THE WEEKLY UPDATE

WEEK 11 (Special Edition)

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Mar 13, 2020 2

Special Edition: Panic sell-off
 Third largest % price drop in BTC history

Bitcoin: Daily % change (Close: 00:00 UTC)

60%
The bitcoin price is still up 36% Year-on-Year

6,000
40%
+36%
5,000
20%

4,000

0%

BTC (USD)
3,000

-20%
2,000
-37.53%
-40%
1,000
-38.67%

-48.57%
-60% 0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Mar 13, 2019 Mar 13, 2020

Source: CoinMetrics

Mar 13, 2020 4

 Highest correlation with stock market in BTC history
▪ The 90-day correlation between the bitcoin price and S&P500 went up to the highest level ever seen, after the recent price drop.

▪ In just one day, the correlation went from an insignificant level of 0.1 to over 0.5.

▪ Even though this correlation is expected to fall drastically again, there is no doubt that the “uncorrelated asset” narrative for bitcoin is taking a hit these days.

90-day correlation: BTC-S&P500

0.52

Source: Screenshot CoinMetrics

Mar 13, 2020 5

 Altcoins tumble down with the bitcoin price drop
BTC market share remains stable
▪ A historical week in the crypto market, which had a major impact on the Percentage of Total Market Capitalization
whole market.

▪ The market share of bitcoin stays relatively stable, indicating a drop for BTC ETH BCH LTC XRP DASH NEM XMR IOTA NEO
all cryptos. Market
63.87% 9.03% 1.95% 1.39% 4.28% 0.28% 0.21% 0.41% 0.23% 0.27%
Share
▪ Most cryptos dropped down more than 50% this week. Weekly
0.64% -0.68% -0.42% -0.13% 0.28% -0.04% 0.02% -0.05% -0.02% -0.06%
Change*

Source: Coinpaprika.com
* Weekly change in percentage points
Top 3: Percentage Change in Price Over the Last Week
20%
Monthly Performance of Market Capitalization Weighted Indexes

10%
15%
0%

-10% 5%

-20%
-5%1 Mar 2 Mar 3 Mar 4 Mar 5 Mar 6 Mar 7 Mar 8 Mar 9 Mar 10 Mar 11 Mar 12 Mar 13 Mar

-30% XRP: -34%

-15%
-40% BTC: -39%

ETH: -43% -25%

-50%
-34.77%
-60%
-35% -35.45%
-36.44%
-70%
6 Mar 7 Mar 8 Mar 9 Mar 10 Mar 11 Mar 12 Mar 13 Mar -45% -40.26%
Large Mid Small Bitcoin

Source: Bletchleyindexes.com

Mar 13, 2020 6

 The market is now extremely fearful
The Fear & Greed Index dropped like a rock this week and is now down to 10. This situation also show that all indicators
have their weaknesses. This index was down to a level of 5 in August 2019. As this index is built on very specific data
(volumes, volatility, social media, surveys, dominance and google trends), it doesn’t necessarily get the real market
sentiment. We can all agree that the market is more fearful now than in August 2019.

Extreme Greed 10
100

90
Now Last week Last month

80
Extreme Fear
Fear (41) Greed (53)
(10)
70

60

50

40

30

20

10
Extreme Fear
0
March 19 April 19 May 19 June 19 July 19 August 19 September 19 October 19 November 19 December 19 January 20 February 20 March 20
Source: alternative.me

Mar 13, 2020 7

 Reshuffling of bitcoin ownership! Skyrocketing volume amidst sell-off
A lot of bitcoin have been changing hands this week, with daily trading volume touching levels we haven’t seen since the
peak in 2019. Yesterday, March 12, $4.2 billion changed hands. The 7-day average real trading volume* spiked
yesterday, touching $1.5 billion – more than double the volume that was seen in the beginning of the week.

3,500

3,000

$4.2 Billion in
Trading Volume ($ million)

2,500
daily volume
(March 12)
2,000

1,500

1,000

500

Real BTC Daily Volume (7-day average)

0
Mar 19 Apr 19 May 19 Jun 19 Jul 19 Aug 19 Sep 19 Oct 19 Nov 19 Dec 19 Jan 20 Feb 20 Mar 20

Source: cryptowat.ch *as defined by Arcane Research. Read more here.

Mar 13, 2020 8

 Major volatility spike as bitcoin crashes down
We got the move we talked about last week and it was a big one. Bigger than anyone could have imagined.
The 30-day volatility jumped up above to above 7% - levels not seen since 2014.

