Market Update 10/13

MARKET OVERVIEW

The week ending on October 13th saw cryptocurrency markets trading sideways testing higher highs, and lower lows, initially rallying then with inter-week adjustment paring the losses. Bitcoin fell on the week 3.10% and Ethereum falling 5.65% on the 7 days basis, with trading volumes being elevated during market sell off. The two major cryptocurrencies Bitcoin (resistance) $27,450 and (support) $26,600 and Ethereum $1,620 (resistance) and $1,525 (support). Bitcoin daily volume on the day is $10.6 billion and Ethereum daily volume $ 4.56 billion. BTC market capitalization equaling $519.2 billion and $183.5 billion: indicating 2.8289x ratio, increase from 2.762x ratio on 10/06. BTC outperformed ETH some 2.70% for the 7 days ending on October 6th 2023. Bitcoin dominance continuous.

Highlights for the week include our very own report from Cryptoken Board, producing Nakamoto Coefficient for the leading BVM chains, including data by Nakflow. The SC measures decentralization of nodes by blockchain consensus, with Ethereum chain scoring near the bottom of the list with NC (2), indicating a high degree of centralization comparing to other infrastructure chains like Solana (29), Avalanche (24), Sui (14), Near (9), Hbar (9) and Cosmos (8).

The news this week surrounded a leading DeFi application Thorchain, and (independent) API service providers Thorswap, ceasing operations as one of the wallets obtained from illicit activities attempted washing the funds - tweet. Thorchain is not affiliated with Thorswap, but it’s clear that DeFi apps will likely add a 3rd party wallet screening software in order to remain compliant.

The criminal trail accusing the former FTX Exchange founder, Sam Bankman Fried with (7) felony counts proceeded with bevvy of testimonies coming from former FTX engineer Aditya Baradwaj, and Caroline Allison former Co-Head of FTX sister trading arm Alameda Research - tweet by Inner City Press. According to the testimonies, it appears clear that risk management practices ran amiss, accounting & book keeping flawed, customer deposits commingled, and their lending policies abusive at FTX, ultimately leading to a fall of FTT cryptocurrency, that was used as collateral for most of the financial aspects of the firm.

The Futures Markets on CME had a daily Open Interest (totals) 10,960 contracts, price of $26,800 for month end October and are trading in slight contango, with the term structure showing very little optimism. The largest CME contract saw volume of (10,117] for ME October, and continuoud tepid demand is reflected by the flat futures curve with ME November (+ $185), December (+ $385) and January (+ $580). Bitcoin futures, Volume and Open Interest for the week ending on October 2023, is similar to September 2023.

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c1 Bitcoin (trailing) 180 days

c2 BTC/ETH (trailing) 7 days

TECHNICAL ANALYSIS

The volume adjusted indicators for BTC cryptocurrency, including Accumulation Distribution Line and the Sharpe Ratio, including BTC/ETH ratio are reported on chart 1 and chart 2 for week the ending on October 13th.

#Bitcoin
○ A/D Ratio - Accumulation Distribution Indicator or ADL (Accumulation Distribution Line) is a volume based indicator that aims to measure the underlying buying / selling pressure by combining money index multiplier with traded volume. For the trailing 6 months - Bitcoin ADL equals near $ 26 750 , very near the spot price, falling from the last week's $ 30 000.

○ Money Index Flow (31 day)- or The Money Flow Multiplier is determined by the relationship between a period’s closing price and the period’s high/low range, adjusted for 31 days, trailing. For this week, we're not reporting MIF.

○ Sharpe Ratio (31 Day) - The Bitcoin SR is the performance adjusted return for the risk free rate (5%) / divided by the standard deviation of return for the period. The week ending in October 13th has SR of -3.25 reflecting negative risk adjusted returns, comparing to last week of +0.80.

#Ethereum
○ $BTC / $ETH ratio broke reached the low on October 10th, rallied through October 12th before reverting again. ETH is trading down on the week at 0.05744 down from 0.05869 per BTC. Ethereum fell 2.50% over the past 7 days, with additional short term uncertainty. Proof of Work digital assets continue to be leaders in this risk off market environment.