MAX Digital Asset Weekly, Jan 4 2019

MAX Digital Asset Weekly

Digital Assets gained +13% this week on lighter trading. Volume fell -22% WoW across the space to a daily average of US$14.4B. Breadth was strongly skewed to the positive with 84% of the top 200 coins / tokens ending the week higher. The space as a whole finished the week modestly above the 50 day moving average and with the 20 day moving average just 1% away from crossing above the 50 day. Alt coins continued to lead gains — with outperformance relative to BTC increasing to 2 standard deviations above the pair’s 50 day moving average.

News this week remained a mixed bag, though sentiment was noticeably better. Top stories this week included: 1. Bakkt announcing US$182.5M in funding (though delaying their original Jan 24 2019 launch to ‘early 2019’), 2. Novogratz boosting his holdings in Galaxy Digital to 80%, 3. BitTorrent launching a token, and 4. more mainstream media attention paid to BTC with comments from Jordan Peterson, Tony Robbins and Dave Rubin.

With BTC building support north of the 20 day moving average and with the 20 day moving average looking increasingly likely to cross above the 50 day moving average there is a good chance that BTC will be able to test $4,400 — $4,700 by the end of the next week.

It’s also worth highlighting that ETH outperformed Bitcoin by ~ 25% this week. ETH/BTC not only now has rising 50 and 100 day moving averages but has also broken out of the apex resistance of a flat bottomed wedge / triangle formed over the last 7 months. Volume in ETH is also encouraging and looks to be on track for the 3rdconsecutive month of gains.

Seen together, these indicators are materially very positive for both ETH and arguably risk sentiment more generally given the importance of ETH to the broader space. Given ETH/BTC’s outperformance this week and RSI of 77, we could easily see a 5–8% pullback in the near term. It’s important to note that a pullback in the pair could manifest itself in a period of ETH consolidation or, potentially more likely, a break higher in BTC over the next couple of weeks.

On a final note, this week we published a piece by MAX Contributor Andrew Jim which looked at statistical crypto anomalies. The three important takeaways from that piece in the context of this summary are:

1. Bitcoin was the only Digital Asset in the top 20 by market cap to trigger downside price anomalies in the recent Nov-Dec sell-off (arguably making it the safest coin to accumulate into this move)

2. XMR and XLM are good proxies to the price performance of major alt coins.

3. Major alt coin proxies XMR and XLM are 20% and 13% from hitting what the model would expect to be likely inflection points.

Points 2 and 3 above could make XMR and XLM interesting gauges of sentiment in the coming weeks. A failure of XMR and XLM at these key levels is likely to indicate a short-term failure in the broader crypto universe and may give us our first real test of the theory that sentiment has in fact bottomed for this cycle already.