[Aim Rich Investment Strategy] Weak Bitcoin vs. Ethereum DeFi Strong

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Aim Rich Cryptocurrency Investment Information (2021.1.26)
<Figure 1=Market trend score as of 14 o’clock on the 26th (100 points, left)/Market rise/fall intensity (right)/Data=Aim Rich Financial Engineering Research Institute>

◆Cryptocurrency market conditions <weak>

Cryptocurrency prices, which had plummeted during the intraday, have returned to recovery. The price of Bitcoin (BTC), the number one cryptocurrency market capitalization in which the sell-off was concentrated in the morning, recovered from the previous day and is rising again. Bitcoin seems to be looking for momentum to rebound from the $32,000 level over the past 24 hours. However, it seems difficult to break through major resistance lines as market expectations and demand for Bitcoin weaken.

As bitcoin prices recover, most altcoins have started to rebound. Ethereum (ETH), the second largest cryptocurrency in market capitalization, is on the rise by about 1.60%, Polkadot (DOT) by 0.34%, and Ripple (XRP) by about 0.10%.

Bitcoin’s rise has slowed, while the Ethereum and decentralized finance (De-Fi) markets are heating up, making Bitcoin the lowest market share since September 2020. Bitcoin had a market share of close to 70% until recently, but fell to 62.5% at one time. As the market’s bullish expectations for bitcoin weaken and prices fluctuate, more investors are moving to Ethereum. Along with this, many DeFi tokens are also breaking record highs. It is interpreted that this is acting as a factor that weakens the dominance of Bitcoin along with the strength of Ethereum.

Last night, the New York Stock Exchange in the US led the stock market with large tech stocks with high earnings expectations, such as Apple and Tesla, amid growing burdens of the Corona 19 crisis. On the 25th (local time) on the New York Stock Exchange (NYSE), the Dow Jones 30 Industrial Average ended at 30,960.00, down 0.12% from the battlefield. On the other hand, the Standard & Poor’s (S&P) 500 index rose 0.36% to 3,855.36, while the technology stock-oriented NASDAQ index rose 0.69% to 13,635.99. The US stock market blockchain theme rose 1.54%.

As of 14 o’clock on the 26th, the Bitcoin market cap base bitcoin price is $31,745.60, the 24-hour trading volume is about $58.7 billion, and the market cap is about $607.5 billion. The total cryptocurrency market capitalization is $965 billion, and the Bitcoin market cap share is 62.9%.

The total cryptocurrency market cap decreased by 0.93% compared to the previous day, and the market cap excluding bitcoin increased by 0.04% compared to the previous day, making altcoins stronger than bitcoin, and bitcoin’s market cap decreased by 1.48% compared to the previous day. The market share of the company decreased by 0.56% compared to the previous day, indicating that the number of coins in the market as a whole is falling more 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 that rose in the morning after the opening turned down after 12 o’clock, and it was analyzed that the sell-off of bitcoin and mid-sized stocks was strong. W50, a cryptocurrency market index including bitcoin, is -0.95%, W50X, a cryptocurrency market index excluding bitcoin, is -0.53%, WLC, a large stock-oriented index, -0.90%, 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 26th/Data=Aim Rich Financial Engineering Research Institute>

As of 14 o’clock on the 26th, the ratio of buy:sell cumulative transaction volume in the last 24 hours was 46%:54%, and the sell ratio was high, and as of 14 o’clock, the selling rate was strong in the long/short ratio of each exchange.

At the same time, on the cryptocurrency derivatives exchange BitMEX, the basis of bitcoin futures is around -46.0, and the basis of Ethereum futures is around -1.10. The price of bitcoin futures on the Chicago Merchandise Exchange (CME) is falling. January futures traded at 32,100.0 dollars, up -1340.0 dollars (-4.01%) compared to the previous day.

