Market Structure Break- Flagship Vault Update Week 20

Over the past seven days, the Portfolio Vault's share price has increased from $66.41 to $69.44, a 4.35% increase. Regarding BTC and ETH, the Flagship portfolio vault underperformed BTC by 0.85% and outperformed ETH by 5.05%.

Portfolio Vault Assets update

Bitcoin

Bitcoin is up 5.2% this week. Inflows into the nine exchange-traded funds (ETFs) tied to Bitcoin have shown considerable volatility, with certain days experiencing robust inflows while others record no activity. This fluctuation reflects a dynamic market where investor sentiment can shift rapidly. Such inconsistencies in daily inflows highlight the volatility of Bitcoin and crypto.

Regarding technical indicators, Bitcoin has reclaimed the previous range and has now broken its downtrend. BTC needs to keep closing its daily candles above $63.5k. It will be interesting to see how we trade in the following week. BTC has shown that it is currently the asset to watch; alts are bleeding, and BTC is just ranging. In the next leg up, we need BTC to take control.

The Open Network

Over the past week, TON has seen an 11.60% increase. Recently, Tether announced that they will be bringing their stablecoin USDT to the TON ecosystem. Being the first large stablecoin on TON, Tether will attract more liquidity to the ecosystem.

TON has been on of the strongest alts in the space and one of the strongest alt blockchains. It is now showing some form of weakness and will probably consolidate.

Pendle Finance

Pendle has decreased by 5.79% over the last seven days, continuing its long-term and short-term trends. The Total Value Locked (TVL) has remained stable at $4 billion dollars after the recent Eigenlayer token release. With the Eigenlayer token release, the points farming on Pendle has stopped, causing a short-term significant volume drop.

Pendle has recently lost its daily trend but is currently at its previous consolidation phase. While it has lost its trend and you can expect lower, all that matters is what BTC does. If BTC decides to move up, Pendle will follow.

Solana

Solana has increased by 12.18% in the last seven days. With Solana overtaking Ethereum on DEX volumes, most on-chain participants have flipped over to Solana because of the cheap fees.

The chart for Solana looks good in terms of a high time frame, as it has retraced a large part of its previous move and is looking to build support at the last consolidation phase. Solana has also reclaimed its daily trend, and if it continues to hold, we can expect Solana to start trending up again. Solana is one of the few alts that follow BTC very closely.

Fetch

Fetch is up 2.73% in the last seven days. It is currently undergoing a merger with SingularityNet and Ocean Protocol. They are discussing merging their tokens into an AltSignals (ASI) token with a fully diluted valuation of $7.5 billion.

Fetch is one of the Alts that has not made new lows, while BTC has not. Fetch would be a top performer with a potential bottom coming in as it has yet to make any new lows. Fetch has also reclaimed its daily trend and looks like a top performer if the AI sector starts moving.

Bittensor

Bittensor is down 0.61% in the last seven days. Spot Bittensor was finally listed on a tier 1 exchange. Binance has decided to Bittensor. This inclusion on Binance could boost TAO’s market liquidity and accessibility, potentially elevating its market position.

While Bittensor has been underperforming these last few weeks, from a fundamental perspective, it is one of the strongest projects out there. It captures every sub-AI sector, as all of these can be built on the Bittensor Network.

Ondo

Ondo Finance is up 10.19% in the last seven days. Ondo is a DeFi protocol that aims to provide institutional-grade financial products on the blockchain, including tokens backed by U.S. Treasuries. It has been supported by prominent figures in the financial industry, including Larry Fink, the CEO of BlackRock, one of the world's largest asset management firms.

Ondo's technical indicators are also bullish. It's one of the few adults that has been able to hold its daily trend.

Pyth

Pyth Network is down 7.60% in the last seven days. With new applications being launched daily, more and more are picking Pyth over Chainlink as an Oracle provider. This has caused the gap in market cap to diminish. There is speculation that Pyth Stakers will also receive numerous airdrops.

Pyth had a significant run-up and retraced the move. It is now one of the weakest alts, as there was a billion-dollar unlock. As a project with a low float and high FDV, it completely depends on the next Bitcoin move. If Bitcoin and Solana trade higher, Pyth will follow.

Stacks

Stacks is up 5.96% in the last seven days. The Nakamoto upgrade of Stacks has been delayed once again, as it requires an additional eight weeks of development time.

Stacks is the biggest BTC beta. It is still below the daily trend and consolidating at previous support. If BTC can make a move up and break out of its current range, we can see stacks following as it's the biggest BTC beta.

