A Tale of Two Exchanges

In yesterday's note, we pointed to the growing leverage in derivative markets, explaining that we anticipate it unwinding in coming weeks.

Since we published it, we've seen an aggressive "sell" wall placed on FTX, the world's third-largest derivatives exchange by open value.

This caused Bitcoin to sell off and created a clear zone of supply.

On the other hand, Bitfinex, one of the most prominent spot exchanges, has a monster "buy" wall placed just under current market prices.

FTX and Bitfinex are experiencing significant order book activity, and there are now monster walls placed on either side of market prices.

Additionally, we've seen yet another uptick in open interest to all-time highs in a context where price stability is at a local peak and Deribit implied volatility is progressing down to its lowest value since April.Source: Glassnode

The data overwhelmingly suggests an unwind out of this trading range is close to happening.

Digging deeper into these tactical developments, here's another look at the liquidation map we posted in yesterday's note. This plots the price levels where traders will get liquidated in the futures market.

This forced selling/buying from liquidation events provides liquidity for market participants and often acts as key pivot levels given that price is always in a walk toward liquidity.

There's a notable cluster of short liquidations just below 47,000, right in the middle of the current FTX wall.

Assuming these FTX orders aren't pulled, we're planning for a scenario where the market absorbs the short liquidations around 47,000 before finding a tradable low around 44,000 to 45,000 among the bids in the Bitfinex wall.

In yesterday's note, we outlined how we're currently buying pullbacks around 45,000 for a tactical long position with an invalidation right below.

This setup is still intact.

Weekly Chartbook

Today's the day of the week when we publish our full crypto chartbook.

It includes over 150 crypto-related charts, ranging from crypto indexes to individual names and including the various crypto-related equities and ETFs.

There were a few standouts this week, first among them Cosmos $ATOM. After a messy 2021, it looks like Cosmos is reasserting itself as a leader.

The key level here is 32. We like owning ATOM above there.

Helium $HNT is also getting tight, pressing up against 42, 43.

We like owning HNT above there, with a target of 61.

As for the crypto stocks, they've been messy at best. While cryptos have been working since the summer, the crypto stocks have been lackluster.

Amplify Transformational Data Sharing $BLOK is one of the best ETFs to track the sector. It's hanging out near its lows and in a strong downtrend relative to the broader market.

We only like being long BLOK above 39; otherwise this is a complete no-go for us.