◆Main cryptocurrency prices <weak>

As of 14:00 on the 26th, the domestic bitcoin (BTC) price decreased 1.74% from the previous day to 3,5428,000 won, Ethereum (ETH) decreased by 0.07% to 1472,000 won, and Polkadot (DOT) decreased 0.93% to 19,080 won. Recorded. Ripple (XRP) fell 0.67% to 296 won, Bitcoin Cash (BCH) fell 1.73% to 475,950 won, Ada (ADA) fell 0.52% to 381 won, Stellar Lumen (XLM) fell 2.05% to 287 won, Chain LINK is trading at 25,550 won, down 2.70% from the previous day, and Litecoin (LTC) is trading at 151,400 won, down 1.01%.

<Figure 4=Upbit BTC/KRW Daily Chart/Data=Trading View>
<Figure 5=Top 10 Coin Price (As of January 26, 14:00)/Image=Coin Market Cap>

At the same time, the global cryptocurrency market price based on CoinMarket Cap is falling among the top 10 stocks by market capitalization as of the last 24 hours, excluding Tether. The international Bitcoin (BTC) price is $31,745.60, down 2.97% from the same time the day before. Ethereum (ETH) fell 6.63% to $1,331.26, while Polkadot (DOT) fell 9.18% to $17.16. Ripple (XRP) fell 3.57% to $0.2667, Cardano (ADA) rose 4.61% to $0.3426, Chainlink (LINK) fell 8.24% to $23.08, Litecoin (LTC) fell 3.00% to $138.73, Bitcoin Cash (BCH) fell 1.78% to $437.24, while Binance Coin (BNB) fell 1.94% to $41.89.

◆ Analysis of major media and market experts <neutral>

In the market, there is a possibility that bitcoin, which showed tremendous volatility after falling below $29,000 over the past week and then rebounding strongly, will lead to a greater price increase in the future. Bitcoin faces resistance at a slightly higher level than its current price, some see, but beyond this level, it is expected that a much larger rise will be possible within a few days. It was also expected that the continued strength of Ethereum could exert the effect of raising Bitcoin higher. However, it is also worth listening to JPMorgan analysts’ concerns that price volatility increases due to month-end option expiration dates and that the current institutional fund flow is not strong enough to increase Bitcoin by more than $40,000.

(Positive opinion)

① Cryptocurrency Media NewsBTC said, “Bitcoin rebounded strongly after falling below $29,000 last week, raising the possibility of a greater price increase.”

② Matt Hougan, Chief Investment Officer of Bitwise, a cryptocurrency index fund service company, said, “Today we had a webinar with more than 1,000 financial advisors. According to a survey conducted at the seminar, 28% of them believe that the bitcoin price will exceed $100,000 within five years.”

③ Bloomberg experts also predicted that, in the 2021 cryptocurrency forecast report, “the bitcoin price will soon reach $50,000 due to a decrease in supply and inflow of institutional investors.” It became a reference price.” Unless there is a sudden negative issue, the possibility of dropping to $20,000 is “zero”.

④ Analyst and trader Josh Rager recently predicted that “the price of bitcoin will rise to $100,000 at the beginning of next year.”

⑤ Cryptocurrency analyst Lark Davis said, “I fully agree with the $100,000 forecast, but I’m sure that will be the end of this year, not next year.”

(Neutral opinion)

①Cryptocurrency Media CoinDesk said, “According to data from cryptocurrency analysis company Skew, on the 29th (local time), Deribit, CME (Chicago Commodity Exchange), Bakkt, OKEx, Lexer X ( LedgerX) and other major exchanges have a $4 billion bitcoin option position expiration. “In a few days, a $4 billion bitcoin option position will expire. There is a possibility of causing the price of bitcoin to fluctuate.”

② Cryptocurrency analyst filbfilb diagnosed that “the bitcoin price could be trapped in a consolidation (flooding) between $30,000 and $38,000.”

(Negative opinion)

① In an investment note on the 22nd, JPMorgan analysts such as Nikolaos Panigirdjoglu pointed out that “for two weeks, the inflow of grayscale bitcoin trusts fell 22%, more than the 17% decline in bitcoin during the same period. Analysts added, “At the moment, institutional fund flows are not strong enough to increase Bitcoin by more than $40,000,” adding that “Momentum traders are at risk of liquidating their Bitcoin futures position.” JPMorgan analysts said, “In the short term, risks are still skewed in a negative direction.”

