Zignaly Provider’s Monthly Recap (April)

6 min readMay 9, 2022

- Bull market (very likely) over 📉
- Crypto/Traditional market correlation increasing 👨‍💻
- Provider’s results update 💰
- Comments on the ETH Futures first 6 months ⏳🧭
- What comes next? 👁️‍🗨️

I don’t know about you, but 2022 has been a weird year so far, so much so that someone has accurately described it with the meme here below.

What many people expected to be a year on the “upside” after a 2 years long pandemic, lockdowns, etc, has shown his hand right off the bat, with ramping inflation (although this was not a secret to most people somehow involved with financial markets), a war breaking out in Europe, and financial markets pretty much collapsing.

Bull market (very likely) over 📉
With regard to the crypto-markets more specifically, this has caused BTC to remain in a relatively tight (by crypto standards) range from the beginning of the year until now.

Highlighted BTC price action from January until May 2022

However, it looks like Bitcoin, hence the crypto market, has now decided which direction to take at least for some time, with the potential for this to develop into a full-blown bear market.

The reason why we consider this to be a high probability outcome at this point is due to at least three elements:
- Our systems have signaled a long term change in the market direction;
- The market structure has changed and seems to indicate a bearish scenario playing out;
- An increased correlation between crypto and traditional market means that a bearish outlook for traditional markets will also affect crypto;

About a month ago I have indicated on my Twitter account the potential development of a harmonic pattern on both BTC and ETH, which seems to have been playing out pretty well so far.

Bitcoin seems to love harmonic pattern formations near its top, in fact, another harmonic pattern did develop right at the top of the BTC chart in 2017 too.

On top of this, BTC seems to have just broken an important support level that might have compromised its structure for good.

BTC seems to have just broken an important support level that might have compromised its structure

So if a bear market does play out from here, we will likely see a significant drop in the prices of the crypto assets class in the coming months.

Crypto/Traditional market correlation increasing 👨‍💻
The likelihood of crypto entering a bear market somehow prematurely is probably also due to the increased correlation between the crypto markets and the traditional financial markets, particularly tech stocks and the S&P500, which in turn is probably due to increased institutional participation.

Provider’s results update 💰
How does this translate for our Zignaly Providers?

As some of you will probably know by now, our Providers suffer small losses during sideways, dull non-directional market conditions, while they thrive with trending markets and particularly during persistent and strong directional movements, either up or down.

Therefore, the market conditions faced lately, and particularly during these past 6 months have been less than ideal for our Providers, although that seems to finally have changed now.

This is because these systems are “market agnostic” which means that they don’t have any directional bias and can perform really well as long as the market moves.

This is indeed very good news for our followers since they will be among the very few people that cannot just be protected but even benefit from a dropping market.

Bear markets are in fact where most of our edge is built, since the ability to profit both in up or down conditions gives us an “unfair” advantage, particularly vs, those that are just holding.

In practical terms with regards to our Providers, this translates as follows:

The BTC Futures Provider, currently sitting at approximately -40% drawdown (not accounting for open profits), one of its worst historically but not something that we haven’t already faced and of course successfully overcome more than once, is finally printing some profit and if this moves continues, it will likely make a new all-time-high soon.

Our Altcoins Spot Provider has instead managed to protect capital, once again and in a very successful way, even though the market conditions have been far from ideal for a long-only system such as this one (which trades spot markets).

Finally, our ETH Futures Provider has now been trading for about 6 months, so we prefer to provide separate analysis for it.

Comments on the ETH Futures first 6 months ⏳🧭
To be completely honest, the timing to lunch this Provider could have not been less fortunate.

The is always a lot of randomnesses (luck) involved with the lunch of a new trading system since obviously the future market conditions cannot be forecasted and, as mentioned above, our systems tend to suffer during sideways/transitional market conditions, which is exactly what we have got since the lunch of the ETH Futures Provider.

This has resulted in some very volatile initial results and one of the worst drawdowns that this system has experienced to date, equivalent to -37%, but this hasn’t discouraged us, as we are fully aware that as soon as the market conditions will change (which again seems to be the case), this Provider will really shine.

The worst drawdown experienced by the ETH Futures system happened in 2017 and was equivalent to -42.64%

Just to put things in perspective, the worst drawdown experienced by the ETH Futures system happened in 2017 (chart above) and was equivalent to -42.64%. Seems like the system has managed to perform quite well since then and we are confident the same will happen this time around.

What comes next? 👁️‍🗨️
Obviously, nobody knows, especially the people that tell you they do know. However, as already explained above, the market outlook for the coming months is currently bearish, but the good news is that this is nothing to worry about for our followers.

As usual, if you have any questions and/or want to enjoy some market commentary and a feed of our Alts trades, feel free to join our Telegram group and follow us on Twitter.

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I am a full-time trader specialized in the crypto markets, now offering crypto copy trading services