7%
7%

6%

5%

4%

3%

2%

BTC-USD Volatility (30-day average)

1%

0%
Mar 19 Apr 19 May 19 Jun 19 Jul 19 Aug 19 Sep 19 Oct 19 Nov 19 Dec 19 Jan 20 Feb 20 Mar 20

Source: cryptowat.ch, CoinMetrics

Mar 13, 2020 9

 Extreme volatility in the BTC futures market

▪ With the recent price drop, the futures market for

bitcoin has turned extremely volatile.

▪ The premium rates that we normally see on futures are

gone, and most contracts are now trading below spot
price.

▪ For example, March contract on Deribit is now trading

300 dollar below spot implying an astonishing -80%
annualized premium.

▪ Even contracts for September expiry is trading below

spot today.

▪ The bearish sentiment is definitely reflected in the

futures market.

Mar 13, 2020 10

What happened?
 Whales dumping BTC? Large amounts transferred to exchanges prior to the sell-off

▪ PlusToken, a pyramid scheme that acquired $2.9 billion in ▪ In addition, 1,000 BTC
values in bitcoin, still holding around 61,229 Bitcoins, transferred belonging to an old
13,000 BTC from its wallets to exchanges via mixing services over mining wallet dating
the last weekend.
back to 2010 were sent
▪ Identified transfers from the PlusToken wallets has historically to 55 different exchange
coincided with large widespread sell offs in the market, and this wallets on Thursday 12th
time was no different. Bitcoin plummeted from $9000 to $7500 of March.
over the weekend following this wallet transfer.
▪ The 13,000 BTC were sent to exchanges and likely sold off in the ▪ Soon thereafter the
market. The selling can have persisted over a longer time frame bitcoin price fell from
and might also explain part of the crash seen on Thursday 12th of $8000 to $7500.
March.
▪ This sell-off could have
initiated what would
become the third worst
trading day, in terms of
%r eturns in bitcoins
history.

2010 wallet moving coins. Source: Blockchain.com

Bitcoin price chart showing PlusToken movements. Source: Chainalysis

Mar 13, 2020 12

 BitMEX liquidations skyrocketed and wiped out liquidity

▪ Thursday 12th of March there was blood in the streets as BitMEX

had its largest liquidation rate ever, liquidating positions of
$876 million during a massive and violent sell-off.
1000 Bitmex XBTUSD Liquidations
▪ The liquidations continued during the night, as over $300m were $876m

Millions
liquidated in the early hours post midnight.
900 Sell Liquidations
▪ The liquidation halted as BitMEX went down for maintenance Buy Liquidations
between 02:16 and 03:00 CET, due to hardware issues, according 800
to a BitMEX.
700
▪ During the maintenance period, the bitcoin price bounced hard
as the price moved from $3850 at 02:15 to $5200 at 03:00. 600

500
▪ Many speculate that this had nothing to do with hardware
but was done to avoid a total collapse – a limit down, as is 400
common practice on stock exchanges.
300
▪ The liquidations was substantially likely larger than the liquidity
in the order book at the price of the liquidation, leading to a 200
massive feedback loop of liquidations which in turn potentially
could have led to a clearing of the order book all the way 100
down to zero on Bitmex.
0
▪ Bitmex has denied this theory and has provided evidence that
the downtime was due to heavy CPU pressure, also stating that Jan 20 Feb 20 Mar 20
they have a healthy and vast insurance fund prepared for these
kinds of events. Source: skew.com

Mar 13, 2020 13

What now?
 Will bitcoin find support at the 200-week moving average?

▪ No technical analysis can explain the price

drop we have seen this week.

▪ This is a good reminder that technical

indicators are only that, indicators.

▪ The bitcoin price smashed through most

moving averages this week, even the 200-
weekly average that acted as support
when bitcoin bottomed out in 2019.

▪ Will it once again be a support level for

the bitcoin price?

▪ If not, the levels around $4,000 may be a

possible support level. This level has
historically seen a lot of trading activity.

50W MA
100W MA
200W MA

Source: Tradingview

Mar 13, 2020 15

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• “The weekly update” (the report) by Arcane Research is a report focusing on cryptocurrency, open blockchains and fintech. Information published in the report aims to spread knowledge about developments in the market for
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are not responsible for readers losses in the market

• We have made every reasonable effort to ensure that the information in the report is accessible, accurate and up-to-date, but subject to technical problems, errors and inaccurate information may occur.

• Investing in cryptocurrency and technology companies involves considerable risk. To understand the risk you are exposed to, we recommend that you perform your own analyzes and seek advice from an independent and
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• Arcane Research is a department within Arcane Crypto AS, org. 994 608 673, and can be contacted at research@arcane.no or tbj@arcane.no

Mar 13, 2020 16

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