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Cryptos - waiting for the bids...

The Market Ear Picture

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Still believe in bitcoin fallacies - it ain't a fear hedge

Remember when people used to talk about BTC as the "ultimate" hedge against everything, including fear. It is not a fear hedge. On the contrary, BTC has fallen sharply during VIX spikes over the past year.

Source: Refinitiv

Bitcoin loves the Fed BS expansion - really?

Remember the long bitcoin logic due to the Fed expanding the balance sheet? Maybe a bit of chart crime, but BTC and Fed's BS are diverging massively...or is BTC discounting the "delta" of the balance sheet?

Source: Refinitiv

Bitcoin is a risk on/risk off asset

Maybe, but lately this bitcoin logic has worked in risk off mode only. Let's see how it behaves sub 46k, but if BTC represents the aggregate psychology on steroids of this market, then the SPX looks a bit "risky"?

Source: Refinitiv

Bitcoin backwardation ain't bullish

BTC and ETH futures spread over spot has crashed recently. As JPM writes: "This is an unusual development and a reflection of how weak bitcoin and ethereum demand is at the moment from institutional investors that tend to use regulated CME futures contracts to gain exposure into these two cryptocurrencies."

Inflows are not looking overly optimistic. The real institutional flow in BTC simply isn't there (and no, MSTR and El Salvador is not enough).

Source: JPM

Bitcoin - waiting for the institutional inflow

Inflows are not looking overly optimistic. The real institutional flow in BTC simply isn't there (and no, MSTR and El Salvador is not enough). Real inflow is long term sticky money, not prop bets...

Source: JPM

Crypto's momentum problem

Last Flow and Liquidity of 2021 via JPM shows BTC and ETH momentum continuing sharply lower. CTAs have most likely been active in pushing stuff lower. Note we are approaching "oversold" levels of last May /June.

Source: JPM

Source: JPM

Volatility remains a problem for cryptos

One of the big problems with cryptos and not seeing the "real" institutional bid is the still elevated volatility of BTC and ETH. Institutions are not looking for (even) more volatility. Note both BTC and ETH volatilties have come down substantially since the panic weekend in early December, but general levels stay too high for "real" money to get involved.

Source: Genesisvolatility

Source: Genesisvolatility

Gonna be a busy New Years Eve for crypto traders

The crypto space is having a real fireworks expiration on New Year's Eve. ETH is having the biggest expiration ever, more than double the previous expiration record. Bitcoin is looking forward to a chunky expiration as well. Let's see how these traders will handle this one given the low liquidity at that time of the year...

While at the topic of size expiration. As bit_hedge pointed out a few weeks ago, there was a massive ETH March calls punt. Note the bar in chart 3. 15k feels so distant...

Source: bit_hedge

Source: bit_hedge

Source: bit_hedge

Bitcoin technicals

BTC is trading around the support at 46k. Note the 200 day moving average is here as well, although it has no direction. The short term trend channel remains intact with the first resistance around the 50k area. There is also a longer term positive trend line slightly lower to watch in case it comes into play.

Source: Refinitiv

ETH technicals

ETH is down to the lower part of the big trend channel that has been in place since mid July. Note we are trading just below the 100 day. Support levels to watch should we break below the channel: 3600 and then the 200 day around 3250. Resistance: 4200 and then 4400.

Source: Refinitiv

Bitcoin is dead - long live bitcoin

Seen over the past years, the main cryptos are beating everything. Short term BTC and ETH sentiment isn't overly happy but that is also when the abrupt reversals tend to occur. Usually these abrupt reversals tend to occur when some "smart" person is out bashing cryptos. Today was one of those days. In case you missed the CNBC headline earlier today: "Bitcoin "may not last that much longer," academic warns..."

Source: Refinitiv

 

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