[Aim Rich Investment Strategy] Market rebound is welcome, but ‘probable short-term decline’ still remains

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Aim Rich Cryptocurrency Investment Information (2021.1.28)
<Figure 1=Market trend score as of 14 o’clock on the 28th (100 points, left)/Market rise/fall intensity (right)/Data=Aim Rich Financial Engineering Research Institute>

◆Cryptocurrency market conditions <strong>

A strong buying trend is flowing into the cryptocurrency market, which has fallen sharply. Bitcoin (BTC), the number one cryptocurrency market capitalization, which fell sharply the previous day and once broke $30,000 during the week, is on the verge of a recovery of $32,000, and Ethereum (ETH), Polkadot (DOT), and Ripple (XRP) are also on the day before. Compared to that, they increased by 5.64%, 7.47% and 3.35%, respectively.

On the previous day, bitcoin dropped more than 10% at one time during the intraday, leaving $30,000 as miners began to market the largest amount of bitcoin since October 2020. The amount of bitcoin held by miners continues to be withdrawn, and some whales continue to sell, and the rise is slowing.

Last night, the US New York Stock Market closed lower due to increased desire to realize profits ahead of the earnings release. After the meeting, the Fed made a statement and announced that it would freeze the base rate at the current 0.00~0.25%. In addition, the Fed has also made it clear that it will not change its current easing monetary stance for the time being, as it will maintain its $120 billion monthly asset purchase.

On the 25th (local time) on the New York Stock Exchange (NYSE), the Dow Jones 30 Industrial Average fell 2.05% from the previous length to 30,303.20, the Standard & Poor’s 500 Index fell 2.57% to 3,750.77, and the technology stock-oriented NASDAQ index 2.61% The deal closed at 13,270.60, down. The US stock market blockchain theme fell 0.21%.

As of 14 o’clock on the 28th, the price of bitcoin based on the coin market cap is $31,745.60, the 24-hour trading volume is about $65.6 billion, and the market cap is about $584.9 billion. The total cryptocurrency market capitalization is USD 9298 billion, and the Bitcoin market cap share is 63.0%.

The total cryptocurrency market cap increased 3.27% compared to the previous day, and the market cap excluding bitcoin increased 3.17% compared to the previous day, making Bitcoin stronger than Altcoin, and Bitcoin’s market cap increased 3.32% compared to the previous day. The market share of the company increased by 0.05% compared to the previous day, indicating that the number of coins in the market as a whole is higher than the bitcoin price.

<Figure 2=Status of Real-Time Cryptocurrency Market/Data=Aim Rich Financial Engineering Research Institute>

On the other hand, according to the Weiss Crypto Index, the market, which had weakened for about 30 minutes immediately after opening, turned upward around 10:00 and is on a strong rise. Altcoins are slightly stronger than Bitcoin, and small stocks are stronger. Stood out. W50, a cryptocurrency market index including bitcoin, +2.69%, W50X, a cryptocurrency market index excluding bitcoin, +2.96%, WLC, a large stock-oriented index, +4.47%, and WMC, a medium-sized stock-oriented index. -1.09% WSC, an index centered on small stocks, recorded -0.68%.

<Figure 3=Longs/Shorts cumulative trading volume ratio of major exchanges in the past 24 hours/Data=Aim Rich Financial Engineering Research Institute>
<Table 1=Ratio of Longs/Shorts trading volume of major exchanges as of 14:00 on the 28th/Data=Aim Rich Financial Engineering Research Institute>

As of 14 o’clock on the 28th, the buy:sell cumulative transaction volume ratio for the past 24 hours was 51%:49%, and as of 14:00, the long/short ratio of each exchange showed similar buy and sell taxes.

At the same time, on the cryptocurrency derivatives exchange BitMEX, the basis of bitcoin futures was around -17.5, and the basis of backwardation and Ethereum futures was around 1.60. The price of Bitcoin futures on the Chicago Merchandise Exchange (CME) is rising. January futures traded at $31,480.0, up $5.0 (+0.02%) compared to the previous day.

