July 19, 2018 Market Update

Since my last piece, the digital asset market has rebounded and is currently nearing the 300 billion dollar level for the total market capitalization.  This sharp rally started on Sunday, July 15th near the 250bb level.  Should I tell you the time that it started as well ?  You guessed it, right after CME Futures opened which is 6:00 est.

The surge in buying happened on Tuesday July 17th, as Bitcoin hit a new 30 day high.  A one month high may seem trivial, but many funds and investment managers have some level in that zone as either a stop loss for shorts or a new entry point for longs.

Some funds may even use this as a pivot where they not only cover shorts, but then initiate longs as well.  The two pictures below will help illustrate this .

 

Digital Commodity Market from July 10 – July 19

 

 

Bitcoin One Month Chart

 

Since I started writing this blog, Bitcoin market share has decreased every time that the overall market rallied.  This past week was only the second time this year where the total cryptocurrency market increased and BTC Dominance increased as well.  Bitcoin market share also did this in late March and a major rallied ensued from the lows in April.

As noted in many of my past blog’s, BTC is an entry point to the digital asset world for the majority of investors.  As prices increase, many tend to use some of the balance sheet increase to move investment dollars to other assets.

 

One of the coins which I have followed since my entry into the digital asset market, (it was also the only trading pair for the “old” pac coin or a long time, is DOGE.

In my opinion, DOGE was the leader last week, as it has increased in price by 64% over the past seven days.  This is one of my indicators, as DOGE is a major trading vehicle for currencies with a low per unit denomination.  With the surge in buying, this was the second signal that institutional capital moved into the market and is building positions in some of the key trading pairs.

 

The Dogecoin buying preceded the broad based rally, and as I mentioned in last weeks writing, keeping an eye on key trading pairs in the currencies that I watch has been very important.

 

DOGE One Week

 

 

$pac had a very strong week last week, gaining 25% in value.  I am aware that many of the readers look at the BTC-$PAC pair, as it is the most heavily traded and tends to set the price for the other pairings.  With Bitcoin dominance increasing on a market rally which happens very infrequently, $pac was only up a few satoshi’s, but with BTC gaining 20% I was still impressed with the performance.

The current resistance level in $pac vs the USD is at the .005 area.  Earlier this month it challenged that level and did not break through, this week it broke that barrier briefly then some profit taking occurred.  Yesterday’s low price came with the highest volume of the month as a few larger $pac – btc sales came to market.  High Volume has a direct correlation with tops and bottoms.

The next level of resistance in $pac in the .007 to .0079 zone.

In a prior writing I spoke about LOG movements and how they either double the price or cut the price in half.

Looking at last weeks low which was .0038, a move to .0079 would be a one LOG move to the upside.

The LOG resistance level in USD term’s for $pac are …

.0079

.0155

.02999

Three separate orders of $pac vs BTC came to market last night, two on Cryptopia, and one on Yobit.  The Yobit order occurred first and it took more than an hour to clear, the other markets were seemingly delayed, as $pac-btc was trading 10% higher on cryptopia than on Yobit for a good hour.  As the arbitrage algos came in they were slow and meticulous, as to not trade large quantities and simply buy one lower and sell one higher across exchanges.  Next came the Cryptopia seller order one, since it is the primary exchange, then people seems to take note and this was purchased in rather short order.  Third order, the “aggressive seller” was most likely a market making algo who got a tap on t he shoulder and was not paying attention.

I do not normally comment on specific trades but this seemed to be on the communities mind, so I wanted to share some color on these transactions.

June 30 – July 19    $pac – USD

 

 

 

June 30 – July 19    $pac – btc

 

 

These charts have a slightly different look, but the are the same asset.  Trading digital currencies  in dollars, you have one in perpetual motion, while the other is stagnant.  Hence why on market increases, the smaller cap coins tend to gain at a more rapid pace, just as on selloffs, they tend to lose value more quickly.

That said, the majority of funds and institutions I know have the retail accounts marked in BTC terms, while the  institutional accounts are marked in Dollars, and capital on deposit is looked at in Dollar terms.  I can go into the why portion of this at a later date, as it is a lengthy discussion.

 

 

I will show a few examples to help illustrate.

 

Example One

BTC = $10,000

$PAC = 300 satoshi’s

$PAC in USDs = 3 cents

 

Example Two

BTC = $7,500

$PAC = 400 satoshi’s

$PAC in USD = 3 cents

 

 

In closing, during my career, one may have to explain how a specific strategy performed or under performed on a weekly basis, but at bonus time, the management just looked at the end result.

 

 

 

 

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