The market is still waiting

You already know that every week, except for exceptions, you have your Friday market commentary in BELOBABA. IN it, we explain our particular vision of the market as a Trading Analyst at BELOBABA.

The truth is that this is a market that tends to make things easy for you when you have to make a comment, because we could say that ‘things always happen’. But we have entered a phase in which it seems that everything has stopped, and the truth is, it is difficult to find remarkable facts

2023: We started aimlessly

This first week of 2023 has been a prologue to the previous week of 2022: very little volume, very little activity and a total absence of news. I think we already talked to you in previous weeks about how the futures market was positioned in terms of crypto assets. refers.

Despite detecting a volume above normal in open positions in the market, it was not very remarkable considering that we were at the end of the year. Open positions did not reach 4 billion USD

A large part of these positions have moved to expiration dates of 2023, so they have not been liquidated. This is a movement known as rollover. Currently this market, with the data that we handle every week, has modest figures

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Just over 1.5 trillion USD right now at today’s expiration. This is a very minor figure compared to other occasions. Keep in mind that we are talking about futures with an expiration date, not perpetual futures.

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In the case of perpetual futures we have more volume, but we are talking about another type of investment. The difference with futures to expiration is that the latter forces the trader to make decisions continuously when the expiration approaches

The trader has to choose between:

  • Extend the open position in the market. Moving it to a later expiration date (What is known as rollover, as we have commented)
  • Liquidate the position at the expiration date

Therefore, one way or another you have to position yourself in the market.

Risk indicators at record lows

But let’s continue, this is not the only indicator that tells us that the market is inactive. The next one that I am going to comment on I have already shown several times and it is an indicator that arises as a replica of a metric widely used in the traditional market: the VIX


Leaving aside the more or less sensationalist definitions, such as the one that describes the VIX as ‘The indicator of fear’, it is true that it is a metric that shows us the activity of operators in the derivatives market and specifically tries to show the data asset hedging operations.

A hedging operation is the one that is carried out in the market, not to seek profitability or profit, but to generate a capital gain that manages to compensate the losses generated in another asset in the event that the market goes down. This is a very important point, I have always told you that you have to be clear about entering the market, and we are talking about an elementally defensive operation as far as investment strategy is concerned. Here the objective is the containment of losses.

So, if we evaluate the trading levels of a certain series of products, we can get an idea of the market sentiment of investors (especially professionals).

It must be borne in mind that contracting these products has a cost, both for contracting and for having to manage them internally, so they will only be contracted when deemed necessary to reduce the risk levels of the portfolio.


This concept has been transferred to the crypto-asset market, with the CVI or (Crypto Volatility Index). This index measures the volatility of BTC and ETH, which are currently the most reliable assets in the derivatives market because they concentrate most of the of the traded volume.

By analyzing this indicator we can see how these positions evolve in certain products whose main functionality is to act as coverage or insurance, as we have commented.

So, the higher this indicator is, the higher the level of risk is perceived by the market.

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I think the graph speaks for itself:

We are at historical lows of the series

With barely 50 points, the CVI is at a level that it has rarely seen. The quick conclusion that we can draw is that the market has a difficult forecast right now. The lack of volume is decisive when it comes to ensuring the prolongation of market movements, in any asset.

In this way, what we are seeing is that the movements that occur have a short life or short journey, because liquidity quickly stops pushing the trend and it disappears.

Volume data indicates capital flight

Therefore, the trading volume data is eloquent in this sense, and to illustrate the argument I am going to show you two of the indicators with which I work as a trader, at a particular level.

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volMCAP index

This index is composed of two different metrics:

  • The trading volume in a given period
  • The capitalization of assets in the same period

Given a population made up of the 250 most capitalized assets, this ratio indicates the capital turnover rate. Said like this and looking at the figure does not tell us anything, but if I tell you that under normal circumstances this figure is approximately 10%, we see that right now the level is low.

Crypto500 Index

I have already commented on this index on other occasions, and I concentrate the 250 most capitalized assets in the entire ecosystem. Through a weighted calculation of each, we can obtain an index score that expresses the movement of the entire market.

In addition, we can see the accumulated volume in the trading of all the assets that make up the index

The index is calculated daily, so the volume corresponds to the last 24 hours. The data we have at the moment, with a figure slightly above USD 50 billion, is more than modest. Normally we can see trading figures that are around USD 120,000 million, although it is also true that we have not reached this level for quite a few sessions.

Diagnosis: little movement in the market due to little volume

We can do multiple analyses, and they will all lead us to the same conclusion:

lack of money in the market

This is the sentence and the clear origin of the current passivity that we can see, for example, in the BTCUSD graph

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The evolution of the price is completely flat and with hardly any oscillations in a clear sign that the level of volatility has been reduced considerably

You may think that this is something positive, because we tend to associate volatility with something negative, but nothing beyond reality. I would not dare to describe this situation as negative, but dangerous.

Right now, the market is at the mercy of any operator of a relatively considerable size

This lack of volume can cause the entry of operations with some forcefulness to move prices in one direction or another, so the lack of volume only increases uncertainty.

We must follow these data very closely and be attentive to changes in the trading volume in the market, something that as soon as we detect it, we will inform immediately, but remember that it is much better that you monitor the market yourself and develop your own opinion or criterion