Patrick Heusser from Crypto Finance AG breaks down Bitcoin's April 2019 rally: CME futures volume jumped from 2,000 to 20,000 contracts in two days, driven by leveraged funds covering shorts. He identifies support levels at $5,000, $4,800, and $4,250, and notes a rumored $80M buyer emerged during the spike.
Questions this video answers
Approximately $5,000.
Approximately $4,800.
Approximately $4,250 (described as the breakout level).
About 2,000 contracts.
About 20,000 contracts.
Chapters
Hi there, I'm Molly Jane and in today's Crypto markets video we are talking to Patrick Heuser from Crypto Finance ag. Hey Patrick. So looking at the major coins we're witnessing some sort of correction. And what do the indicators show? What is the new support level for Bitcoin?
Well, let me first talk, Let me first distinguish between what assets we're looking at. We for example, when we look at the top 50 coins excluding BTC, we look at our own MACDS and advanced decline line indicators. They're quite slow. We look at them on a weekly basis. We also publish those on our rotation report. They don't in particularly look bullish right now. But then if I'm going to be a bit more precise, we have a few coins which we monitor very closely. They trade on futures exchanges. So we monitor the future cash basis. That means we're looking at where the spot is trading versus where the future contract of these currencies are trading. BTC has one Cardano, Ether, Litecoin, Eos, Tron and Ripple as well. When the basis trades in contango, that means the market is in a bullish state. When the future trade in backwardation then it's rather on the bearish side. We have seen in the past two weeks quite a wide contango basis. So the market was pretty bullish. Now let's talk about the BTC support levels. Currently the high volume support is 5000 we are right there. But further below further 4800 we think is quite an important level and we will tell you why later on. And then 4250 is the big support last line of defense. That was the breakout level.
What about the OTC market? What difference in the reaction have you noticed between the OTC and then exchanges both during and after the spike?
It's funny you ask because we have seen quite an interesting behavior in the market during the spike. Most of the volume went through traditional spot exchanges. That rumor which went around that a guy was buying roughly $80 million worth of bitcoins, that is probably true because that volume spike we have seen on the exchanges, we also saw some large liquidations on Bitmex, which is the biggest derivative exchange in volume terms. And then on the OTC side there was nothing happening on the spike. But when the consolidation happened roughly at around the 4800 level, big trades went through and a lot of coins changed hands there. So that's why we're also having the 4800 as a support level.
Okay, got it. So we've seen an increase in Bitcoin futures trading volume on CME. On April 1, for example, we saw about 2,000 futures traded and then in just two days there were 20,000 features traded. So what does this mean? Who is trading them and how is the futures trading reflected in the price of Bitcoin?
Well, first of all, let me start with who's trading on the cme. Institutional clients are the ones who have access to the cme. No retail traders are there. And then there is even a separation within the traders. So the COT report has four groups. You got the dealers, the asset managers, leveraged funds and other reportables. And there it was a very clear picture that the leveraged funds were short right to the maximum on the 2nd of April. So the volume spike was definitely driven by these shorts, had to cover back those contracts and probably even turned the other way around and went long. Then also on the traditional exchanges we have seen the volume spike. That means market makers who were trading actively on exchanges needed somewhere to hedge their positions and they probably went as well to the CME as it is still one of the liquid exchanges out there.
Thanks, Patrick. Here with us was Patrick Heuser from Crypto Finance ag. Don't forget to tune in this Sunday for our weekly Hodler's Digest. Also this Monday we're releasing another Crypto Markets update with Mati Greenspan from Etoro. Be sure to check it out and if you have any questions for him, leave them for us in the comments and we'll try to ask him your questions. This episode is sponsored by Trade Santa. Trade Santa is a cloud based trading bot. Set it up in less than two minutes. Trade multiple pairs, choose between long and short strategies or use tech analysis indicators and see your results in real time. Trade Santa works 247 to get you the profit you set. The platform is already integrated with Binance, Bittrex, Bitfinex and hitbtc. The link is in the description below. Cointelegraph. Like subscribe and Hodl.