◆Main cryptocurrency prices <strong>

As of 14:00 on the 28th, the domestic bitcoin (BTC) price rose 2.10% from the previous day to 35.2 million won, Ethereum (ETH) rose 2.21% to 1472,000 won, and Polkadot (DOT) rose 4.93% to 18,330 won. Recorded. Ripple (XRP) rose 0.70% to 286 won, Bitcoin Cash (BCH) rose 2.47% to 437,000 won, Ada (ADA) rose 2.83% to 363 won, Stellar Lumen (XLM) rose 2.60% to 276 won, Chain LINK is trading at 25,640 won, up 8.23% from the previous day, and Litecoin (LTC) is trading at 141,450 won, up 1.95%.

<Figure 4=Upbit BTC/KRW Daily Chart/Data=Trading View>
<Figure 5=Top 10 Coin Price (As of 14:00 on January 28th)/Image=Coin Market Cap>

At the same time, the global cryptocurrency market price based on CoinMarket Cap is declining among the top 10 stocks by market cap as of the last 24 hours. The international Bitcoin (BTC) price is $31,468.95, down 1.45% from the same time the day before. Ethereum (ETH) fell 1.63% to $1,287.54, while Polkadot (DOT) rose 0.74% to $16.46. Ripple (XRP) fell 3.72% to $0.2562, Cardano (ADA) fell 2.60% to $0.3251, Chainlink (LINK) fell 2.61% to $22.86, Litecoin (LTC) fell 3.68% to $127.20, Bitcoin Cash (BCH) fell 5.70% to $390.60, while Binance Coin (BNB) rose 1.08% to $41.95.

◆ Analysis of major media and market experts <neutral>

After bitcoin hit an all-time high ($42,000), the downtrend is prolonged as the selling trend in the market strengthens, leading to negative outlooks. Many experts believe that the current trend is likely to continue for some time in the short term, but optimistic outlook on the long-term trend still prevails.

(Positive opinion)

① Fundstrat Global’s chief strategist David Grider recently said, “I don’t think Bitcoin has reached its highest price yet”. “Investors who bought bitcoin a year ago still have more than 300% “This adjustment is healthy in terms of maintaining the rate of return.”

② Bloomberg’s chief product strategist Mike McGlon said in the 2021 Cryptocurrency Outlook Report, “The past record high of $20,000 is now the’standard price’. Unless there is a sudden negative issue, the possibility of dropping to $20,000 is’zero’. He predicted that “Bitcoin price will soon reach $50,000 due to a decrease in supply and an inflow of institutional investors.”

③ Matt Hogan, Chief Investment Officer of Bitwise, a cryptocurrency index fund service company, said, “According to a survey conducted with more than 1,000 financial advisors, 28% of them are within five years. It appears that the BTC price is expected to exceed $100,000.”

④Ari Paul, co-founder of Blocktower Capital, who served as investment manager at Chicago University, said, “Many institutions are accustomed to investing in bitcoin,” adding, “Institutions are also cryptographically through regulatory licensed companies such as Coinbase, Fidelity and Anchorage. You can understand currency investment and buy directly.”

⑤ Michael Saylor, CEO of MicroStrategy, a listed company in the New York Stock Exchange, said, “Some say that Bitcoin will be adjusted by 60 to 80% based on technical analysis such as Fibonacci. “It’s not that important. What’s important is the potential and large-scale adoption of Bitcoin as a digital network. Bitcoin will rise 100 times or even 1,000 times more than it is now. No one will be able to stop this macro flow.” .

(Negative opinion)

① Scott Minerd, Chief Investment Officer (CIO) at Guggenheim Partners, a US investment specialist, said, “Bitcoin is likely to be adjusted up to $20,000,” and said, “Bitcoin is not breaking the year-round high. I won’t be able to do it.”

② JP Morgan strategists pointed out that “it is difficult to recover $40,000 in bitcoin due to the current inflow of institutions,” and pointed out that “the short-term risk balance is still on a downward trend.”

③ Edward Moya, senior market analyst at Oanda, a London-based foreign exchange exchange, predicted on the 27th (local time) that if the Federal Reserve’s position is not sufficiently moderate, Bitcoin could fall below $30,000. “Bitcoin seems to be ready for a bit more consolidation,” he said. “But if the Fed is not moderate enough and the dollar rebounds, there is a chance that Bitcoin will easily fall below $30,000,” he added.

