SingularityDAO Trading Team Update: dynBTC Recent Activity

Greetings Singularitarians,

Over the past few weeks we have watched some absolutely unprecedented world events begin to unfold. These events have led to some extreme market behaviour both in traditional finance and the cryptocurrency space. We thought it would be interesting to share with you some of the most recent actions taken by our trading team regarding the dynBTC DynaSet.

Before we get into that though, regarding those world events; our hearts and thoughts go out to all those affected by this terrible conflict, regardless of what side of the border you may find yourself on. We pray for the safety of friends, family, loved ones and strangers alike. We can only hope for a swift and in whatever way possible, positive conclusion to all that is happening in the world right now.

Below are a couple of example trade cycles completed by the SingularityDAO DAM over the past few weeks, along with the thoughts and reasoning behind the actions taken. It is worth noting that while in this blog we are covering specifically dynBTC and Bitcoin price action, Ethereum and dynETH have been following very similar patterns and been subject to highly correlated analysis.

Trade cycle 1
Trade opened 24/02
Long entry $37458 and $35663
Reasons for entry:

• Options flow indicating that risk was being transferred from the short towards the long side.
• Usually this is an indication that market sentiment is shifting from negative to positive. In and of itself, not necessarily actionable, but when complemented by other notable signals, a strong sign that it’s time for a trade.
• Open interest significantly increased for Calls with strike price 42000 and expiry in the first week of march.
• Another strong signal that there is strong positive short term sentiment. Traders are starting to bet on a price increase of the underlying asset.
• Significant pending bids between 35k-37k.
• Sometimes referred to as a “Buy Wall”, these areas of high volume bids tend to create a price floor that when viewed alongside the other noted signals strengthens the case for a short term momentum shift.

Trade closed 02/03
Close long $42170
Ideally a short trade entry, but until DynaSets V1 in Q2 we must make do with a “Close long”.
Reasons for close:

• Options flow indicating hedging activity in the market — i.e. call options being purchased against an above average short exposure in Perp markets.
• When traders start hedging, it is a sign that they are losing confidence in the current market direction and taking steps to protect themselves against a reversal.
• Market price trading against an untested Point of Control price (equilibrium price from the 16th of Feb)
• The market had found equilibrium at a level which previously had a very low volume of trading support, when this happens it is usually a far weaker point than that which has seen previous market action over days, weeks, months or even years.
• Above average sell limit order between 43500 and 44000.
• With a very high volume of sell orders being placed above current market price, this demonstrates that traders are preparing to exit positions ready for a move to the downside.

Trade Cycle 2
Trade opened 07/03
Long entry between $39313 and $38860
This trade was scaled into as the market price moved down, in preparation for reversal.
Reasons for entry:

• Options flow showing an increase in buy interest — Significant increase in the Open interest for Calls with 40k strike, Increase in buying volume for options across the options matrix.
• Options markets were showing increased buying interest suggesting an expected upside move.
• Market price trading against an untested Point of Control price (equilibrium price from the 28th of Feb)
• Again the market was trading a previously untested level, making it unlikely to hold for long.
• Significant order flow imbalances skewed to the upside between 39k and 38k.
• The market was seeing significantly more buying pressure compared to selling, indicating a shift in momentum.

Trade closed 09/03
Close long $40935
Reasons for close:

• Options flow indicating risk unwind in the market — i.e. call options being purchased against an above average short exposure in Perp markets — New Russia/Ukraine comments could have been the catalyst
• As world events unfolded, certain market activities suggested that there was some risk at this price level.
• Market price trading against an untested Point of Control price (equilibrium price from the 4th of March).
• Once again, and something of a trend over the last few weeks, the market was trading at untested price points outside of usual TA patterns.
• Significant increase in ‘at-market’ sell volume in perp futures (BTC and ETH)
• A large increase in “market sell order” volume shows that people are choosing to exit, and quickly, at this price. Indicating a momentum shift is fast approaching.

Closing comments

Hopefully you found these insights into the trading decisions interesting and that they shed some light on what and why the DynaSets do what they do. We intend to begin releasing these types of articles more frequently over the coming months, perhaps less so during quiet market conditions, but then again… when are crypto markets ever quiet for long?

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