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Vibe Check: The Sell-Off Continues: CoinDesk Indices' Todd Groth
Periodic observations and market musings from Todd Groth, Head of Research, CoinDesk Indices
The sell-off continues.
Bitcoin Trend Indicator (Jan 16: changed to light green. Jan 18: changed to yellow)
STORY CONTINUES BELOW
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Since we turned neutral on the Bitcoin Trend Indicator (from significant uptrend, onJan. 18), and front-end US interest rates have risen 5bps, we’ve fallen lower about4.5% lower to 39.5k, and lie back in the middle of the bitcoin [BTC] price trend channel established at the crypto winter bottom in Dec 2022.
The Bitcoin Trend Indicator or BTI is an online tool, created by CoinDesk subsidiary CoinDesk Indices, to help investors determine where the price of bitcoin (BTC) is going. The tool generates one of five possible values, each representing a particular direction and strength of bitcoin's price trend, ranging from significant downtrend to significant uptrend. The indicators are generated via historical data from the CoinDesk Bitcoin Price Index (XBX), using a non-discretionary algorithm.
Down about 20% since the spot ETF launch peak suggests the market expected greater short term ETF inflows (over $1 billion net inflows over past seven days; H/T @EricBalchunas) and highlights why position sizing is so key in this emergent and volatile asset class we love so much. Sorry, recent TradFi joiners.
CoinDesk 20 Index, a benchmark that tracks top cryptocurrencies, saw its trading volumes growing. One week into the launch of CoinDesk 20 Index, we’ve seen significant daily traded volume on linked perpetual futures linked to crypto’s first multi-token tradable index (currently $44 million 24-hr volume).
While the CoinDesk 20 Index has been dragged lower with the broader market over the past week, over the past 3 months (i.e. since the Bitcoin Trend Indicator turned green) we’ve seen CoinDesk 20 significantly outperform bitcoin and ether by 1500 bps and 1200 bps, respectively.
This outperformance has been primarily driven by the CoinDesk 20 Index’s tilt towards smaller altcoins, notably Solana [SOL], Avalanche [AVAX] and Cardano [ADA], which all punched above their index weight relative to the established [BTC] and [ETH] majors.
Need more color on what's happening in the markets? Check out these stories:
- Grayscale's GBTC Has Moved More Than 100K BTC to Exchange Since Spot Bitcoin ETF Launch: Bitcoin price pressures have picked up this week as outflows from the Grayscale Bitcoin Trust have topped $1 billion per day.
- Crypto Whales Hunt for Bargains as Bitcoin Prices Slide, Data Shows: Bitcoin traded at a fat premium on Bitfinex compared to the global average price over the weekend, hinting at bargain hunting by whales.
- Bottom Fishing in Bitcoin? Here Are the Key Signs To Watch for: Savvy traders are looking for signs of capitulation in the spot and perpetual futures market, and renewed demand for calls when calling market bottom and trend reversal higher.
Todd Groth
Todd Groth was the Head of Index Research at CoinDesk Indices. He has over 10 years of experience involving systematic multi-asset risk premia and alternative investment strategies. Before joining CoinDesk Indices, Todd served as Head of Factor Insights at Premialab, an institutional fintech analytics company, and as a Managing Director at Risk Premium Investments (RPI), a systematic multi-asset asset manager. Before RPI, Todd was a Quantitative Portfolio Manager at Investcorp and began his finance career at PAAMCO, a fund of hedge funds, as a manager within the risk analytics group. Todd holds a BS in Mechanical Engineering from the University of California, San Diego, an MS in Mechanical Engineering from the University of California, Los Angeles, and a Master of Financial Engineering from UCLA Anderson School of Management. Todd holds BTC and ETH above CoinDesk’s disclosure threshold of $1,000.
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