August 06–12 Weekly Report: Bitcoin submerges under low expectations for monthly growth as altcoins are on pace for worst quarterly decline in years

Full report published every Monday: https://news.caviar.io/crypto-weekly-outlook-week-of-august-6-ebee16806732

Market Sentiment

The short-term outlook for the segment remains bearish. The reversal of 20% from recent highs of $8,500 is significant given the amount of positive market-wide developments. Market sentiment suggests a worse balance of risks as market participants continued the trend of negative capital flow. We saw a similarity this week to that of last week as 24-hour trade volumes came down 30–50% from July 31st to Aug 6th. Following our previous report, leading sentiment and technical indicators show clear signs of a bearish narrative in all tokens including Bitcoin. Here at Caviar, as of August 6th our analysis on exchange activity shows a 76% likelihood of a 5–8% daily directional move downwards in BTC in the coming days. This real-time tool incorporates 1) bid/ask exchange information across both North America and Asia exchanges; 2) leading technical analysis on blockchain-level analytics and; 3) social media activity — to predict short-term market movements. The tool provides a scenario analysis on the likelihood of short-term reversal of the current market trend. The outcome registered an “76%” likelihood that BTC moves lower in the next 3–4 days.

Futures Markets, COT Report


The release of the COT report on each Tuesday serves as a tool to identify crowded speculative trades, as it provides insights to institutional positioning. Above is the most recent COT report which was issued last Friday August 3rd but is based on data from Tuesday July 31st. As of Tuesday of last week there were 3,932 short bitcoin futures positions and 2,329 long bitcoin futures positions held by what is defined as non-commercial traders. Non-commercial traders are those who are betting on the speculating on the price of Bitcoin and are NOT using the futures market for hedging purposes. As such, non-commercial traders were 63% net short. Here at Caviar, we are analyzing the sideways pattern of net-short percentage over time as a signal that institutions and retail alike are abandoning BTC accumulation and instead exploring sophisticated tools to short the asset class.

Market Cap Year-to-Date


BTC dominance is currently around its 200-day high of 48.5%. As such, the market share of altcoins continues to decline as investors continue to dump their alts in favor of Bitcoin. Bitcoin presents moderate but positive returns as it remains the preferred asset in crypto with a strong defense of both short-term economic and fundamental catalysts that firmly support its position in the market. As per our analysis, given our view that BTC dominance will continue to increase at a rate above that of the overall market — we find it appropriate to show how rarely BTC dominance trends reverse as the graph above clearly shows both the emergence and continuation of the trend on April 30th to August 6th. It’s paramount to note that the last two times Bitcoin hovered around its 90-day trendline, we saw the emergence altcoin bull-runs.

Bitfinex BTC/USD Shorts from July 7th to August 06th


BTC shorts surged this past week as traders see weak BTC demand. On the fundamental front, expectations for an ETF delay until February support the narrative of institutions foregoing BTC accumulation for Q3 given the sector’s volatility profile. Market volatility is showing a bearish retracement in performance as the asset class in on pace to be among the worst-performing asset-classes of 2018, relinquishing it’s 6 year title.

August 06–11 Trade Ideas:

- Structure Short trading position to benefit from declining BTC price

DISCLAIMER

This report has been compiled by Caviar for informational purposes only. The views expressed within are Caviar’s in its entirety. The information within this report is our own opinion only and is not to be used in making a decision for investment. We are not financial advisers, you should consult your own investment adviser before taking any action to acquire or deal in, or follow a recommendation (if any) in respect to any of the financial products or information mentioned in this report. Whilst Caviar believes everything contained in this report is based on information which is considered to be reliable, its accuracy and completeness are not guaranteed and no warranty of accuracy or reliability is given or implied, and no responsibility for any loss or damage arising in any way for any representation, act or omission is accepted by Caviar or by any officer, agent or employee of Caviar or its related entities. Caviar makes no judgements or representations about the legal status and/ or compliance of any company, cryptocurrency or token mentioned in this report. Caviar may at this time, or at any time in the future, without further notice, open positions in any of the cryptocurrencies or tokens discussed in this report.