Research Summary
The report from Ouroboros Capital provides an in-depth analysis of the current cryptocurrency market, focusing on Bitcoin (BTC) and Ethereum (ETH). It highlights the recent altcoin rally, the shift towards an ETH ETF, and the potential for a retracement in the total crypto market cap. The report also discusses the role of global liquidity and funding rates in the crypto market.
Key Takeaways
Altcoin Rally and Funding Rates
- Altcoin Rally: The report notes a recent rally in altcoins, which has driven funding rates to a level not seen since the start of 2021. This high level of funding rates adds to the cautious outlook of the analysts, leading them to lower their positioning from net long to flat.
- Funding Rates: The report highlights the importance of funding rates as an additional data point in the analysis of the crypto market. The recent increase in funding rates suggests a need for increased caution in the market.
ETH Over BTC
- Bullish on ETH: The analysts express a bullish outlook on ETH over BTC into 2024, supported by several charts. They anticipate a shift in narrative towards an ETH ETF heading into 2024 and observe signs of prepositioning from the charts, including ETH spot to futures volume and ETH CME Open Interest (OI).
Global Liquidity and Crypto Rally
- Global Liquidity: The report notes that global liquidity has been bottoming out, which has been supporting the recent rally in crypto. Despite near-term caution, this trend compels the analysts to maintain a bullish outlook into 2024.
Market Retracement
- Market Cap Retracement: The total crypto market cap is at the top of the past 1-year range, and the analysts believe it is due for a retracement. Similarly, the altcoin market cap is at post-LUNA/pre-FTX highs, and the analysts also anticipate a retracement in this area.
ETH ETF Narrative
- ETH ETF Positioning: The report highlights a significant increase in ETH CME OI, almost doubling in the past week from $322m to $607m. This trend suggests that the market is now positioning for ETH ETFs, supporting the analysts’ long-term bullish outlook for 2024.
Actionable Insights
- Monitor Funding Rates: The report suggests that investors should keep a close eye on funding rates as they can provide valuable insights into market dynamics and potential shifts in market sentiment.
- Consider ETH’s Potential: With the narrative shifting towards an ETH ETF and signs of prepositioning in the market, investors might want to research the potential of ETH for long-term investment.
- Assess Global Liquidity: The report indicates that global liquidity trends can have a significant impact on the crypto market. Therefore, tracking these trends could be beneficial for understanding market movements.
- Prepare for Possible Retracements: Given the analysts’ anticipation of a retracement in the total crypto market cap and altcoin market cap, investors should be prepared for potential market adjustments.
