2100NEWS WEEKLY CRYPTO REPORT Aug-4

The NWST1100 index has declined by 2.64% from the previous week. Over the last thirty days, coins, represented by the NWSCo100 index, have had the most favorable performance, rising by 6.98%.

*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. 

The previous report accurately predicted that the cryptocurrency market would trend within a range between pivot P and support S1. Analyzing the NWST1100 index chart, which serves as a significant benchmark index, has revealed several key points:

1. The NWST1100 index price has been sliding down along 25-DAY EMA within a range between pivot P and support S1. This suggests a bearish trend in the market.
2. Negative Market Sentiment: The Percentage Price Oscillator (PPO) lines have continued to decline, indicating a further bearish sentiment. However, it’s worth noting that the PPO histogram has flattened, which might signal a potential slowing down of the bearish momentum. Additionally, the Relative Strength Index (RSI) has shown a strong downward trend, reflecting increasing selling pressure in the market.
3. Crypto Market Breadth indicators: The observations on the Crypto Market Breadth indicators at the bottom of the chart reveal a decrease in market breadth. The ADVL (Advance-Decline Line) falling suggests that there are more declining digital assets than advancing ones, indicating a bearish breadth in the market. The McClellan Summation Index falling also confirms a negative breadth, further supporting the bearish sentiment.

Considering these observations, it becomes evident that the current cryptocurrency market sentiment appears negative, with the cryptocurrency market experiencing a decline in prices and decreasing market breadth. The chart on the right shows that all four A50R lines are currently oversold. This breadth indicator measures the percentage of digital assets trading above a 50-day moving average. An oversold condition indicates that many cryptocurrencies are currently trading below their 50-DAY EMA (at relatively low levels compared to their short-term moving averages). As a result, some market participants may see this as an opportunity to buy at potentially discounted prices. In contrast, others may approach it cautiously, considering the overall negative sentiment in the market.

* 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

This crypto report aims to provide an analysis of the near-term market outlook for the cryptocurrency market. While complete predictability remains challenging, the market waves show some degree of predictability with discernible patterns in market behavior. By examining momentum indicators, several signals emerge that offer insights into the potential direction of the market in the short term.

1. Recently, the market has experienced a price decline, leading to the testing of key support levels. This price action provides critical clues about the market sentiment and potential future trends.
2. The RSI (Relative Strength Index) currently stands at 38, indicating a moderate level of selling pressure in the market. An RSI value below 30 is often considered oversold and might indicate a potential buying opportunity.
3. The Percentage Price Oscillator (PPO) histogram may start rising recently. Considering the past wave rhythm, the PPO lines’ downward sliding suggests a potential trend reversal point and the beginning of an upward movement. The PPO is a trend-following momentum indicator that measures the percentage difference between two moving averages.
4. The Breadth indicators at the bottom of the first chart (NWST1100) may change direction. The McClellan Summation Index, a long-term market breadth indicator relying on the McClellan Oscillator, indicates a continued decrease in market breadth. When the oscillator bars are below zero, it suggests a bearish momentum, indicating that the market breadth currently favors declining assets. The chart below shows that bearish downward pressure will reach the level in a few days, where a trend reversal occurred in May or December. Judging by the duration of this pressure, as seen in the histogram on the chart, it is expected to ease off by the end of the week.

Considering this setup, it will likely rebound after a quick test of solid support represented by the 143-DAY EMA (Exponential Moving Average). A rebound is anticipated over a pivot point referred to as “P.”

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

After analyzing the data in the table, the overall index NWST1100 has declined by 2.64% 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, coins, represented by the NWSCo100 index, have had the most favorable performance, rising by 6.98%.

Crypto (Digital Assets) compared with global equity

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

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. Let’s break down the key observations and implications:

• Historical Performance Comparison:
  • 21 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 suggests that investing in digital assets was more profitable during that period compared to traditional stocks.
  • 12 Months Ago: However, over the past 12 months, digital assets have lagged behind traditional stocks by 10.5%. This indicates that traditional stocks have delivered better returns compared to digital assets during this specific time frame.
• Recent Shift in Performance:
  • In the current year, there has been a noticeable shift in performance, with digital assets outperforming traditional stocks by a significant margin of 30.9%. This suggests a potential resurgence in the performance of digital assets and a change in investor sentiment toward the cryptocurrency market.
• Mean Reversion Opportunity:
  • The chart includes a blue dashed curve representing the average quotient price over 143 working days. This average has been lower than the long-run mean at 8.20. This observation hints at a potential buying opportunity for digital assets based on the mean reversion theory.
  • The mean reversion theory suggests that asset prices, over time, tend to revert to their historical average returns. The fact that the current average quotient price is below the long-run mean could imply that digital assets are currently undervalued compared to historical trends.
• Returns Comparison:
  • The chart also presents the returns achieved with the stock price generated by buying one point of the respective index daily over the past twelve months.
  • The NWST1100 Crypto Index experienced a 1.42% gain compared to a year ago. Additionally, the purchased stock of the index achieved an 8.9% increase compared to the index’s current price.
  • In contrast, the DJW Capital Index (traditional stocks) experienced a 7.24% gain compared to a year ago. It achieved an 8.2% return on the purchased stock of the index based on daily purchases.

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