2100NEWS WEEKLY CRYPTO REPORT Jul-14

The NWST1100 index has risen 3.78% from the previous week. Compound (COMP), Large-cap Ethereum-based Token, is biweekly making the most significant leap in rank within the NWSL100 crypto index.

*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 chart shows essential price information, crucial decisive price levels, momentum, trading volumes, and crypto market breadth. 

As predicted in the previous report, the cryptocurrency market has been consolidating above pivot P until Wednesday. However, a significant court decision regarding Ripple’s sale of XRP on Thursday has notably impacted the market. The court ruled that this sale does not qualify as an investment contract, leading to increased prices across various indices and leading cryptocurrencies. A closer analysis of the NWST1100 chart, a benchmark index, reveals interesting observations regarding market trends.

1. Changed market sentiment: There has been a shift from negative to positive market sentiment on Thursday, as indicated by various momentum indicators. The Percentage Price Oscillator (PPO) lines have changed direction and are now rising, along with the PPO histogram, suggesting an increasing bullish sentiment among market participants. The Relative Strength Index (RSI) has also changed direction and is rising, indicating improving market sentiment and potential buying pressure.
2. Shifting focus to the Crypto Market Breadth indicators at the bottom of the chart, two notable observations emerge. Firstly, the Advance-Decline Line (ADVL) has started rising, implying that more cryptocurrencies are experiencing positive price movements than declining ones. Secondly, the McClellan Summation Index, which measures the rate of change of the ADVL, has flattened, indicating a stabilization in market breadth.

Considering all these observations, it becomes evident that the cryptocurrency market is currently in a state of consolidation following a notable jump after the court decision. However, the changing momentum indicators, along with the slight improvement in market breadth, suggest a potential retracement.

One of the indicators providing insight into the market breadth is the A50R lines. These lines represent the percentage of digital assets trading above a 50-day moving average.

*This breadth indicator is essential in measuring the internal strength or weakness of the underlying index. Looking at the chart on the right side, we can see the A50R lines for four different categories of digital assets:

1. The top box shows the A50R lines for 100 Large-cap members of NWSL100.
2. The middle box displays the A50R lines for 1100 members of NWST1100, which is the Total Index measuring the performance of significant crypto assets based on market capitalization.
3. The third box shows the A50R lines for 100 Ethereum Tokens members of NWSET100.
4. The bottom box represents the A50R lines for 100 Coins members of NWSCo100.

All four A50R lines are currently at or over a midpoint. This suggests that a considerable portion of these digital assets are trading above their 50-day moving average, indicating positive internal strength within these market segments.

Outlook for this week

The cryptocurrency market waves show some degree of predictability, with discernible patterns in market behavior, although complete predictability remains challenging. By examining the momentum indicators, several signals emerge that provide insights into the near future. Here is an analysis of the near-term market outlook:

1. RSI: The RSI (Relative Strength Index) currently stands at 61.
2. The PPO (Percentage Price Oscillator) histogram and the PPO lines may change direction and start falling, indicating a potential continuation of decreasing price momentum. The PPO is a trend-following momentum indicator that measures the percentage difference between two moving averages. A downward movement suggests a weakening of price momentum, which could result in a slowdown in price increases.
3. The Breadth indicators at the bottom of the first chart (NWST1100) may start falling. The McClellan Summation Index, a long-term market breadth indicator relying on the McClellan Oscillator, indicates a continued decrease in market breadth. The oscillator bars below zero suggest a bearish momentum, indicating a potential lack of broad market participation.

These signals point towards a neutral sentiment permeating the cryptocurrency market, with slightly bearish momentum. Based on this analysis, a scenario of consolidation above Pivot P is likely, indicating a pause in the prevailing trend and a period of stabilization or sideways movement in the market.

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

After analyzing the data in the table, the overall index NWST1100 has risen by 3.78% over the past week. The chart below highlights the performance of various cryptocurrencies, such as Bitcoin, Ether, and the 2100NEWS Indices, which measure the performance of Ethereum-based tokens (NWSET100), Large caps (NWSL100), and Coins (NWSCo100). Looking back over the last thirty days, coins, represented by the NWSCo100 index, have had the most favorable performance, soaring 15.94%. The court decision regarding Ripple’s sale of XRP on Thursday has had a notable impact, as shown in the chart below.

Crypto (Digital Assets) compared with global equity

These comparisons provide insights into the relative performance of digital assets and traditional stocks over different time periods.

The comparison highlights the performance differences between digital assets (coins, tokens) and traditional stocks; the NWST1100 represents digital assets, while the Dow Jones Global W1Dow index represents traditional stocks. Here are the key observations:

• Performance Comparison: 20 months ago, digital assets (represented by the NWST1100 index) were outperforming traditional stocks (represented by the W1Dow index), with a record high quotient between the two indexes. This indicates that during that period, investing in digital assets yielded higher returns compared to traditional stocks. Over the past 12 months, digital assets have continued outperforming traditional stocks by 2.7%.
• Recent Shift: There has been a recent shift in performance in the current year, with the NWST1100 index outperforming the W1Dow index by a substantial margin of 35.9%. This shift potentially indicates a resurgence in the performance of digital assets and a potential shift in investor sentiment toward the cryptocurrency market.
• 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 8.31. 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.
• Returns: The bottom two boxes on the chart illustrate the returns achieved with the stock price (blue curves) if one point of the respective index was bought daily in the past year. The Crypto Index NWST1100 experienced a significant 26.3% gain compared to a year ago. Moreover, the purchased stock experienced a 14.9% increase compared to the index’s current price. The DJW capital index experienced a 17.8% gain compared to a year ago and achieved a 10.9% 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. 

Indices Revision 7-14-2023

Based on the latest Bi-weekly revision, several new mid-cap assets have been added to the NWSM200 index, including Maverick Protocol, Verge, Acala Network, etc. More information about the additions and deletions for other indices in the family is available in each index’s presentation.

Winning member

Congratulations to Compound (COMP) for being the winning member of the NWSL100 crypto index with the most significant rank jump. We gauged Compound (COMP) Large-cap Ethereum-based Token with 2100NEWS Digital Assets 100 Large Cap Index (NWSL100) to make an appropriate peer comparison. On average (violet area chart), the relationship between NWSL100  and COMP has shown that COMP has outperformed NWSL100 by 87% over the previous ten weeks. First, compare the COMP green area graph with the index (orange area graph) while observing the correlation graph. The correlation graph explains the weak correlation (Pearson’s correlation coefficient = 0.17). It was moving in the same direction as the NWSL100; however, it has been a bad representative of the NWSL100 index regarding price changes.

*We elect the member of the NWSL100 crypto index with the most significant jump in our ranking. We will examine how the market rates the project’s progress in case of price changes. It seems important to us whether the project is out of the ordinary tide of crypto project prices. Peer comparison should be efficient and effective, considering an investor’s point of view. 

Compound (COMP) Website: https://compound.finance//

COMP Large-cap Ethereum-based Token is 67th in the 2100NEWS ranking. It is an Index member: NWST1100, NWSL100, NWSTo100, NWSET100

2100NEWS DA Orderbook Quality Evaluation Grade:  Poor, 16.5 (Average for Large-caps: 18.5)

Over the last week, the average market cap was $470.4 million, and the average daily volume was $111.5 million.

*The chart below shows the COMP compared to NWSL100 at the top, the box in the middle of the chart shows the original price, and at the bottom, we see NWSL100 and the correlation between  COMP and NWSL100.