The index for NWST1100 has risen 0.51% over the last week; Coins represented by the NWSCo100 index have shown the most favorable performance within the previous 30 days, with a gain of over 10%.
*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 analysis, where we predicted that the market would likely continue its rally and potentially surpass resistance level R1., we have conducted a detailed examination of the NWST1100 index chart, which serves as a significant benchmark index and reveals a multitude of noteworthy insights:
- The NWST1100: The index has experienced a pullback after only touching the resistance level R1. This movement indicates a halt in the upward momentum near a critical technical level.
- Market Sentiment: The PPO lines and a PPO histogram have continued their descent, suggesting a decrease in bullish momentum. This trend indicates that the market’s upward drive is losing steam. However, the RSI has fallen below the oversold territory.
- Crypto Market Breadth indicators at the bottom of the chart provide a more cautious perspective. A downtick in the Advance-Decline Line (ADVL) suggests that fewer individual cryptocurrencies are participating in the rally, which could be a sign of weakening market breadth. Similarly, a falling McClellan Summation Index, a long-term version of the McClellan Oscillator that measures market breadth, has been falling, further corroborating the notion of diminishing upward momentum.
* 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 market shows bullish trends that differ from those seen in the early months of the year, as highlighted by the patterns within the ellipses on the chart. This shift suggests a change in market dynamics and investor sentiment, potentially leading to more sustained upward movements.
- The RSI (Relative Strength Index) with an RSI reading 51 indicates the market is balanced.
- The PPO lines may change the slope to an ascending, and the histogram may start rising, suggesting increasing bullish momentum.
- Looking at the breadth indicators at the bottom of the NWST1100 chart. The McClellan Summation Index (as shown in the chart below) – a derivative of the McClellan Oscillator – may cease its decline. This stabilization implies a steadying market breadth, which is crucial for sustaining a rally.
Given these momentum indicators, a short-term rebound in the cryptocurrency market seems likely. This forecast is underpinned by the current market momentum and breadth, which appear to support a change in direction. Additionally, the market is abuzz with speculation regarding the SEC’s anticipated decision on approving spot Bitcoin ETFs. This decision could be a pivotal moment for the cryptocurrency sector, potentially influencing market movements significantly. In conclusion, the NWST1100 index is expected to renew its rally and potentially surpass the resistance level R1.
Performance of different groups of Digital Assets (Coins and Tokens)
Investors and traders often rely on 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 0.51% over the last week, indicating a consolidation 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 10%.
While the broader market is experiencing consolidation, different segments and individual cryptocurrencies exhibit varied performance dynamics. Bitcoin and certain indices like NWSBE and NWWS30 are lagging. In contrast, NWSET100 and NWSL100 are leading. Ether is improving; NWSCo100 is lagging and has sharply declined in the past week. 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:
- 26 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 76.3%. This performance data accentuates the heightened returns digital assets offered over shares in the specified duration.
- Mean Reversion Opportunity:
- The average quotient price over the past 143 working days is plotted as a blue dashed curve (6.14). Currently, this average sits near its long-run mean, hovering around 7.41. However, the spot price is 7.45.
- The mean reversion theory suggests that asset prices, over time, tend to revert to their historical average returns. The current average quotient price at the long-run mean could imply that digital assets are currently valued 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 106.75% appreciation relative to last year’s period. With daily index investments, an investor’s stock would have seen a 39.7% uplift compared to the index’s current price.
- Contrasting with the crypto index, the DJW, representing global capital market shares, grew by 17.33% over the past year. However, a strategy involving daily purchases would have resulted in a gain of 7.6%.
- Expectations are rife as we stand the confirmed bullish trend between digital assets and global capital market shares. Digital assets purchased over the preceding year at an average price of 2884 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.