◆Comprehensive analysis of Bitcoin market price

The daily bitcoin price (see Figure 5), which technically started just below the 5-day moving average after opening, rose strongly, followed by a rise in US ICE’s dollar index futures during the day, and the US CME’s Bitcoin futures in line with the decline. After a sharp decline as the sell-off has increased, it has not been able to rebound properly. If you look at the Bitcoin chart, the moving average lines on the 5th, 10th, and 20th are in an inverse arrangement, and if you look at the end with a long upper tail on the previous day, it clearly shows the current market, where the sell price dominates the buying trend. On the same day as well, the fact that it rarely rebounds after rising and falling is different from the uptrend, so a short-term downtrend is expected to continue.

According to the market analysis data of the institute, 1) the kimchi premium index maintains a stable’buy’ level, 2) the amount of unsettled payment options on the day has a high proportion of put options selling, and 3) an indicator that is an on-chain transaction On the first day of the month, the bitcoin price is falling, but the possibility of an increase can be seen as a positive factor.

However, 1) the daily technical indicators decreased from’active buy’ to’neutral’ and’sell’ respectively, 2) the investor sentiment of market participants is declining in terms of crypto fear and greed index, 3) bit compared to the beginning of the year There are more negative factors, such as the fact that the return rate of coins is gradually lowering, and 4) as a result of the analysis of non-settled bitcoin options with the near expiration date, it is expected to show a volatility with a considerable amplitude over time based on $36,000-37,000. In many cases, the possibility of a decline in the bitcoin price at the end of the month seems great.

<Figure 6=BTC/USDT (Binance) Daily Price (Based on 14:00 on the 26th)/Chart=Trading View>

In addition, in a report on Thursday of last week, the institute announced a simulation result (moving from $35,000 to $36,000 after the 21st and then falling to the level of $28,000 as price volatility increased toward the end of the month) through the bitcoin option data of the near maturity date. As shown, it is believed that the bitcoin price is falling, and investors need special attention. Technically, it is expected that a drop to the level of 26,678 dollars is possible.

Meanwhile, today is the settlement date of January 26th 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 of the Bitcoin options of DRBT by time (see Figure 16), the share of selling put options is high, so the market price will try to rebound to around $33,000, the estimated maturity settlement price as the settlement time goes. Is expected.

Binance BTC/USDT, calculated by the institute’s quant program, has an important price change on the day of $33,013 (pink line), and the current price is below this price and the previous day’s low, so the market price 1) will strongly recover from the previous day’s low. It can be bought when 2) the market price of the day and the 5-day moving average recover, and 2) when it breaks above $33,013.

However, if it fails to recover the low price the previous day, it is necessary to withhold the sale 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 26th, the technical analysis of the daily price movement of Bitcoin on Upbit, a domestic cryptocurrency exchange, and Binance, a foreign exchange, were found to be’neutral’ and’sell’, respectively. Looking at the detailed evaluation items, one of the oscillator indicators in Upbit was’Buy’, 5’Sell’, and 2’Neutral’ opinions and’Sell’ opinions, and the moving average indicators are 7’Buy’ and 5 It was summarized as a’buy’ opinion as a suggestion’sell’.

<Figure 7=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 6, and’Neutral’ is 1, which is sending a’active sell’ signal.The moving average indicator is’Buy’ is 6, ‘Sell’ was summarized as’Neutral’ with six.

<Figure 8=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 maintained the greed stage of the previous day to 71 points, down 3 points from the previous day, but the investment sentiment slightly worsened. The index closer to 0 indicates extreme fear in the market, and closer to 100 indicates extreme optimism.

