The index for NWST1100 has rallied by 11.31% over the last week; Coins represented by the NWSCo100 index have shown the most favorable performance within the previous 30 days, with a 50.99% 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.
Our previous forecasts have been accurate so far, as the cryptocurrency market is moving towards the resistance area R1, as predicted. 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 substantial rally after surpassing the 143 EMA resistance three weeks ago. However, the subsequent deceleration in growth over the last two weeks may signal a weakening of the upward momentum, prompting market participants to exercise caution.
- BlackRock plans for ethereum trust fueled speculation about ETF filing on Tuesday. Asset management giant BlackRock registered the iShares Ethereum Trust, and Nasdaq filed a proposal to list and trade shares of the trust.
- Market Sentiment: The PPO (Percentage Price Oscillator) lines’ upward trend generally indicates continued bullish sentiment. Nevertheless, a flattened PPO histogram could be interpreted as a sign that the market’s upward trend may not maintain its current pace. The RSI (Relative Strength Index), a crucial momentum indicator in the overbought territory, could imply that the market is due for a correction or period of consolidation. This is often seen when an asset’s price has risen quickly, prompting some investors to sell and take profits.
- Crypto Market Breadth indicators at the bottom of the chart: The ADVL (Advance-Decline Volume Line) leveling off implies that the market is at a standstill, with equal numbers of cryptocurrencies increasing and decreasing in value. However, the positive slope of the McClellan Summation Index indicates strong market breadth, meaning that the bullish trend is supported by a larger number of stocks participating in the rally, which is a positive sign for overall market strength.
According to the chart on the right, all four A50R lines have settled 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 85%) 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.
- The market’s current behavior is likened to observable patterns from earlier in the year, specifically those seen in February and March. This comparison suggests a cyclical nature of market movements that could indicate upcoming trends.
- The RSI (Relative Strength Index) currently stands in overbought territory, with a reading of 88. This condition often precedes a price pullback as prices could be stretched too far from their averages.
- 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, which could signal the beginning of a decrease in momentum.
- Delving into the breadth indicators at the bottom of the NWST1100 chart. The McClellan Summation Index (chart below) – a derivative of the McClellan Oscillator – may soon shift from an ascending to a descending trajectory, indicating that the bullish momentum across the broader market is weakening.
- The seasonal pattern associated with the approach of Thanksgiving, historically correlated with market growth, may provide an upward push, potentially offsetting the consolidation suggested by other indicators.
Considering the consolidation signals from the technical indicators and the bullish seasonal trend, a cautiously optimistic view suggests that while the market shows overbought conditions that could lead to consolidation, the positive seasonal influence may support the market’s sustenance above the support level, which was previously a resistance level (R1).
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 11.31% over the last week, indicating a sharp rally 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 Coins represented by the NWSCo100 index have shown the most promising performance, with a gain of over 51%.
While the broader market is experiencing a rally, different segments and individual cryptocurrencies exhibit varied performance dynamics. Ether and certain indices like NWSC100, NWSET100, and NWSL100 are currently leading in momentum, pointing to their strong market performance. In contrast, Bitcoin is showing signs of decreasing momentum, suggesting it may not be contributing as much to the recent rally. Investors and traders might use this information to adjust their portfolios, possibly shifting focus toward assets with stronger relative momentum while being cautious about those in the Weakening quadrant.
*RRG® charts show you the relative strength and momentum of groups of digital assets. That with strong relative strength and momentum appears in the green Leading quadrant. As relative momentum fades, they typically move into the yellow Weakening quadrant. If relative strength then fades, they move into the red Lagging quadrant. Finally, when momentum picks up again, they shift into the blue Improving quadrant.
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:
- 24 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 67.7%. 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 67.6% 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 (6.83). Currently, this average sits below its long-run mean, hovering around 7.50. 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 57.99% appreciation relative to last year’s period. With daily index investments, an investor’s stock would have seen a 31.7% uplift compared to the index’s current price.
- Contrasting with the crypto index, the DJW, representing global capital market shares, grew by 8.77% over the past year. However, a strategy involving daily purchases would have resulted in a gain of 2.0%.
- 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 2609 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.