Digital Assets ended the week -7% as an end of week bounce helped offset a steep -17% decline earlier in the week. Breadth for the week remained heavily skewed to the negative, though, with < 10% of the top 200 coins / tokens ending higher.
News flow remained pretty skinny this week, leaving price action to again be largely directed by technicals / flow. Signs of capitulation were more evident this week with social media full of retail investors – with portfolios heavily skewed towards smaller coins / tokens – throwing in the towel.
Top stories included 1) leaked slides from Bitmain’s pre IPO deck, 2) Coinbase adding 50k users / day, 3) the Bitcoin Tracker One ETN getting more US friendly, and 4) Pantera on track for a sizeable venture fund raise.
Looking into next week would expect to see a bounce as BTC digests this week’s aggressive shorting and as ETH attracts bottom fishing.
BTC’s ability to hold the line in the face of the most aggressive shorting in 4.5 months probably tilts risk to the upside. Historically (chart 6), shorting of this magnitude has been followed by a modest bounce the following week – and then more aggressive covering after that. The timing of a possible squeeze also lines up nicely with normal BTC seasonality which tends to see improved price performance in September.
ETH is also getting interesting after falling to its lowest RSI in 5 months and retracing to the < $400 level where it spent ~ 6 months consolidating last year. Feel that this is a very strong area of support for ETH. From a liquidity and regulatory perspective, ETH is also really the only other digital asset that institutional money is likely to engage with over the next 12 months. Risk / reward seems favorable at this level.
Read the full report here: Digital Asset Weekly August 17 2018