2100NEWS WEEKLY CRYPTO REPORT Sep-20

The crypto index NWST1100 has risen by 4.31% over the last week; with a rise of 4.89%, Bitcoin has shown the most favorable performance within the previous 30 days.

*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. Monitoring Market Sentiment and Breadth is necessary to detect early signs of trend reversals or continued strength.

Based on our previous analysis, we predicted that the index the target range would likely be around Pivot P. After conducting a detailed examination of the NWST1100 chart, a vital metric for the cryptocurrency market, we have identified several important observations:

The NWST1100: The index hovered around pivot P until Wednesday, aligning with our predictions of market stability before any significant movement. Following the Federal Reserve’s rate cut announcement on Wednesday, which saw interest rates slashed by half a percentage point, the index responded with a sharp rally. This is a typical market response, as rate cuts favor riskier assets, such as cryptocurrencies, by encouraging investment. The index’s rally has brought it to a critical resistance level marked by the 143-day Exponential Moving Average (EMA), a significant technical threshold often used to gauge long-term market trends. The approach or touch of the 143-day EMA signals that the market is testing the strength of this rally. If the index can break through this resistance level, it may signal a sustained bullish trend.

Crypto Market Breadth indicators at the bottom of the chart show the Advance-Decline Line (ADVL) and McClellan Summation Index. A rising Advance-Decline Line (ADVL) and, similarly, a rising McClellan Summation Index, a long-term version of the McClellan Oscillator that measures market breadth, hint at a firmly established upward momentum that might have been prevalent.

* 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:

1. 100 Large-caps members of NWSL100 (top box)
2. 1100 members of NWST1100
3. 100 Ethereum Tokens members of NWSET100
4. 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.

1. The PPO histogram may change direction, suggesting that the upward momentum is losing steam, which might lead to market stabilization.
2. The RSI (Relative Strength Index), at a reading of 64, has been placed near the overbought zone; the market appears to be in a strong bullish phase with dominant buying pressure.
3. The Breadth indicators, evident at the bottom of the first chart (NWST1100), are on an upward trajectory. A rise in Breadth indicators, primarily the McClellan Summation Index (chart below), signals broad market participation.
4. The bullish trend is likely to continue with sustained upward movement if the index breaks through the 143-day EMA.

In conclusion, The seven-month declining period in the cryptocurrency market appears to be slowly ending as we approach the October to April period, which has historically been more favorable for investments. The third breakout of the 143-day EMA is typically successful, and if this occurs, the market may become overbought, reinforcing bullish enthusiasm. This outlook is further supported by the upcoming U.S. presidential elections, which often lead to rising prices for financial instruments. Additionally, quarter-end portfolio adjustments could trigger window dressing, with fund managers adjusting their positions to improve portfolio performance as the quarter ends and the new one begins. Overall, the market outlook is optimistic, with technical signals suggesting that while the market may be nearing a point of reversal at some resistance levels, bullish momentum remains dominant. The NWST1100 index is likely to test the Pivot R1 resistance level soon, which will be a critical point to watch for further confirmation of the market’s direction.

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, it can be seen that the overall index has risen by 4.31% over the last week. The chart above 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). Bitcoin has outperformed other segments, with a rise of 4.89% over the last thirty days.

While the broader market is experiencing an upward trend, different segments and individual cryptocurrencies exhibit varied performance dynamics. Bitcoin and index NWSET100 were leading; indices NWSBE and NWS30, and Ether were improving, NWSL100 was weakening, while NWSCo100 was lagging. 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 the relative strength and momentum of groups of digital assets. Those with strong relative strength and momentum appear 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:
  • 34 Months Ago: Digital assets showcased a notable outperformance against shares in global capital markets, reaching a record high in the comparative quotient between the NWST1100 and W1Dow indexes. At this juncture, digital assets displayed a notably superior performance trajectory compared to shares on global capital markets.
  • Twelve months ago, the advantage for digital assets became even more pronounced, with digital assets outperforming shares by a margin of 62.2%. This stark difference highlights the substantial returns that digital assets have offered over traditional shares within this timeframe.
• Mean Reversion Opportunity:
  • Over the past 143 working days, the average quotient price, represented by a blue dashed curve, stands at 8.42, while the current spot price is 7.95. This is higher than the long-term mean of 6.60.
  • The mean reversion theory suggests that asset prices, over time, tend to revert to their historical average returns. The current average quotient price above the long-run mean could imply that digital assets are currently highly 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 102.51% appreciation relative to last year’s period. With daily index investments, an investor’s stock would have seen only a 4.6% uplift compared to the index’s current price. Digital assets purchased over the preceding 12 months at an average price of 4,703 points were purchased at relatively elevated levels, as they were bought during a period when markets were yielding returns of several tens of percent compared to the previous year, and prices remained above the 143-day moving average for an extended period. This highlights the importance of timing in making purchases, suggesting that, for more substantial investment potential moving forward, acquisitions should be made when the market is below the 143-day moving average, as it was this past summer and continues to be at present.
  • Contrasting with the crypto index, the DJW, representing global capital market shares, grew by 25.30% over the past year. However, a strategy involving daily purchases would have resulted in a gain of 11.5%.

*The box in the middle of the chart shows the original NWST1100 price; at the bottom is W1Dow.