The NWST1100 index has increased by 0.90% from the previous week. Over the last thirty days, Tokens represented by the NWSET100 index have exhibited the most favorable performance, with an increase of 1.48%.
*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 we predicted in our previous report, the cryptocurrency market experienced a rebound after a swift test of the support level represented by the pivot point labeled “S1.” We have analyzed the NWST1100 index chart, which serves as a significant benchmark index, and discovered several important details:
- The NWST1100 index price exhibited a significant rebound during the week, particularly on Tuesday. This suggests that the support level held, and the market responded positively. This surge was characterized by a substantial increase in the index’s value, indicating increased buying pressure.
- Market Sentiment: The Percentage Price Oscillator (PPO) lines continued to rise, indicating positive momentum in the market. The PPO histogram also showed a subsequent increase, which can be interpreted as a strengthening trend. Additionally, the Relative Strength Index (RSI) has risen, suggesting that the market sentiment is becoming more bullish.
- Crypto Market Breadth indicators: The Crypto Market Breadth indicators at the bottom of the chart indicate an increase in market breadth. The Advance-Decline Line (ADVL) has risen, indicating that a more significant number of cryptocurrencies are experiencing gains. Furthermore, the McClellan Summation Index turned around on Thursday, which suggests a potential two-month bullish market. This turnaround in breadth, along with the rising sentiment, supports the idea of a changing market sentiment towards bullish.
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 trading below their 50-day EMA (at relatively low levels compared to their short-term moving averages). Despite being oversold, the A50R lines have started to rise. This indicates that the market may have increasing momentum, potentially leading to a reversal in the oversold condition. For investors and traders, an oversold condition could present an opportunity to buy cryptocurrencies at potentially discounted prices. This could be particularly appealing to those who believe in the overall positive sentiment in the market, especially if signs of upward momentum are present.
* 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:
- 100 Large-caps members of NWSL100 (top box)
- 1100 members of NWST1100
- 100 Ethereum Tokens members of NWSET100
- 100 Coins members of NWSCo100 (bottom box)
Outlook for this week
This report analyzes the cryptocurrency market’s short-term outlook and aims to provide insights into its potential direction. Although predicting the market’s behavior is challenging, discernible patterns in market waves offer some predictability. By examining momentum indicators, we can identify several signals that shed light on the market’s possible direction in the short term.
- The RSI (Relative Strength Index) currently stands at 48, indicating a moderate level of selling pressure in the market. RSI is a momentum oscillator that measures the speed and change of price movements, and an RSI reading of 48 suggests a balanced equilibrium between buying and selling forces.
- The Percentage Price Oscillator (PPO) histogram may continue an upturn. A rising PPO histogram can signal a strengthening momentum, suggesting the possibility of an evolving trend. The PPO, a momentum indicator tracking the percentage difference between two moving averages, may continue its ascent.
- Delving into the breadth indicators at the bottom of the NWST1100 chart, they may continue rising. The McClellan Summation Index, in particular, has been showing a turnaround. The McClellan Summation Index is a long-term market breadth indicator based on the McClellan Oscillator, and its turnaround indicates increasing breadth in the market.
Considering the current market landscape and this analytical setup, the cryptocurrency markets are poised to rise in the upcoming week, with the target being the resistance level represented by the pivot point labeled as “P.”
Performance of different groups of Digital Assets (Coins and Tokens)
Investors and traders often use historical performance data to make informed decisions about their cryptocurrency holdings. After analyzing the data in the table, the overall index NWST1100 has increased by 0.90% over the last week, indicating a modest positive performance in the broader cryptocurrency market. 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). A retrospective view over the last thirty days indicates that Tokens represented by the NWSET100 index have shown the most promising performance, with an increase of 1.48%.
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:
- 22 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 5.2%. This indicates that traditional stocks have delivered better returns than 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 margin of 18.4%. 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 7.87. 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 1.65% gain compared to a year ago. Additionally, the purchased stock of the index achieved a 2.6% decrease compared to the index’s current price.
- In contrast, the DJW Capital Index (traditional stocks) experienced a 12.52% gain compared to a year ago. It achieved a 6.9% 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.