MaiCoin Digital Asset Weekly, Aug 16 2019


Digital Assets -13% WoW for one of the worst weekly drops of the year. Declines were broad based with < 15% of the top 200 coins and tokens ending the week higher. Volume continued to slide, falling ~ 5% WoW to a daily average of US$55B.

Headlines this week were led by 1. Reports of large selling from PulseToken (a Ponzi scheme broken up by Chinese authorities 2 months ago), 2. Barclays ending its relationship with Coinbase, 3. China’s central bank digital currency reportedly ready, and 4. the SEC again delaying a decision on BTC ETFs.

Declines this week came on the back of BTC’s failed bull pennant set up from last week. Remain cautiously optimistic going into next week, though, given the oversold signals from:

– 7D ROC. Hit a low of -15% this week. One of the largest readings YTD.
– 50D Price Z Score. -1.34 standard deviations. The lowest since early Feb.
– 50D Volume Z Score.-1.04 standard deviations. One of the lowest YTD.
– RSI. Low this week of 38 is the lowest since early Feb.
– TD Sequential. Currently on a down 7. Values > 7 are often inflection points.

Given strong support at the $8500 level, a conservative way to play the possibility of continued weakness is a small leveraged long between $8500 — $9,000.


Why did BTC lag Gold this week?

While we’ve recently been highlighting the increasing correlation between BTC and Gold, it’s important to remember that these are 2 very different assets despite having similar thematic drivers.

With a macro backdrop that seems uniquely favorable to BTC and Gold — European Banks hitting 52-week lows, trade wars, CNY devaluation, inverted yield curve, etc — it is, in someways, perplexing to see BTC underperform this week.

BTC and Gold are very different in terms of market participants, volume fragmentation, regulatory oversight, market cap, and overall maturity. I think that what this means is that while BTC is trending towards becoming a safe haven asset (as implied by increasing correlation with Gold), the correlation remains low — and we shouldn’t be surprised to see periods of short term diversion between the two.

Will there ever be an Alt Season?

Probably, no.

Alt Coins continued to underperform this week widening the gap with BTC YTD (chart below). Historically, the primary driver for Alt Coins is a rotation out of BTC on the back of a strong price move and the entrance of new money reluctant to chase a BTC rally.

Given that 1. new money generally prefers new projects (not struggling ICOs), 2. existing Alt Coin holders (mostly down ~90% from issuance) are a big overhang and 3. increasingly onerous regulatory oversight it’s hard to imagine a replay of 2017.



Chart 1. BTC vs Alt Coins, 1 year