The index for NWST1100 has gone down by 4.65% compared to last week, while Bitcoin has shown the most favorable performance within the previous 30 days, with a 6.34% gain.
*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 complex to read initially, but the graph shows essential price information, crucial decisive price levels, momentum, trading volumes, and crypto market breadth.
As anticipated in our previous report, we expected further declines toward the support levels at pivot P or possibly even pivot S1. We have analyzed the NWST1100 index chart, which serves as a significant benchmark index, and discovered several important details:
- The NWST1100 index price illustrated a significant bounce-back after touching the support delineated by the pivot point marked “S1” on Friday. This movement indicates that the mentioned support level remains solid and robust. Such resilience, especially after a forecasted decline, suggests substantial buying interest at this point, preventing further downward movement.
- Market Sentiment: The downward trend in the PPO lines, accompanied by a flattened histogram, emphasizes a prevailing bearish sentiment. This indicates a potential cooling off in the market. In contrast to the PPO, the RSI’s rebound showcases that there might be a renewed interest from buyers or a reduction in the intensity of selling. The conflicting signals between the PPO and RSI demonstrate the market’s current state of uncertainty.
- Crypto Market Breadth indicators at the bottom of the chart: The ADVL’s upward trajectory signifies that a broader range of cryptocurrencies is witnessing appreciation. This could denote a potential turnaround in the market. However, the decline in the McClellan Summation implies that the market might be experiencing some internal weakness or deceleration in momentum. It’s an essential contrast to the positive turn seen in the ADVL.
According to the chart on the right, all four A50R lines are in the oversold territory but have risen. This breadth indicator measures the percentage of digital assets trading above a 50-day moving average. The current condition suggests that a substantial portion (over 75%) of the cryptocurrency market is trading below its 50-day EMA (at relatively low levels compared to their short-term moving averages). When many cryptocurrencies start trading above their 50-day EMA, it may indicate a broader upward trend or a potential bullish 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:
- 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.
- Last week, the market took a breather, and there’s been a notable recovery after reaching a support level.
- The RSI (Relative Strength Index) currently stands at 43, with indications it might increase in the upcoming days.
- The Percentage Price Oscillator (PPO) histogram seems poised for an upward trajectory. An ascending PPO histogram usually signifies intensifying momentum, pointing to an emerging trend. Given that the PPO determines the percentage variance between two moving averages, its quick ascent due to a zero crossover may indicate the emergence of a new trend.
- Delving into the breadth indicators at the bottom of the NWST1100 chart, they may rise. The McClellan Summation Index is a long-term market breadth indicator based on the McClellan Oscillator. It indicates increasing breadth in the market, suggesting a broader participation of cryptocurrencies in the upward movement.
Given the current indicators and market dynamics, the short-term outlook for the cryptocurrency market appears optimistic. The analysis above points to a potential upswing in the upcoming week, with the target being the resistance level represented by the 143-day Exponential Moving Average (EMA). Furthermore, a successful third attempt to penetrate and surpass the red curve (143-day EMA) is anticipated.
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 dropped by 4.65% over the last 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). A retrospective view over the last thirty days indicates that Bitcoin has shown the most promising performance, with a gain of 6.34%.
Crypto (Digital Assets) compared with global equity
These comparisons provide insights into the relative performance of digital assets and shares on capital markets over different periods.
The NWST1100 represents digital assets, while the Dow Jones Global W1Dow index represents shares on capital markets. Let’s break down the key observations and implications:
- Historical Performance Comparison:
- 23 Months Ago: Digital assets, represented by the NWST1100 index, were outperforming shares on capital markets, represented by the W1Dow index, with a record high quotient between the two indexes. This suggests that investing in digital assets was more profitable than shares in Global capital markets during that period.
- 12 Months Ago: However, over the past 12 months, digital assets have lagged behind shares on capital markets by 8.7%. This indicates that shares on Global capital markets 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 shares on capital markets by a significant margin of 21.9%. 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 (5.26) over 143 working days. This average has been lower than the long-run mean at 7.6. 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 7.61% gain compared to a year ago. Conversely, the purchased stock of the index achieved a 3.9% decrease compared to the index’s current price.
- In contrast, the DJW Capital Index (shares on capital markets) experienced a 17.11% gain compared to a year ago. It achieved a 2.0% 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.