July 15th, our analysis on exchange activity shows a 76% likelihood of a large directional move 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 lastly; 3) social media to token price analysis with a 35% weight on GitHub activity. The tool provides a scenario analysis on the likelihood of short-term reversal of the current market trend. The outcome registered a 76% likelihood that BTC moves higher in the next 3–4 days.
Technical Analyses, TradingView
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 13th but is based on data from Tuesday July 10th. As of the last Tuesday, there were 4,121 short bitcoin futures positions and 2,666 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 60% net short. Here at Caviar, we are analyzing the gradual convergence in the number of shorts relative to longs as a short-term market bottom.
Market Cap Year-to-Date
There has been a collapse in trading volumes. On Saturday, trading volumes reached their lowest levels of the year. Bitcoin’s high market cap dominance (>40%) in conjunction with the defense of key psychological level of $6,000 signals a probability of an increase of a short-term breakout in BTC trading volume and in turn price.
Google Trends (bitcoin)
Interest in Bitcoin searches have remained modestly stagnant in the past few weeks relative to the large January decline in bitcoin searches. For the past two weeks, the stagnation in bitcoin searches coincides with a time horizon in which Bitcoin traded primarily in a sideways channel of $6,900 to $5,800 on marginally decreasing exchange volumes. Here at Caviar, we assess that the retail investors are cautiously optimistic on an ETF approval, yet highly risk-averse, foregoing the opportunity to speculate on the event.
Number of new BTC wallets
The number of new wallets being created reﬂects the decrease in the rate of new market entrants. The number of new wallets being created continues to be mixed. The fickle growth in new wallets relative to market cap implies a much larger decline in the rate of new wallets. Here at Caviar, we interpret widening spreads to be leading indicators on the continuation of the market trend, exercising caution on forecasts outside of 3–4 days.
Bitfinex BTC/USD Shorts from June 16th to July 15th
BTC shorts are steadily increasing as traders extract tepid trading volumes as a leading indicator of market strength. Although ETF approval expectations are weighing heavily into institutional analysis, the market has been capped below $300 billion for a concerning 35 days. Based on the lack of momentum on short-pressure, bitcoin’s repeated defense of $6,000, and an increase in risk appetite, we expect BTC/USD shorts to decline as a modest improvement in sentiment will drive both retail and institutional investors back to the asset class.
July 15–22 Trading Ideas: Long Tezos, as institutional interest has sharply increased, and long GoChain on expectations of industry-shaping partnerships and leading technical developments
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.