DISCLAIMER: Consilium Crypto Inc. research and recommendations are meant for educational purposes only and the opinions expressed do not constitute investment advice. Independent advice should be sought where appropriate. The information in this report is provided "as is" and "as available". All information and opinions expressed herein are current as of publication and are subject to change without notice. Consilium Crypto Inc. does not warrant the accuracy of the materials provided herein, either expressly or impliedly, for any particular purpose and expressly disclaims any warranties of merchantability or fitness for a particular purpose. This document is provided for informational purposes only and should not be used for investment decisions. This is not an offer to sell or a solicitation of an offer to buy any security referenced in this document. Consilium Crypto Inc. does not provide financial or trading advice. For any questions or clarifications, please contact email@example.com.
The month of anticipation leading up to the third “halving” of Bitcoin looked much brighter than the previous month where all digital asset prices dropped sharply around March 12th and none were able to recover into the positive zone by the end of month. April has proven to be quite the opposite. Beside the small drop on April 2nd, none of the assets covered in this report ever went into a net-negative position for the month of April, and volatilities moved back from the extreme levels to a more normal zone.
As per the Bitcoin protocol, every roughly four years the system will undergo a ”Block Reward Reduction”, which is most commonly called the “halving”; It will reduce the reward paid to the miners by half, making it more expensive for them to create more supply in the market. Bitcoin will undergo its third “halving” on May 12th, and it is not clear if the historic price patterns will repeat when looking at the price movements around the prior two “halvings”. In 2012 we had a down month that led up to the halving, whereas in 2016 it was more of an upward spike followed by a pullback or correction. The month of April 2020 was definitely not a down month. However, towards the end of the month most assets experienced a slight correction. With that it becomes more likely, that if the historic pattern repeats, that we will be in for a stronger correction before the actual “halving” occurs on May 12th 2020.
Ripple had an exceptional month, towering more than 10% above Ethereum's monthly returns and doubling some of the other assets’ returns all together. This may come as a bit of a surprise since it was reported by Cointelegraph that Jed McCaleb, Ripple’s Co-Founder, has been selling XRP tokens throughout the month of April due to an alleged agreement previously made with Ripple. In total it is estimated that he liquidated roughly 54 million XRP tokens, at a rate of about 1.8 million XRP a day. The price however did not reflect heavy selling pressure at all. In actuality, XRP finished the month with a ~70% price gain. Throughout the month Ripple announced a relationship with Japan's Sumitomo Mitsui Financial Group (SMFG), which could explain some of the euphoria for the asset which finished as a top price gainer for the month.
The month ends with XLM being the biggest winner with 71.23% gain, followed by ETH with 57.21% gain. The other projects still did well, with EOS being the smallest gainer, but still appreciating by 28.40% throughout the month of April 2020.
Price IN USDT
Price IN USDT
Price IN USDT
|XLM_USDT||0.05794||0.04012||0.0687||↑ +71.23%||↑ +18.57%|
|ETH_USDT||222.45||132.87||208.88||↑ +57.21%||↓ -6.10%|
|BTC_USDT||8580.72||6368.74||8675.35||↑ +36.22%||↑ +1.10%|
|TRX_USDT||0.01676||0.01154||0.01549||↑ +34.23%||↓ -7.58%|
|EOS_USDT||3.5628||2.211||2.839||↑ +28.40%||↓ -20.32%|
The rolling volatility graph at first glance looks turbulent, however after taking the vertical scaling into account it is not as turbulent as it may look. The biggest volatility spike this month came towards the end of the month, around April 30th, when prices for most major assets started falling. However, the volatility spike does not even reach the 0.02 mark. Last month, March 2020, the biggest spike was around 0.1 and saw several spikes with greater magnitude than 0.02. Overlapping this month's data with last months and adjusting the scales, it becomes apparent that the volatilities in April 2020 are of much smaller magnitude and much more in line with normal levels.
Looking at XRP’s volatility curve, it shows that volatility picked up for XRP in the 2nd half of the month. With XRP leading all 4 spikes in the 2nd half of the month. In general terms, this makes sense in the context of the price graph, where XRP was making significant up moves this month. When further analyzing the volatility spikes, it appears that as the month progressed, fewer assets experienced these large spikes in volatility. The majority of assets were sitting tight and following each other in terms of volatility with XRP leading the pack for the 2nd half of the month. However, that does not apply to the last volatility spike that coincides with the small pullback mentioned earlier.
Correlations across the market have generally declined again this month. That was to be expected, following March 2020’s correlation readings of close to 1 for some pairs.
The pairwise correlations of ETH & BTC and ETH & LTC are still among the highest, and have been for several months in a row. If it is consistency that you seek, then these two pair combinations seem to be the ones to follow. If you are able and willing to adjust the pair based on the market, EOS & LTC show interesting readings this month. With pairwise correlation readings of 0.9, it becomes the most positively correlated pair of the mix.
Throughout the reports most pairs with high correlation were somehow linked with LTC, making Litecoin a perfect candidate to track and use as a sort of benchline in your analysis for convergence/divergence strategies.
Consilium Crypto is a big data company that provides quantitative and qualitative insights to market participants in the digital asset space, including funds, family offices and exchanges.
Consilium analyzes 17,000 trading pairs, over 1000 assets, across 50+ exchanges, and tracks trading activity to the millisecond. Our system monitors raw transaction data, as well as complete price and liquidity information from order books around the globe. These data pipelines power our core products, designed to help funds find alpha and place large orders efficiently in times of thin liquidity.
For more information, send an email to firstname.lastname@example.org