Actions in the exchange of cryptocurrency cryptocurrencies mentioned in Nasdaq (COIN) They quickly approach an overvaluation threshold, a 10X investigation, headed by Markus Thielen, said Friday. Thielen recommends a torque trade that understands a short position in the currency and a long simultaneous position in Bitcoin
.
In a note sent to customers, Thielen explained that the foundations of Coinbase, mainly commerce volumes, have not maintained the rhythm of the rally in the prices of the shares, which are quickly approaching the overvaluation threshold, a classic configuration for a “tactical investment.”
“While Coinbase has not violated the 330%overvaluation threshold, it is approaching rapidly and, despite being one of the few high quality cryptography works, its current cousin suggests the risk of low performance ahead,” said Thielen. “Merchants seeking to capitalize on this dislocation could consider going to Bitcoin long while cutting Coinbase, or using options selling a coins call and buying a BTC call to express the same opinion with the defined risk.”
Fundamental disconnection
According to the 10X linear regression model, 75% of the price action of Coinbase is explained by the price of Bitcoin and negotiation volumes. That means that only 25% of the COIN price action is led by other factors, such as the potential impact of the Overstep or Circle cryptographic developments.
In quantitative terms, it suggests that the coin price tends to increase by $ 20 for each movement of $ 10,000 in BTC and $ 24 for each increase of $ 100 billion in the negotiation volume.
The recent price action suggests that the rally extends too much in relation to the price and commercial volumes of Bitcoin. Coinbase shares have increased 84% in the last two months, while Bitcoin has increased by only 14%.
“Not only is this cousin stretches in relation to the current price of Bitcoin, but also disconnected from the underlying cryptography trade volumes, which are around $ 108 billion,” said Thielen. “This rare deviation suggests that coinbase assessment is extended and vulnerable to average reversal.”
The report said that other factors, the OPI of Circle on June 3, the draft “Genius” stable of June 17 and the purchasing frenzy of Korean investors, seem to have a price.
“As this impulse cools, evident in the recent reversals of Circle, Kakapay and Metaplanet, there is a growing risk that Coinbase’s actions are also close to a local top,” said Thielen.
