MAX Digital Asset Weekly, Jan 18 2019

MAX Digital Asset Weekly, Jan 18 2019

Digital Assets ended the week little changed on lighter trading. Breadth improved slightly — but remained skewed heavily to the negative — with 20% of the top coins / tokens finishing above their 20 day moving averages (vs just 5% last week). Overall trading across the Digital Asset space was down about -8% from the previous week to a daily average of US$15B.

Infrastructure expansion and technology upgrades were the focus of the week with 1. ETH pushing back the Constantinople upgrade, 2. More Lightning Network development (Blockstream opening its satellite network to Lightning Network powered data broadcasts), 3. the much-awaited launch of the 2ndMimblewimble implementation (privacy tech possibly applicable to BTC) and 4. A recovery of BTC hashrate to a 3 month high.

Newsflow this week was light — offering little inspiration to break price out of a tight trading range. Stories this week were led by 1. The Stock Exchange of Thailand reportedly applying for a Digital Asset license, 2. BitGo and Genesis offering a new custodial / trading partnership, 2. A single digit US$M hack at Cryptopia, and 3. BInance opening up GBP/EUR trade support.

Looking into next week, BTC outperformance vs the rest of the space looks to have largely mean reverted back to neutral with BTC ending the week at an 8 day high vs other Digital Assets. That said, BTC also looks to be approaching another major inflection point with volatility tightening, volume thinning and leveraged trading slowing down sharply. Sentiment continues to be heavily stacked to the negative with the majority of traders still expecting BTC to break below the US$3,000 level. Major caveats to the bearish view, though, are 1. The fact that sentiment is overwhelmingly one side, 2. Tentative outperformance of small caps and utility tokens this week — signaling tentatively better risk appetite in some areas of the space, and 3. very active MtD trading in sentiment bellwethers TRX and LTC. Finally, it’s also worth highlighting that the monthly RSI is currently trading at a historic low RSI of 44 and that the rebound in the weekly RSI is very reminiscent of the 2015 bottom (chart 7).

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