Indicator list

Forex Markets

The Forex market is a proxy for risk on or off the environment. EUR/USD is looking strong, and the Forex market looks like a neutral/ risk environment. The dollar is looking weaker. It trades above 100 and is testing the 200-day MA, a neutral and potential risk-on scenario.

DeFi Stablecoin TVL.

When the Total Value Locked (TVL) exceeds the market capitalization, it indicates a risk-on environment. Conversely, if the TVL falls below the market cap, it suggests a risk-off scenario where investors are more cautious. Recently, TVL has been trending upward, but is stagnating. Thus indicating a neutral environment.

Relative Strength Index

The relative strength index (RSI) is a momentum indicator that measures the speed and magnitude of an asset's recent price changes. When the RSI is above 50 on either daily or weekly charts, it signals a risk-on environment. Conversely, an RSI below 50 on these timeframes suggests a risk-off atmosphere. BTC has now reclaimed the 50 on the daily level, indicating a risk-on scenario.

Trends

We utilise the 12, 21, and 36 Exponential Moving Averages (EMA), precise tools for market analysis, to determine the daily and weekly trends. A move below these EMAs on the daily chart will indicate a shift towards a risk-off environment, signalling caution among investors. The market shows signs of stagnation but has yet to lose the daily trend, suggesting a steady state without clear indications of a downturn. When the market reclaims its position above these EMAs on the daily timeframe, it will be considered a sign of transitioning into a risk-on environment. We have reclaimed the daily trend, indicating a greater risk to the environment.

Bitcoin Dominance

Bitcoin Dominance (BTC.D) doesn't directly indicate a risk-on or risk-off environment. Still, deciding our allocation strategy between Bitcoin and the rest of our portfolio is crucial. An upward trend in BTC.D suggests an increased allocation towards Bitcoin, while a downward trend signals a shift in preference towards investing more in blockchains and decentralized applications (dApps). Currently, we're on the lookout for an upward move. This could be a significant move up for BTC that will lead to ALTS underperforming.

ETF Inflows

Reviewing ETF inflows helps us understand the money movements of institutional investors. The dynamics of spot Bitcoin ETFs have recently displayed notable volatility in their inflow patterns. This week, Grayscale's Bitcoin Trust (GBTC) recorded multiple daily net inflows, breaking a long trend of consistent outflows. From May 14 to May 16, the ETFs accumulated another 700 million in BTC, which indicates more upward momentum.

Total Market Caps

When analyzing market cap indicators to gauge the overall sentiment in the crypto market, we consider three different aspects. The first indicator, the total market cap of the cryptocurrency sector, hasn't reached an all-time high but is showing neutral signs.

The second market cap indicator, which excludes Bitcoin, appears weaker than the first and faces resistance. This situation presents a neutral to risk-off sentiment for altcoins while still bullish for Bitcoin, suggesting that Bitcoin might be a safer bet than other cryptocurrencies in the current market condition.

The third indicator excludes Bitcoin and Ethereum from the total market cap, revealing an even more bearish outlook. This hints at a potential increase in bearish sentiment across altcoins, except Bitcoin, which remains relatively bullish.

Liquidity

Global liquidity trends serve as a barometer for market sentiment, with an upward trend being synonymous with a risk-on environment. This suggests investors are more willing to take on risk, buoyed by the availability of capital. Conversely, a downward trend in global liquidity marks a shift towards a risk-off environment, indicating a more cautious approach by investors as capital becomes scarcer.

Equally significant is the trend in US liquidity, which mirrors the global pattern. A rise in US liquidity reflects a risk-on sentiment within the country, indicating investor confidence and a willingness to explore riskier assets. Conversely, a decrease in US liquidity signals a risk-off mood, where there's a tendency to avoid risk, favoring stability and safer investments. Understanding these trends is vital for investors, as it can guide their investment strategies and decisions.

Both global and US liquidity have started to show upward trends, suggesting a more risk-on environment in markets. This indicates that globally and in the US investors could have a larger risk appetite.

Brent Crude Oil

Brent crude oil prices impact risk assets significantly. When oil prices rise, the cost of goods and transportation increases, leading to higher inflation. This often results in central banks raising interest rates to combat inflation, making borrowing more expensive and reducing investment in risk assets like stocks. Conversely, when oil prices fall, inflation pressures ease, potentially leading to lower interest rates, cheaper borrowing costs, and increased investment in risk assets. We are now seeing that oil is currently trending down.

Risk profile

We have decided to remain ultra-bullish on Bitcoin despite seeing a loss of trends and a more bearish environment. We are still in a bull market and are already completely deployed at better prices. Consequently, we have decided not to rebalance the vault. As such, the new vault allocations are:

Until next week,

Flagship’s Captain team