④ Coinnis special analyst’JIn’s Crypto’ said, “Bitcoin aimed for a technical rebound twice after the bottom of the 4th (28,089 dollars) and 22nd (28,800 dollars), but it could not keep the trend.” Analyzed. He explained, “In particular, BTC trading volume on the 26th recorded the lowest since one month, reflecting the decline in trading demand. In the short term, the support line could be pushed to the $27,000 level, and the validity test could be conducted.” He added, “In the case of Ethereum (ETH), it aimed to rebound three times thanks to the strength of the DeFi project, but the buying trend was not able to keep up with the trend in one direction. It is highly likely to share the flow with Bitcoin in the short term.”

⑤OKEx Insight Senior Editor Adam James explained, “(The recent decline in bitcoin) is due to excessive leveraged speculation and the weak hands that panic immediately upon detecting the first danger signal.” However, despite the increase in short-term volatility, institutions and whales continue to buy bitcoin.

◆Comprehensive Analysis of Bitcoin Market Price <Strengthening>

Bitcoin’s daily market price (see Figure 6), which had plunged the previous day and threatened to break out of the $30,000 mark, has risen strongly to the moving average line on the 5th since opening, but has not exceeded it and has been pushed back again. Although it broke out of $30,000 the previous day, technically, it showed strong support at the point where the bottom of the Bollinger band and the bottom of the trend line meet, confirming that this is the main support price. If the bitcoin price rises as it is, the market acknowledges the support of the price, but if it does not fall again, the intention is not to acknowledge the price that was supported the day before, so it seems to be prepared for further decline.

<Figure 6=BTC/USDT (Binance) Daily Price (at 14:00 on the 28th)/Chart=Trading View>

In fact, as it is now, even when it rebounded after a plunge five days ago, it seems that there is nothing strange if only the Bitcoin spot chart, including Binance, continues to rise again. However, if you look at the daily price chart of CME’s BTC futures in Figure 7, it will look something different from Binance BTC/USDT in Figure 6.

Both have applied the same indicators such as Bollinger Band, Moving Average, and Ichimoku balance table, but Binance is an exchange that trades 365 days a year, and CME is a change created by the difference in’trading days’ on weekends. In addition, CME is an exchange exchanged by institutions, and this exchange has an increasing influence on the market price of bitcoin and cryptocurrency as futures options for numerous financial products such as dollars, interest rates, oil prices, and foreign exchange stocks are simultaneously traded.

<Figure 7=Daily Market Price of US CME BTC Futures (at 14:00 on the 28th)/Chart=Trading View>

Figure 6 is not at all strange if it rises right away, but according to Figure 7, it is still lower (1) and at least you will have to check the price movement at the bottom of the Bollinger Band before responding. At this time, if the selling trend is strong, it is expected that the fall to the point where (2) the gap ($24,500~26,100) occurred during the price hike at the end of December last year should be kept in mind.

In addition, according to CoinDesk, a channel specializing in cryptocurrency, institutions are thinking that they will not buy and watch until the US Biden administration’s stance on bitcoin and cryptocurrency becomes clearer, so there is no market demand to handle the pouring volume. It is known to be. In other words, it is unlikely that the market will rise strongly in the short term.

Even if we analyze the distribution of the Delibit Bitcoin option pending contracts due tomorrow (Figure 8), it is not as hopeful as it is known to the media. Of course, although there are many open contracts for call options, the strike price, which is mostly an out-of-the-money option, is set at $52,000. This is not a purchase hoping that the bitcoin price will rise to $52,000, but with the intention of not coming up to this price. This is a trading method by institutions that sold call options in anticipation of a reduction in the premium, and it does not appear to be largely related to the market’s directional trading strategy.

<Figure 8=BTC/USDT (Binance) Daily Price (at 14:00 on the 28th)/Chart=Trading View>

Meanwhile, today is the settlement date of January 28th for Bitcoin and Ethereum options on the DRBT exchange. Options that are due today are expected to have little impact on the market as the strike price is low and the number of outstanding contracts is relatively small compared to other maturity dates. As a result of analyzing the proportion of all open contracts for Bitcoin options of DRBT by hour (see Figure 9), the proportion of both options sold is large, so the market price is not excessive on one side, and the estimated maturity price is around $31,000. Seems to converge.

