The index for NWST1100 has risen by 3.05% 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 24%.
*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.
Continuing our track record of precise projections, the cryptocurrency market has maintained its position above the pivotal support thresholds, aligning with prior anticipations. Our scrutiny of the NWST1100 index chart, which serves as a significant benchmark index, reveals a multitude of noteworthy insights:
- The NWST1100 index’s trajectory shows a consolidation phase. This phase often indicates a market taking a breather, accumulating energy before its next significant move.
- Market Sentiment: The PPO lines have declined. The PPO histogram, trailing below the neutral line, has pivoted and now shows an ascending slope. Such a development is frequently viewed as an early sign of a potential trend reversal, suggesting a warming market sentiment. Adding to the optimistic signs, the Relative Strength Index (RSI) has diverted to an upward trajectory, signaling enhanced market vigor.
- Crypto Market Breadth indicators at the bottom of the chart reflect an uptick in the Advance-Decline Line (ADVL), signifying more cryptocurrencies are advancing than declining. The McClellan Summation Index has leveled off, suggesting a balancing of market forces.
According to the chart on the right, all four A50R lines have settled in the overbought territory but spiked down on Tuesday. 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). While traditionally, the overbought designation might spell caution, in this context, it may well be an expression of the market’s enduring strength and potential for continued upward movement.
* 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’s present course resonates with the same patterns discerned in the early months of the year, encapsulated by the ellipses on the accompanying chart.
- A closer look at the RSI shows it retracting from the overbought threshold, now positioned at a reading of 65—an indication of easing momentum yet still reflecting a strong market.
- The Percentage Price Oscillator (PPO) histogram, which measures the percentage difference between two moving averages, may soon show a shift from a descending to an ascending trajectory, which could signal the beginning of an increase in 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 remain flat, underlines the possibility of range trending.
Considering the consolidation signals from the technical indicators, a cautious perspective suggests that the market may stay in a consolidation phase within a specific range. However, it’s important to note that the market’s stability will likely remain above a critical support level, a 25-day EMA. This foundational support could serve as a launchpad for an upswing, mirroring the resilience seen during the vigorous December season, which is frequently graced with a year-end Christmas rally.
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 3.05% over the last week, indicating a modest rebound 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 24%.
While the broader market is experiencing consolidation, different segments and individual cryptocurrencies exhibit varied performance dynamics. Certain indices like NWSC100, NWSET100, and NWSL100 are currently weakening momentum. In contrast, Bitcoin, NWSBE, and NWWS30 are improving, increasing momentum. 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 54.5%. 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 63.5% margin. 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 (5.59). Currently, this average sits below its long-run mean, hovering around 7.47. 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 73.38% appreciation relative to last year’s period. With daily index investments, an investor’s stock would have seen a 30.1% uplift compared to the index’s current price.
- Contrasting with the crypto index, the DJW, representing global capital market shares, grew by 10.43% over the past year. However, a strategy involving daily purchases would have resulted in a gain of 5.5%.
- 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 2663 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.