2100NEWS WEEKLY CRYPTO REPORT Jun-9

The NWST1100 index has declined 5.53% from the previous week. Regulatory actions taken by the SEC against major crypto exchanges have introduced uncertainty and affected investor sentiment, causing market volatility and subsequent price drops.

*Below, we present a standardized weekly report and next week’s outlook, prepared based on the Theory Swingtum of intelligent finance. We gauge the crypto market’s breadth and direction by showing charts 2100NEWS Digital Assets Total Index (NWST1100), which measures 1100 (by market capitalization) significant crypto assets’ performance. The information-laden chart is difficult to read initially, but the graph shows essential price information, crucial decisive price levels, momentum, trading volumes, and crypto market breadth. 

As per the previous report, a test of support S1 was expected1. Analyzing the NWST1100 index chart, interesting observations on market trends were revealed by a significant benchmark index. Here are the key points:

1. The index initially dropped below the 143-DAY EMA (Exponential Moving Average), which can be attributed to actions taken by the SEC against major crypto exchanges, namely Binance and Coinbase, for allegedly offering unregistered securities.
2. After the initial drop, the index rebounded but faced resistance. Since then, the cryptocurrency markets have resumed their decline.
3. Momentum indicators at the top of the chart indicate a negative market sentiment. The PPO lines and histogram have fallen, suggesting a decrease in price momentum. Additionally, the RSI (Relative Strength Index) has decreased, indicating a weakening of the market’s strength.
4. Shifting focus to the Crypto Market Breadth indicators at the bottom of the chart, two observations stand out. The ADVL (Advance-Decline Line) has fallen, reflecting a decrease in the number of advancing digital assets compared to declining ones. The McClellan Summation Index has also started falling, indicating a negative market breadth.

The chart on the right shows that all four A50R lines are currently extremely oversold. This breadth indicator measures the percentage of digital assets trading above a 50-day moving average. This suggests that the overall internal strength of the cryptocurrency market is weak.

* The percentage of digital assets trading above a specific moving average is a breadth indicator that measures internal strength or weakness in the underlying index. The chart on the right side compares the percentage of DA trading above 50 days EMA for:

1. 100 Large-caps members of NWSL100 (top box)
2. 1100 members of NWST1100
3. 100 Ethereum Tokens members of NWSET100
4. 100 Coins members of NWSCo100 (bottom box)

Outlook for this week

Despite its inherent complexity and volatility, the crypto market exhibits some degree of predictability. Market behavior patterns can be discerned, although complete predictability is challenging. Examining the momentum indicators, several signals emerge for the near future. Firstly, the RSI (Relative Strength Index) currently stands at 30, reflecting a bearish sentiment prevailing. An RSI value below 30 is often considered oversold, suggesting that selling pressure has pushed prices to potentially low levels. Secondly, the PPO (Percentage Price Oscillator) histogram may change its current direction by the end of the week, and the PPO lines may continue to fall.

Additionally, the Breadth indicators at the bottom of the first chart (NWST1100) may continue falling. The McClellan Summation Index, a long-term market breadth indicator, relies on the McClellan Oscillator. When the oscillator bars are below zero, the Summation Index tends to fall, indicating bearish momentum. Although these indicators suggest a bearish outlook, other factors, such as new buyers’ arrival, could act as a force to stop further declines. Additionally, several reasons may encourage buyers, such as prices falling deep below the 200-day average (a level that has seen previous rebounds in the past year) and extremely low AR50 lines. These factors could attract buyers who perceive the market as undervalued and potentially trigger a reversal in sentiment. Based on this setup, a potential reversal in sentiment and a consolidation around support S2 is likely.

Performance of different groups of Digital Assets (Coins and Tokens)

After analyzing the data in the table, the overall index NWST1100 has plunged by 5.53% over the past week. The chart below highlights the performance of various cryptocurrencies, such as Bitcoin, Ether, and the 2100NEWS Indices, which represent the performance of Ethereum-based tokens (NWSET100), Large caps (NWSL100), and Coins (NWSCo100). Looking back over the last thirty days, Ether has had the most favorable performance, with a decrease of only 2.22%. Conversely, Ethereum-based tokens, represented by the NWSET100 index, have had the poorest performance. Regulatory actions and news can often substantially influence the cryptocurrency market, causing price fluctuations and market sentiment. It seems that actions taken by the SEC against major crypto exchanges have significantly impacted the performance of Ethereum-based tokens, as shown in the chart below.

Crypto (Digital Assets) compared with global equity

These comparisons highlight the contrasting performance between digital assets and traditional stocks.

This comparison provides insights into the performance differences between digital assets (coins, tokens) and traditional stock; The NWST1100 represents digital assets, while the Dow Jones Global W1Dow index represents traditional stocks. Here are the key observations from the information you provided:

• Performance Comparison: 19 months ago, digital assets were performing better than traditional stocks, with a record high quotient between the NWST1100 and W1Dow indexes. However, over the past 12 months, traditional stocks have outperformed digital assets by 12.7%.
• Recent Shift: There has been a recent shift in performance in the current year, with the NWST1100 index outperforming the W1Dow index by 27.8%. This shift potentially indicates a resurgence in the performance of digital assets.
• Mean Reversion Opportunity: The blue dashed curve on the chart represents the average quotient price over 143 working days, which has been lower than the long-run mean at 8.40. This suggests that digital assets may present an opportunity for buying at lower prices based on the theory of Mean reversion. Mean reversion theory suggests that asset prices and historical returns tend to revert to their long-run means over time.
• Annual Average Returns: The bottom two boxes on the chart depict the average yearly returns of buying one point of the respective indices daily (blue curves). The Crypto Index NWST1100 experienced a 22% decrease compared to a year ago. On the other hand, purchased stock from the NWST1100 has yielded a return of 4.9%. The DJW capital index achieved a 6.7% return on the purchased stock based on buying one point daily.

*The box in the middle of the chart shows the original NWST1100 price; at the bottom is W1Dow.