Research Summary
The report by Ouroboros Capital provides an analysis of the recent trends in cryptocurrency markets, focusing on the performance of altcoins, Bitcoin, and Ethereum. It also discusses the impact of global liquidity, the role of traditional finance (TradFi) in Ethereum’s performance, and the implications of large liquidation days.
Key Takeaways
Altcoin Season and Market Positioning
- Altcoin Performance: The report highlights the strong performance of altcoins, particularly FXS and RLB, due to potential token airdrops and revenue distribution proposals respectively. However, the report also warns of the need for market agility due to events like the flash crash on December 11.
- Market Positioning: Despite the flash crash, funding rates remained largely positive, indicating heavy speculative positioning and the potential for more long liquidations before the market resets.
Bitcoin and Ethereum Market Trends
- Bitcoin Trends: The report notes an increase in Bitcoin spot sends into exchanges, while CME Bitcoin Open Interest dipped by almost 20% but remains high.
- Ethereum Trends: Ethereum continues to trade weak, with the report suggesting a lack of interest from traditional finance as a possible reason for its sluggish price action.
Global Liquidity and Cryptocurrency Market
- Global Liquidity: The report observes that global liquidity continues to rise, supporting the current upward trend in the cryptocurrency market.
- Stablecoin Deployment: The increasing stablecoin market cap indicates more capital flowing into the crypto market, suggesting a risk-on environment.
Miner Activity and Market Impact
- Miner Sell Flow: Despite continued selling by miners, the market has not felt the impact due to the compensating spot bid.
Impact of Large Liquidation Days
- Large Liquidation Days: The report suggests that large liquidation days typically mark “buy-the-dip” events, but those without negative funding have led to bigger market downturns.
Actionable Insights
- Monitor Altcoin Performance: Given the strong performance of altcoins like FXS and RLB, it may be beneficial to keep a close eye on these and other altcoins for potential growth opportunities.
- Assess Market Positioning: The positive funding rates despite the flash crash suggest heavy speculative positioning. This could indicate potential for more long liquidations, which could impact market dynamics.
- Consider Global Liquidity Trends: The rising global liquidity could continue to support the upward trend in the cryptocurrency market. Monitoring these trends could provide insights into potential market movements.
- Track Miner Activity: Continued selling by miners could potentially impact the market. Keeping track of miner activity could provide valuable insights into market trends.
- Understand Impact of Large Liquidation Days: Large liquidation days without negative funding have led to bigger market downturns. Understanding the impact of these events could help in making informed market decisions.