<Figure 9=Deribit (DRBT) BTC Option Simulation Result of Expected Water Settlement Price on January 28 (at 14:00)/Data = Aim Rich Financial Engineering Research Institute>

The price of Binance BTC/USDT, calculated by the institute’s quant program, for the day is $30,721 (pink line), and the current price is above this price and the price of the day, so if the price continues to rise 1) move on the day 5 You can buy when you break through the average line or 2) when you break through the high price the previous day. However, if it exceeds $30,721, it seems that it will have to wait and wait. For more detailed analysis based on market data, see ‘7. Please refer to the’Quantitative Analysis’ section.

◆Technical Analysis <Weakness>

As of 14 o’clock on the 28th, the technical analysis of the daily price movement of Bitcoin on Upbit, a domestic cryptocurrency exchange, and Binance, a foreign exchange, were all found to be’sell’. Looking at the detailed evaluation items, one of the oscillator indicators in Upbit came out of’Buy’, 7’Sell’, and 0’Neutral’ opinions, and’Strong Sell’ opinions, and the moving average indicators are 6’Buy’ and It was summarized as a’neutral’ opinion with six’sell’.

<Figure 10=Upbit: BTC/KRW (Daily) Technical Analysis Summary Table/Data=Investing.com>

Looking at the detailed items of Binance, among the oscillator indicators,’Buy’ is 3,’Sell’ is 7, and’Neutral’ is 0, sending a’active sell’ signal.The moving average indicator is’Buy’ is 6, ‘Sell’ was summarized as’Neutral’ with six.

<Figure 11=Binance: BTC/USDT (Daily) Technical Analysis Summary Table/Data=Investing.com>

◆Quantitative analysis

◇Crypto Fear & Greed Index <Weakness>

The’Fear and Greed Index’ provided by the cryptocurrency data provider Alternative.me is 55 points, down 23 points from the previous day, down from the extreme greed stage of the previous day to the greed stage. As the index plummeted, it can be seen that investment sentiment rapidly frozen in one day. The index closer to 0 indicates extreme fear in the market, and closer to 100 indicates extreme optimism.

<Figure 11=Crypto Fear and Greed Index/Data=Alternative.Me>

◇Comparison of return by asset compared to the beginning of the year (%) (As of January 28, 14:00) <Weakness>

As the price of bitcoin continued to decline, the US CME Bitcoin futures’ return to the beginning of the year turned negative to -0.24%, down 5.75% from last Tuesday. However, oil futures, which have been on an upward trend since the beginning of the year, rose +0.17% to 10.98%, maintaining the lead among comparable assets. While the dollar’s rise has slowed, all asset classes are looking for direction overall.

The previous day, the US New York Stock Market closed down due to increased desire to realize profits ahead of the announcement of its earnings, and oil prices fell due to concerns about the spread of corona in China. However, the extent of the decline was limited as concerns over supply and demand rose as an explosion, which appears to be an anti-Saudi terrorist attack in Yemen, occurred in the capital. Gold prices ended lower due to growing concerns about delays in stimulus measures.

<Table 2=Status of increase/decrease in return by asset category/Data=Chicago Commercial Exchange, USA>
<Figure 12=Year-Year-Year-Year Trends by Asset Category/Data=Trading View>

◇Comparison of yield by cryptocurrency compared to the beginning of the year (%) (As of January 28, 14:00) <Strengthening>

The rise of altcoins, which was strong as the bitcoin price plummeted, also took a break. The returns of the top-ranked stocks by market capitalization also sharply declined until the previous day and then slightly recovered on the same day’s rebound. Even among the top 10 market caps, the yield to the 4th place is overwhelmingly high, which differentiates it from the 5th place and below.

As of 14:00 on the 28th, Polkadot (DOT) ranked 1st with 89.61% at the beginning of the year as of 14:00, while Chainlink (LINK) ranked 2nd with 84.61%, and Cardano (ADA) ranked 3rd with 82.69%. , Ethereum (ETH) ranked fourth with 74.11%, and Bitcoin Cash (BCH) ranked fifth with 12.00%.

