GAEA Investment Research Center — After breaking the 7,200a line, the BTC market had fallen consecutively by as much as 1,148 points from August 8th to 11th with the lowest fall to 5,988. The market rebounded on August 12th, but still was suppressed according to the 7-day EMA. It continued to fall to 5,880 which was the lowest on August 14th and even slightly lower than that of the 12th, indicating that the market may continue to break down the consolidating point.

Source: GAEA International Community Contributor

However, in the evening of August 14th, it bounced back and at 23:00 the market started to soar from 5,880 to almost 6,455, resulting in a winning streak in the daily chart. Considering the dramatic fall lasting from July 25th to now, the shorting side has exhausted substantial power accompanied with the larger rebound in the daily chart. It is becoming gradually flat. Hence, we believe that the phased plunging has a chance to stop, and then a certain degree of rebound will be brought about.

Future Market Outlook

Picture source: OkEX

As the recent trend is relatively smooth in a unilateral decline state, there are not many pressure nor supporting points. From an overall perspective, the market is still under the pressure of the long-term downward trend, therefore a follow-up decline will not be very surprising. However, in terms of the short-term market, the bearish sign has been significantly alleviated. In fact, since August 9th, the market has sunk into a volatility. The changing interval is mainly testing between the pressure line 6,500 and the supporting line 5,900. For more than half a month, BTC market has accumulated a relatively considerable fall without even a powered bounce.

In the last week, the rallying trend becomes more obvious as the turnover is significantly enlarging. Therefore, we suggest that the market enter a state of immediate rebounds. Investors are advised to trade at small amounts and watch the market carefully before a breaking of the 5,900 line. Please note that once the market falls below the 5,750 line, investors ought to consider stopping investment regardless of their losses.

Analysis of Other Mainstream Coins

Now, let’s have a look at the other mainstream coins. Considering the fact that these coins such as ETH, LTC and BCH, share an identical trend. Hereby, we take ETH as an example for analysis.

Picture source: OkEX

Mainstream coins like ETH rebounds less than BTC. Truth to be told, ETH is still unable to see an obvious sign of stopping decline simply based on its market trend. The price of ETH has been restricted in the downward channel as shown in the chart. Generally speaking, if BTC cannot rebound, neither can ETH and other mainstream coins especially when they now seem very difficult to rise. So currently, it is not advisable to take the initiative to long other mainstream coins except BTC. In contrast, if BTC could not rise as expected, then shorting ETH and other mainstream coins at such high points will work better with the current market.

OkEX Pairs Hidden and Offline

It is worth mentioning that the OkEX announced to hide and logoff some of the trading pairs this week. If you’re interested, readers can visit https://www.okex.com/ for more details. However, being removed from OkEX, such a large exchange, those coins may seriously suffer from lack of liquidity and difficulty of selling, and even worse, returning to zero gradually. For consideration of asset security, it is not recommended to invest in small coins, especially those less-known ones. After all, the bare market is controlling the coin market and investment security should be attached with great importance.

Future-Spot and Calendar Spread Arbitrage Opportunities

We examine arbitrage opportunities by comparing the contracts on BitMEX and relations between spot prices on Binance.

Let’s look at the September Contract for arbitrage opportunities. The price of XBTU18 Contract on August 9th is 6,478, spot price 6,444, so the difference is 34 points. At this time investors can sell future contracts and buy spot contracts to open an arbitrage position. The price of XBTU18 Contract on August 12th is 6250, spot price is 6,287.4, the difference is -37.4. If closing all arbitrage positions at that time, we will earn a 71.4-point spread.

Again, we look at the December contract for arbitrage opportunities. The price of XBTZ18 Contract on August 9th is 6,496.5, spot contract price 6,444, and the difference 52.5 points. At this time investors can sell future contracts while buying spot contracts to open an arbitrage position. The price of XBTZ18 Contract on August 12th is 6,254, spot price 6,287.4, and the difference -33.4 points. If closing all arbitrage positions under such circumstance, we will earn an 85.9-point spread.

There are also opportunities for calendar-spread arbitrage. The price of XBTZ18 Contract on August 9th is 6,496.5, when XBTU18 contract price is 6,478, so the price difference between a December Contract and a September Contract is 18.5 points. The price of XBTZ18 Contract is 6,254, and the XBTU18 Contract price is 6,250. In this case, the price difference between a December Contract and a September Contract is 4, the spread reduced by 14.5 points.

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Source Date: 2018