MAX Digital Asset Weekly, Dec 14 2018

MAX Digital Asset Weekly, Dec 14 2018

Digital Assets remained under pressure falling another -3% this week. Declines remained broad based and heavily correlated with all major thematic groupings down about the same amount. Volume for the week fell ~ -15% from the previous week to a 7 day average of US$12B across the space.

News flow this week was very quiet. Headcount cuts and shut downs continued to be one of the primary focuses of the week with reports that US$133M ICO project Basis had closed shop, ConsenSys had laid off 13% of its workforce, and comments from Pantera that 25% of its ICO portfolio could be subject to SEC directed investor refunds.

The hardware space saw interesting developments with reports that Samsung’s next Galaxy S10 may incorporated a built in BTC hardware wallet, following up on similar offerings from HTC’s Exodus and Sirin Lab’s Finney Phone.

Bitcoin Cash derivatives BCH and BSV continued to struggle with volumes this week falling to a combined US$188M — just 26% of Bitcoin Cash’s 12 month daily average of US$700m. BSV led declines amongst major coins / tokens this week with Binance opening up BCH/BSV conversions, allowing Bitcoin Cash holders to split out BSV and sell into 2 weeks of outperformance. BCH ended the week -15% and BSV -27%.

In terms of price action, the good news is that the 60Day ROC at -50%, coupled with shorts just off YtD highs remains supportive of a bounce (The last breach of 60Day ROC below -50% was 1Day before the Feb5th 2018 bottom which was followed by a 95% ~rally & prior to that you have to go as far back as 14Jan 2015 which was the bottom, although that bottom was retested but not before an 87%~ rally first!).

The bad news is that the bounce has been slow to materialise and the longer that’s the case, the more likely it is that the next move is lower. This is also somewhat supported by the descending triangle on the 4H chart. A break below this $3,300 level could easily put us back at $2,800, a level of resistance for most of the June-August period last year.

Whilst we feel odds continue to favor the downside, total bid / total ask (chart 5) has improved to the highest level on record and is now looking supportive of a medium term bounce.

In the last few weeks we have seen bids totalling 5–6K down only 10% from spot. The last time we saw anything like that number was in the January-August 2015 time frame with several spikes at or around the 2015 bear market bottoms. If we chart the bid:ask ratio, the number has been as high as 6X~ recently (Bid:Ask) which is almost double anything we have seen all year and dwarfs anything we have seen in recent history. YtD anything above 3x~ (Bid:Ask) has tied in nicely with short term bottoms. It may be a rough few days on the horizon but we continue to see the building blocks of a bottom being put in place.