Zignaly Providers Monthly Recap (September)
TL;DR
Market cycle: What are we at?
Breakeven (almost) month for the BTC Futures Provider and bad month for the ETH Futures Provider.
BTC (and crypto market) volatility near historical low level
Intro
In this monthly update I would like to focus on the current state of the crypto markets and make some hypothesis regarding the current stage of the market cycle.
The market is looking extremely uncertain, in fact, during the past two months BTC has been trying to continue the upward movement started back in January, but so far every attempt has been rejected, with the result that the price has gone nowhere and at the time of writing the net percentage price change in BTC between the past two months is equivalent to only 0.62%, a number that would be low even for more traditional markets.
Indeed, during the past year the BTC volatility has reached (and so far remained at) historical lows not seen in crypto at least since 2016, and this is simply because the recording started in 2016, but I would expected higher and not lower volatility before that period.
Even if compared to the previous sideways market occurred between 2019 and 2020, the current one has not only been longer in terms of time, but with a far lower volatility overall (as you can see from the BTC volatility chart above).
This phenomenon becomes even more evident if we look at the net price change for both the periods considered above, noticing how while the 2019 -2020 period had registered a 334.39% maximum rally, the 2022–2023 has registered a mere 95.36%.
While obviously it is only possible to state with certainty at what stage of the market cycle we currently are in hindsight, all the elements above make me think that we might have seen the low of the bear market, and we are now well into this non directional phase which is usually identified as the one between “depression” and “disbelief” on the Wall St. Cheat Sheet, which however could still last any length of time.
For this hypothesis to be confirmed we shouldn’t see any weekly close below the current low price established in November 2022 with the FTX dump, and of course we shouldn’t see a new high, which would by definition determine a new bull market, although if there is any rally during this sideways phase it will like remain well below the Nov 2021 peak price level.
Providers
BTC Futures
Relatively uninteresting month for the BTC Futures Provider that has alternated several long and short positions, as it typically happens during such sideways markets, that however have resulted in a mere -2.8% loss.
Realistically, unless the volatility finally decides to pick up, which will happen sooner or later, all the Provider can do is to keep playing defense and limit the damage provided by this very unfavorable market conditions.
I remain however very confident that as soon as the tide will turn, this Provider will once again generate the amazing returns that we have already seen in the past.
ETH Futures
While this Provider has also been alternating several long and short position in the short time span of a month, proving how much the market has been lacking any direction, the losses here have been larger if compared to the BTC Futures Provider, due to the larger risk per trade that characterizes it (ETH Futures).
Although the ETH Futures Provider has unfortunately given back the vast majority (but not all) of the profit generated during August, the overall equity chart continues trending upwards and the Provider is currently sitting on a profitable short position.
Conclusions
To discourage the most people at the best time to invest and to encourage them at the worst time is the market’s job, and in the past year it has indeed done a great job a scaring anyone away from crypto.
The good news is that thanks to our trading systems available as Zignaly Providers which are able to protect capital at times of distress, and optimize the rewards whenever there are opportunities, you don’t need to try to predict the future.
Historically, investing at times when the strategies where experiencing drawdowns has proven the most profitable choice in the long term, contrary to investing when they are already showing large profits, so this could potentially be one of the best time to invest or increase your investment and see the returns sooner than later.
If you have any inquiries, suggestions, or doubts, feel free to DM me on Twitter or Telegram, or check my other Medium articles and Guides.
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