Digital Asset Weekly, Aug 3

Digital Assets gave up 2 weeks of consecutive gains to finish the week -10%.  Declines continued to be skewed heavily towards smaller coins and tokens with the < $500M market cap cohort falling an average of more than 20%.  BTC was also under pressure dropping -7% to end on 2.5 week low, but managed to outperform the sector as a whole with Bitcoin Dominance gaining to a YTD high of ~49%.  Overall sector market cap ended the week at US$260M.

News flow this week was noticeably lighter.  Investment, fundraising and expansion stories were the top themes of the week as (1) fundraising at a number of major miners (Canaan, EBang, Bitmain) saw new data points released – highlighted by an updated Bitmain term sheet reportedly putting the company’s 1Q18 profit at > US$1B (roughly inline with established tech blue chips like Fujitsu, Texas Instruments and HP), (2) reports that Binance had made its first venture investment, (3) Japan’s SBI continuing to add new equity stakes into their crypto portfolio, (4) reports that custody giant Northern Trust was investigating the space, and (5) Morgan Stanley poaching a ‘crypto specialist’ from Credit Suisse to bolster it’s Digital Assets desk.

Lighter news flow left price action largely at the mercy of technicals.  After 2 weeks of strong BTC gains and continued Alt Coin stagnation, pressure to consolidate kicked in pushing BTC back below the 20D MAVG for the first time in 2.5 weeks.

Looking into next week still see no reason for pressure to ease up in smaller coins / tokens given declining interest in token sales, decreasing liquidity and with ~ 1/2 of small mid cap projects still up significantly over the past year.  After failing to hold onto the $7,800 mark, risk for BTC now looks skewed to the downside.  The clearest near term support line looks to be around $6,400 – which would be roughly inline with normal seasonality.  August is historically a down month for BTC – with price down 3 of the previous 4 years and a median decline of -13% MoM.

Read the full report here: Digital Asset Weekly August 3 2018

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