MaiCoin Digital Asset Weekly, Sep 6 2019

MaiCoin Digital Asset Weekly, Sep 6 2019

Commentary

Digital Assets +9% this week with BTC +11% again doing the bulk of heavy lifting. Volume was a bit softer across the space~ -5% WoW to US$47B. Breadth was modestly better with ~53% of the top 200 coins and tokens ending the week higher.

Gains early in the week were supported by a mid week short squeeze and the liquidation of ~ $130M of short positions on BitMEX. Overall market setup in BTC saw a switch to new longs being added while a number of other major Alt Coins saw continued growth in short positions. BTC’s YTD performance increased to +180% while other major coins and tokens saw YTD gains trimmed to +20%.

News flow this week was generally positive with 1) VanEck moving forward with an institutional only ETF, 2) Indian authorities warming up to crypto, 3) Bitfinex launching derivatives trading, 4) Binance and Paxos launching new stable coins and 5) BTC shaking off a sharp dip in gold.

Most interestingly, though, was a sharp spike in Google search interest this week (Chart 8). China looks to be the epicenter, so pick up in interest is likely part of the broader CNY devaluation story.

Looking forward, BTC price continues to work its way through a triangular price structure (Chart 9). Near Term support looks to be stacked around $9,300 to $9,500 (convergence of Fibonnaci Retracement and Mid Term Trend Line). Near Term resistance looks to be at about $11,000. If BTC can crack convincingly through $11,000 than I think $13,000 is in play. I still like the idea of a small leveraged short on Delta Exchange with a $8,500 target to hedge a break of $9,300 support.

Thoughts

BTC now 70.9% of overall industry market cap

In 1Q18, BTC’s market share fell to a historic low of 33%. This was driven by a surge in ETH price, an explosion in ICO issuances and a series of BTC forks. Prior to 1Q17, BTC normally accounted for >80% of total industry market cap.

I think we’re unlikely to see a significant, broad based recovery in Alt Coins in the near term. ETH, the second largest Digital Asset by market cap, continues to struggle with scaling issues and its transtion to PoS. There is also amassive overhang of 2017 buyers in the ICO market that are likely to sell into any bounce. The BTC forks have largely faded into irrelevance with BSV and BCH combined now accounting for less than 4% of BTC’s price.

Continue to think there is a high probability that BTC dominance will reeturn to the > 80% level.

News

Charts

  • Chart 1. Price vs Volume.
    – Volume was down across the board. BTC and ETC the main price leaders
  • Chart 2. Price Performance, Top Coins and Tokens
  • Chart 3. Price Performance, Major Thematics
    – BTC leads. Bit of a bounce in oversold exchange tokens.
  • Chart4. Price Z Score
    – BTC price back to neutral vs the 50D AVG
  • Chart 5. Volume Z Score
    – Volume in ETH really drying up, could imply a bottom
  • Chart 6. Average Daily Turnover, By Month
    – Volume in everything down for the 4th consecutive month
  • Chart 7. YTD Price Performance
    – BTC +180% YTD, everything else +20%
  • Chart 8. Google Trends
    – BTC search interest in tracking a historic high
    – Top countries: China, Nigeria, South Africa and Ghana
  • Chart 9. Triangular Price Consolidation
    – Depending how you draw the lower support line, I think you could even make the case for a Bull Pennant, which would imply potential upside to $15,000
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