Ouroboros Flows & Positioning Chartbook #5

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Welcome to the weekly Ouroboros Flows and Positioning Chartbook, a weekly compendium dedicated to providing a balanced view of the most noteworthy Flows and Positioning charts. None of the following is financial advice.

We made a significant change in our book's positioning this week, flipping from flat to 50% long as BTC.D rises to new highs. We covered all of our shorts and continue to hold core longs of FXS, RLB and RDNT. We observe that over the past year, new highs in BTC.D to usher in mini alt-szns. That said, it is important to recognize that some of these alt szns can be as short as 1-2 weeks, hence requiring the need to be nimble. We hold the view that this could particularly be the case in the current setup (heavy positioning) as we face a potential "sell the news" event into the 10th Jan's BTC ETF headline.

New highs in BTC.D tends to usher in alt szns; even though some could be as short as 1-2 weeks.

PS: We took profit on DOGE this week at $0.1.

Incremental observations this week:

Liquidity
- Capital continues to flow into crypto evidenced by stablecoin's market cap going up.

OI and Funding
- Evidence of interest rotating from BTC to ETH and alts as BTC perps OI decreases while ETH and alts OI increase.
- BTC CME OI hitting new highs while ETH CME OI got flushed but recovered back close to highs, funding rates becoming less positive (less leveraged longs).

Flows
- Market appears to be in a risk-on mode as stablecoin dominance broke lows despite stablecoin market cap rising.

Small downtick in global liquidity but still an uptrend.

Crypto total market cap at upper end of the channel but BTC.D breaking to new highs inclines us to think that alts go higher.

Expect alts market cap to go higher. Perhaps 20% higher from here to touch the 400B level?

Breakout in BTC.

ETH upper end of the channel but ETHBTC still trading weak despite several "alt mini-cycles" this year. We are not bullish on ETH.

Appears to be a rotation in OI from BTC to ETH and alts.

BTC and ETH continues to flow out of exchanges, indicating real money accumulation.

TradFi CME OI and basis both elevated, indicating heavy positioning. One should thread carefully and stay nimble.

BTC skew rising. Options traders are getting more cautious, buying protection.

ETH skew going the other direction vs BTC. Another evidence of a rotation of interest from BTC to ETH/alts.

ETH options relatively cheaper than BTC on both absolute IV as well as RV vs IV basis.

Liquidation clusters to the downside. Stay vigilant. "Sell the news" event on BTC ETF could be vicious.

Stablecoin dominance broke to a new low despite stablecoin market cap up. Animal spirits/risk-on, be cautious.

Miners continue to sell.

Projects with loud narratives - STX, NEAR, FLOW seeing TVL upticks.