2100NEWS WEEKLY CRYPTO REPORT Feb-7

The crypto index NWST1100 has plunged 13.89% over the last week. Bitcoin has outperformed other segments, gaining 5.60% in the previous thirty 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.

After conducting a detailed examination of the NWST1100 chart, a vital metric for the cryptocurrency market, reveals several essential market dynamics and changes in market sentiment:

The NWST1100: The index has declined toward the 143-day EMA, confirming the transition from a sideways to a downward trend over the past week. A decisive market shift occurred on Monday in the early morning hours, when the index dropped below the diagonal dashed line, confirming the bearish trend. Similar conditions of approaching the 143-day EMA (red line) were observed last June (marked with red ellipses). The decline was significant, with the index erasing approximately half of the gains achieved since November. Mid-cap assets and Ethereum Tokens have been hit the hardest, significantly underperforming the broader market. Despite previous market growth, these assets erased nearly all gains, returning to levels last seen in July of the prior year.

Market Sentiment (PPO & RSI): The Price Oscillator (PPO) lines have continued their downward trajectory. The histogram initially declined before reversing slightly, showing modest gains in the last two days of the week. The RSI (Relative Strength Index) mirrored the PPO lines trend, reinforcing the bearish sentiment with consistent weakness.

Crypto Market Breadth indicators at the bottom of the chart: The Advance-Decline Line (ADVL), which measures the number of advancing versus declining assets, has fallen, suggesting a growing ratio of declining assets to growing ones. Similarly, the falling McClellan Summation Index, a long-term version of the McClellan Oscillator that measures market breadth, showed a downward trend, reinforcing the notion of deteriorating overall market health.

* 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 delves into the cryptocurrency market’s short-term outlook, identifying patterns and signals that could provide insights into potential market direction. While predicting market behavior is inherently uncertain, discernible trends in momentum and market breadth indicators suggest possible developments.

1. The PPO lines may transition to positive after forming a bottom, and the histogram may rise to a zero line. This movement suggests a potential stop of bearish momentum, increasing the likelihood of upward price movements or relief rallies in the near term.
2. The RSI (Relative Strength Index), with a current reading of 33, signals that the market is nearing oversold territory and shows dominant selling pressure and a bearish sentiment in the market. Historically, RSI at these levels signals that selling pressure may be exhausting, increasing the probability of a turnaround.
3. The Breadth indicators, evident at the bottom of the first chart (NWST1100) and the falling McClellan Summation Index on the chart below, may soon reverse, suggesting that declining participation may stop, leading to broader market stabilization.
4. Extreme oversold conditions persist, with most cryptocurrencies trading below their 50-day moving averages. These conditions typically precede periods of stabilization or recovery.

In conclusion, the market is poised for potential short-term volatility, but early signs of stabilization are emerging. While short-term volatility is expected to persist, improving momentum and participation indicators could pave the way for a recovery phase. The 143-day EMA could be a key support level for a potential trend reversal.

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 plunged 13.89% 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, gaining 5.60% in the previous thirty days.

While the broader market is experiencing a downward trend, different segments and individual cryptocurrencies exhibit varied performance dynamics. Bitcoin, NWSBE, and NWS30 led, NWSCo100, NWSET100, and NWSL100 lagged, and Ether was improving. 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:
  • 39 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 41.7%. This difference highlights the substantial returns that digital assets have offered over traditional equity within this timeframe.
• Mean Reversion Opportunity:
  • Over the past 143 working days, the average quotient price, represented by a blue dashed curve, stands at 10.42, while the current spot price is 10.44. This is higher than the long-term mean of 7.33, which has increased since October.
  • The mean reversion theory suggests that asset prices tend to revert to their historical average returns over time. 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 63.68% appreciation relative to last year’s period. With daily index investments, an investor’s stock price (5,998) would have been lower than the current index price, resulting in a 13.9% profit. Digital assets purchased over the preceding 12 months at an average price of 5,998 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. The strong rally in November has made even these relatively expensive purchases profitable. However, for more substantial investment potential, acquisitions should ideally be made when the market is below the 143-day moving average, as it was this past summer and continued until four months ago.
  • Contrasting with the crypto index, the DJW, representing global capital market shares, grew by 16.07% over the past twelve months. However, a strategy involving daily purchases would have resulted in a gain of 6.9%.

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