MAX Digital Asset Weekly, Jan 25 2019

MAX Digital Asset Weekly, Jan 25 2019

Digital Assets remained range bound — ending the week -0.8% and continuing to oscillate within a tight 10% band over the previous 8 days. Lack of price action this week pushed consolidation into the longest stretch since the -40% correction in Nov of last year. Breadth continued to improve, though, with 33% of the top 40 Digital Assets ending the week above their 20 day moving averages (up from 20% last week and 5% the week before). Trading across the space was up fractionally from the previous week to end at a daily average of US$15.4B.

News flow this week was decidedly more positive ending several weeks of largely negative headlines. The themes of the week were expansion, capital market activities, infrastructure builds and generally positive regulatory headlines. Top stories this week included: 1. Coinbase and Bakkt expanding in Asia, 2. BInance launching a crypto-crypto OTC desk, 3. Bithumb and OkCoin executing reverse IPOs in the US and HK, 4. Go-Jek acquiring, 5. Rumors that the new Samsung Galaxy S10 will support BTC and ETH wallets, and 6. Positive comments from the UK’s FCA and Pennsylvania’s Department of Banking and Securities. The main negative this week was the CBOE’s Van Eck SolidX BTC ETF application falling victim to the ongoing US government shutdown.

Technical and trading positives this week included continued expansion across the BTC Lightning Network and another week of active trading in sentiment bellwethers LTC and TRX. Lightning Network total BTC Capacity, Channels and Nodes all ended the week at new historic highs. Average daily turnover in LTC is on pace for an 11 month high of $561M and TRX is on pace for a 9 month high of US$240M.

Looking into next week, the overall consensus remains cautious with leveraged trading still very inactive and traders warry of low volatility foreshadowing another break lower (a common theme throughout 2018). We continue to remain cautiously optimistic, though, especially given price stability in the face of another negative ETF headline — previous ETF delays and rejections have tended to force gaps lower). The lack of price reaction seems to imply that the market has largely immunized itself to ETF related news and that expectations have been reigned in somewhat. It also suggests that weak hands and speculative money have largely been washed out of the market. We think it is increasingly likely that the lows of this cycle have already been printed and that the most likely scenario is for another 2 or 3 quarters of largely sideways trading.

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