The index for NWST1100 has risen 2.34% over the last week; Ether has shown the most favorable performance within the previous 30 days, with a gain of over 2.6%.
*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 approach the upper Keltner Channel line, 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 increased, hovering around a crucial pivot point (P), implying that it is at a critical decision point, potentially poised for further gains if it can sustain its momentum.
- Market Sentiment: The PPO lines and a PPO histogram have continued their ascent, suggesting increasing bullish momentum. The RSI’s position in equilibrium indicates that the market is waiting for a significant event or piece of news to establish the next clear direction.
- Crypto Market Breadth indicators at the bottom of the chart show a rising Advance-Decline Line (ADVL), suggesting that more individual cryptocurrencies participate in the rebound. Similarly, a flattened McClellan Summation Index, a long-term version of the McClellan Oscillator that measures market breadth, could indicate that the market is stabilizing and could be preparing for a more sustained recovery.
* 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 PPO lines and the histogram may continue rising, suggesting a bullish momentum. The RSI (Relative Strength Index), with an RSI reading of 51, the market is in a neutral zone, which typically suggests a lack of clear directional 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 start rising. The oscillator may begin to string together positive bars, suggesting a growing number of stocks participating in the upward movement, which can be a positive sign for the overall market health.
- Drawing parallels to the A50R lines from March of the previous year, which preluded a market rebound, offers historical context that could forecast a similar recovery.
The summary points to a cautiously optimistic outlook for the cryptocurrency market in the short term, bolstered by technical indicators and significant upcoming events like the Bitcoin halving. The NWST1100 index will likely approach the upper Keltner Channel line (+5%). The Keltner Channel, a volatility-based technical indicator, helps to identify potential trend directions and reversals. Approaching the upper line of this channel suggests that the market is testing the bounds of its current volatility range, potentially signaling an impending breakout to the upside.
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 risen by 2.34% 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 Ether has shown the most promising performance, with a gain of over 2.6%.
While the broader market is experiencing a rise, different segments and individual cryptocurrencies exhibit varied performance dynamics. Bitcoin and certain indices like NWSBE and NWWS30 are leading. In contrast, NWSET100 and NWSL100 are lagging. Ether is weakening. 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:
- 27 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 33.5%. 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 (6.41). Currently, this average sits near its long-run mean, hovering around 7.26. However, the spot price is 7.16.
- 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 fairly 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 47.05% appreciation relative to last year’s period. With daily index investments, an investor’s stock would have seen a 32.8% uplift compared to the index’s current price.
- Contrasting with the crypto index, the DJW, representing global capital market shares, grew by 10.84% over the past year. However, a strategy involving daily purchases would have resulted in a gain of 9.9%.
- 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 3008 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.