The index for NWST1100 has rallied by 12.48% over the last week; Bitcoin has shown the most favorable performance within the previous 30 days, with a 27.64% 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.
Based on our previous forecasts, the cryptocurrency market has followed the predicted trajectory, especially after breaching the resistance level of 143 EMA. Our scrutiny of the NWST1100 index chart, which serves as a significant benchmark index, has yielded a plethora of salient observations:
- The NWST1100 index’s trajectory highlights a significant rally after surpassing the 143 EMA resistance, exhibiting the market’s strength and responsiveness to key resistance levels.
- Market Sentiment: The PPO (Percentage Price Oscillator) lines have embarked on an upward trend, hinting at sustained bullish momentum. However, the downward slope of the histogram may suggest a potential tempering of the rally, signaling that the pace of growth may slow down. The RSI (Relative Strength Index), a crucial momentum indicator, has settled in the overbought domain, further hinting at the possibility of a pullback or consolidation shortly.
- Crypto Market Breadth indicators at the bottom of the chart: The ADVL (Advance-Decline Volume Line) has shifted towards a downward course, indicating a potential disparity between advancing and declining stocks in terms of volume. However, the positive slope of the McClellan Summation Index affirms the market’s robustness, suggesting that despite short-term fluctuations, the broader market sentiment remains bullish.
According to the chart on the right, all four A50R lines have transitioned and are in the overbought territory. 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 70%) of the cryptocurrency market trades above its 50-day EMA (at relatively high levels compared to their short-term moving averages). Yet, being in this zone doesn’t necessarily mean the market will drop. It could show strong momentum pushing the market, much like what was observed at the start of the year. However, it’s also a heads-up that the market might be getting too hot.
* 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 experienced a sharp rally. Leading cryptocurrencies like Bitcoin and Ether, along with the performance indices of Ethereum tokens (NWSET100), Large caps (NWSL100), and Coins (NWSCo100), have surpassed their 143 EMA, solidifying a bullish stance.
- The crypto market may follow a similar pattern to those observed in February and March, as marked by ellipses on the provided chart.
- The RSI (Relative Strength Index) currently stands in overbought territory, with a reading of 78.
- The Percentage Price Oscillator (PPO) histogram, which measures the percentage difference between two moving averages, may soon show a shift from an ascending to a descending trajectory.
- Delving into the breadth indicators at the bottom of the NWST1100 chart. The McClellan Summation Index (chart below) – a derivative of the McClellan Oscillator – hints at a possible rise. This increase could signal a wider participation of cryptocurrencies in the market’s upward trend.
Given the current indicators and market dynamics, the short-term outlook for the cryptocurrency market points to a potential consolidation in the upcoming week, potentially gravitating towards the 10-day EMA as a support level.
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 soared 12.48% 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 27.64%.
Crypto (Digital Assets) compared with global equity
This report offers a comprehensive analysis comparing the performance of digital assets, as signified by the NWST1100 index, to shares on global capital markets, as represented by the Dow Jones Global W1Dow index. The comparison spans various timeframes, offering insights into historical and recent performances and potential future trends.
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. At this juncture, digital assets displayed a notably superior performance trajectory compared to shares on global capital markets.
- 12 Months Ago: Fast-forwarding to a year back, digital assets had a clear edge, outperforming shares by 13.1%. This performance data accentuates the heightened returns digital assets offered over shares in the specified duration.
- Recent Shift in Performance:
- An analysis of the present year reveals a stark enhancement in the performance of digital assets. They have surpassed shares on global capital markets by a significant 54.2% margin, indicating a change in tide and possibly hinting at growing confidence among investors in the digital asset sector.
- Mean Reversion Opportunity:
- The average quotient price over the past 143 working days is plotted as a blue dashed curve (6.28). Currently, this average sits below its long-run mean, hovering around 7.54. Such a deviation underscores a potential opportunity to invest in digital assets, leveraging 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 generated by buying one point of the respective index daily over the past twelve months.
- The NWST1100 Crypto Index enjoyed a 21.61% appreciation relative to the same period last year. With daily index investments, an investor’s stock would have seen a 15.7% uplift compared to the index’s current price.
- Contrasting with the crypto index, the DJW, representing global capital market shares, grew by 7.73% over the past year. However, a strategy involving daily purchases would have resulted in a slight decline of 2.9%.
- To conclude, expectations are rife as we stand at the confirmed bullish trend between digital assets and global capital market shares. Digital assets purchased over the preceding year at an average price of 2580 points seem poised to offer magnified returns compared to shares as we traverse this bullish phase.
*The box in the middle of the chart shows the original NWST1100 price; at the bottom is W1Dow.