Research Summary
The report from Ouroboros Capital provides an in-depth analysis of the current state of the cryptocurrency market, focusing on Bitcoin (BTC) and Ethereum (ETH). It presents a balanced view of the market, highlighting both bullish and bearish trends. The report also discusses the impact of global liquidity, market dominance, and investor positioning on the crypto market.
Key Takeaways
Global Liquidity and Market Trends
- Impact of Global Liquidity: The report suggests that the recent rally in BTC was partly due to the bottoming out of global liquidity, in addition to the ETF narrative. It also notes that aggressive up moves in the market typically lead to a near-term top after about 20 days.
- Alt Coin Market Cap: The alt coin market cap is testing the top end of the past year’s range, which the report interprets as a bearish sign. Similarly, BTC is at the top end of its channel, suggesting the tail end of the near-term rally.
Market Dominance and Investor Positioning
- Market Dominance: The report observes a tendency for the market to peak shortly after BTC dominance has peaked. This is seen as a bearish sign. However, the ETHBTC range is at the bottom, supporting a potential further rally in alt coins.
- Investor Positioning: While spec longs have been increasing, the overall interest (OI) remains muted. The report suggests that the market is bullish but not euphoric. It also notes a lack of spot bid for ETH, likely due to a lack of catalysts compared to BTC.
Spot Flow to Exchanges and Whales’ Activity
- Spot Flow to Exchanges: The report does not observe aggressive sending of spot BTC or ETH to exchanges, suggesting no immediate alarm bells for these cryptocurrencies.
- Whales’ Activity: The report notes that whales are not selling yet, which is an indicator to watch closely. It also highlights that traditional finance (TradFi) has been bidding BTC, with CME futures open interest (OI) climbing more aggressively compared to crypto exchanges.
Options Pricing and Stablecoin Deployment
- Options Pricing: The report observes that options are relatively more expensive now, with the BTC 1M IV – RV spread at the upper end. This is seen as an early signpost of excessive bullishness.
- Stablecoin Deployment: The report notes a high level of deployment from stablecoins to risk, with the stablecoin market cap as a percentage of the total crypto market cap at the lows. This tends to herald retracements.
Actionable Insights
- Monitor Global Liquidity: Given its impact on the crypto market, it would be prudent to keep a close eye on global liquidity trends.
- Assess Market Dominance: The report suggests that market peaks often follow peaks in BTC dominance. Therefore, tracking BTC dominance could provide valuable insights into potential market movements.
- Watch Whales’ Activity: The report highlights that whales’ selling activity is an important indicator to watch. Any significant changes could have a substantial impact on the market.
- Consider Options Pricing: The report notes that options are currently relatively expensive, which could be an early sign of excessive bullishness. This could influence investment decisions.
