MARKET ANALYSIS

Research Summary

The report by Ouroboros Research provides an in-depth analysis of the current cryptocurrency market trends, focusing on Bitcoin (BTC) and Ethereum (ETH) along with other altcoins. It discusses the market’s liquidity, open interest, funding, and flows, and highlights the significant shift in Ouroboros’s book positioning from flat to 50% long.

Key Takeaways

Shift in Ouroboros’s Book Positioning

  • Change in Positioning: Ouroboros has made a significant change in its book positioning, shifting from flat to 50% long as BTC.D rises to new highs. The firm has covered all of its shorts and continues to hold core longs of FXS, RLB, and RDNT.

Market Liquidity and Capital Flow

  • Increased Capital Flow: The report notes that capital continues to flow into the crypto market, as evidenced by the rising market cap of stablecoins. However, there has been a small downtick in global liquidity, though the overall trend remains upward.

Open Interest and Funding

  • Interest Rotation: There is evidence of interest rotating from BTC to ETH and altcoins as BTC perps open interest decreases while ETH and altcoins open interest increase. BTC CME open interest is hitting new highs while ETH CME open interest got flushed but recovered back close to highs.

Market Flows

  • Risk-On Mode: The market appears to be in a risk-on mode as stablecoin dominance broke lows despite the stablecoin market cap rising. This indicates that investors are willing to take on more risk in the current market environment.

Altcoins Market Cap

  • Altcoins Growth: The report suggests that the altcoins market cap could go higher, possibly 20% higher from the current level to touch the 400B mark. However, it also warns that some alt seasons can be as short as 1-2 weeks, requiring investors to be nimble.

Actionable Insights

  • Monitor BTC and ETH Flows: The report suggests that BTC and ETH continue to flow out of exchanges, indicating real money accumulation. Investors should keep an eye on these flows as they could signal potential market movements.
  • Stay Vigilant of Liquidation Clusters: There are liquidation clusters to the downside, and the report warns of a potential “sell the news” event on BTC ETF that could be vicious. Investors should stay vigilant and be prepared for potential market volatility.
  • Consider the Impact of Heavy Positioning: Traditional finance (TradFi) CME open interest and basis are both elevated, indicating heavy positioning. This could have significant implications for the market, and investors should tread carefully and stay nimble.
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