<Figure 13=Ranking of the top 10 cryptocurrencies in market capitalization compared to the beginning of the year/Data=Trading View>

◇Bitcoin on-chain indicator analysis

① Analysis of the trend of bitcoin trading volume on the day <strong>

Analyzing the trading volume of BTC/USD’s on-chain data on the same day makes it easy to check the direction of the bitcoin market and respond to it. Indicator 1 in Figure 11 shows the spot trading volume of BTCUSD, BTCUSD or BTCUSDC on 10 major exchanges (Binance, Bitfinex, PoloniX, Bitex, Coinbase, Bitstamp, Kraken, HitbittyC, Gemini). Indicator 2 shows the trading volume of BTCUSD or XBTUSD indefinite futures on 7 derivatives exchanges (Binance Futures, OKX Futures, OKX Futures, Huobi Futures, FTX Futures, Kraken Futures, Delibit, BitMEX) in real time. Sum up and display.

<Figure 14=Comparison of total BTC spot trading volume and total BTC derivatives trading volume on major exchanges/Data=Aim Rich Financial Engineering Research Institute>

Bitcoin prices, which plunged the previous day, are rebounding strongly. However, if you look at Index 1 in Figure 14, it can be seen that the decline in spot trading volume, which continued with the market price decline, is still maintained. Of course, according to the indicators in Figure 15, the daily price is expected to increase due to the decrease in the downward price volatility and the increase in the upward price volatility, and the total number of purchases is greater than the total amount of sales. What is there is very positive.

<Figure 15=Comparison of total daily BTC purchases and total sales of major exchanges/Data=Aim Rich Financial Engineering Research Institute>

② Bitcoin price and Korea premium index trend analysis <Neutral>

It is interesting to compare this trend after drawing the difference between the price of bitcoin listed on the domestic and foreign exchanges (hereinafter referred to as Kimchi Premium Index) on the bitcoin price chart. In the period of price increase, the bitcoin price is higher than the kimchi premium index, and in the period of price decline, the bitcoin price is lower than the kimchi premium index, and the highest and lowest point, respectively, when the price difference widens.

As Bitcoin and Ethereum prices are falling in earnest and the two prices are closer to the Kimchi premium index, it is a situation to be careful to see if they intersect. Since it hasn’t crossed yet, we believe investors over mid-term can maintain a buy perspective, and should check whether the crossing is maintained even if it crosses.

<Figure 16=Bitcoin Price and Bitcoin Kimchi Premium Index Trend Comparison/Data=CryptoQuant>
<Figure 17=Comparison of Ethereum Price and Bitcoin Kimchi Premium Index Trends/Data=CryptoQuant>

◇Analysis of the proportion of non-settled bitcoin options on the day <Neutral>

If you look at the result of analyzing the proportion of all outstanding contracts of Bitcoin options of Delibit (DBT) by time on the 28th day (see Figure 16), if you compare the data analyzed at 10:00 and 14:00, calls in the open contract of the option due on the day Although the share of put options is maintained at a higher level (about 57%) than options, there are not many open contracts as daily options, and the share of selling both options is distributed around $31,000, so the market price does not proceed in only one direction until settlement time. Is not expected.

<Figure 18=Analysis of all bitcoin options outstanding contracts issued by Delibit as of 10:00 (top) and 14:00 (H) on the 28th = Aimrich Financial Engineering Research Institute>

◇Bitcoin short-term price forecast according to bitcoin option data <weak>

It is known that in the cryptocurrency option market, the price of the underlying asset for the option’s expiration settlement tends to shift to the price that causes the most options to lose value by moving to the Max Pain Price. In other words, this price refers to the strike price with the largest number of call and put options, and the price that can incur financial losses to the largest number of option buyers at expiration.

As of 14:00 on the 28th, the trend of the Max Pain Price by option for each option is significantly lowered from $31,000 on January 28 to $28,000 on January 29. It is desirable to prepare for the impact of the downturn.

<Figure 19=Deribit Bitcoin Option Distribution of outstanding contracts by maturity on January 28th (top), 27th (middle), and 29th (bottom)/Data = Aimrich Financial Engineering Research Institute>

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