<Figure 9=Crypto Fear and Greed Index/Data=Alternative.Me>

◇Comparison of return by asset compared to the beginning of the year (%) (as of 14:00 on January 26) <weak>

Bitcoin futures prices fell sharply again. The US CME’s bitcoin futures return to the beginning of the year was 5.99%, down 5.06% from last Thursday. However, oil futures, which have been on the rise since the beginning of the year, fell only 0.40%, maintaining the lead among comparative assets at 10.81%. Asset classes were looking for direction overall, while the dollar’s uptrend slowed. The S&P 500 rose only 0.09% and gold futures fell 0.59%.

<Table 2=Status of increase/decrease in return by asset category/Data=Chicago Commercial Exchange, USA>
<Figure 10=Year Earnings Trend by Asset Category/Data=Trading View>

◇Comparison of yield by cryptocurrency compared to the beginning of the year (%) (as of 14:00 on January 26) <strong>

As the bitcoin price began to adjust, the prices of Ethereum and DeFi stocks rose significantly, and the yield to the fourth place was overwhelmingly high, even among the top 10 market caps. As of 14:00 on the 26th, Polkadot (DOT) ranked 1st with 112.69% at the beginning of the year as of 14:00, while Chainlink (LINK) ranked 2nd with 98.89%, and Cardano (ADA) ranked 3rd with 98.64%. , Ethereum (ETH) ranked fourth with 86.72%, and Bitcoin Cash (BCH) ranked fifth with 27.66%.

<Figure 11=Ranking of the top 10 cryptocurrencies by market cap compared to the beginning of the year/Data=Trading View>

◇Bitcoin on-chain indicator analysis

① Analysis of Bitcoin transaction volume on the day <weak>

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

Bitcoin price is moving sideways from the $32,000 level, near the low price of the previous day. If there is an upside momentum here, it is likely to recover the portion of the decline due to yesterday’s selling offense. Looking at Index 1 in Figure 13, it can be seen that the decline in spot trading volume followed by a decline in the market price turned to an upward trend. In addition, according to the indicators in Figure 14, the daily price is expected to rise as the downward price volatility is decreasing and the upward price volatility is increasing.

However, at present, the transaction volume is higher in index 1 of Figure 13 than the previous day, but if you look at the index in Figure 14, the total selling quantity is higher than the total buying quantity so far, so the bitcoin price is falling as of 14:00 on the 26th. Therefore, until the total number of purchases increases, keep in mind the possibility of a bullish turnaround, but not convinced.

<Figure 13=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 in last week, bitcoin prices are trying to rebound, and the trend of Ethereum is on the rise. In addition, both prices of kimchi premium indices are kept above ‘0’, so it seems okay to keep buying, but we need to observe that they do not cross.

<Figure 14=Bitcoin Price and Bitcoin Kimchi Premium Index Trend Comparison/Data=CryptoQuant>
<Figure 15=Ethereum Price and Bitcoin Kimchi Premium Index Trend Comparison/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 hour on the 26th (see Figure 16), if you compare the data analyzed at 10:00 and 14:00, the call in the open contract of the option due on the day Although the share of put options is maintained at a higher level (about 59%) than options, the intraday market price has already fallen, and as shown in Figure 17, the share of put options selling is high based on the strike price, so as the expiration time approaches, the estimated settlement price is around $33,000. It is expected to rebound again. However, this does not mean that the market trend is rising.

<Figure 16=Analysis of all bitcoin options outstanding contracts issued by Deribit as of 10:00 (upper) and 14:00 (lower) on the 26th = Aimrich Financial Engineering Research Institute>
<Figure 17=Deribit (DRBT) BTC Option Simulation Results of Expected Water Settlement Price on January 26 (at 14:00)/Data = Aim Rich 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 26th, the trend of the Max Pain Price for each option was $34,000 on January 26 and $33,000 on January 27, which is not far from the current price range, but on January 29 at the end of the month. It is expected to drop sharply to $28,000 per day, and the fluctuation market is expected to increase as well.

<Figure 18=Deribit Bitcoin Option Distribution of outstanding contracts by maturity on January 26th (top), 27th (middle), 29th (bottom)/Data = Aimrich Financial Engineering Research Institute>

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