Digital Asset Weekly, Sep 7

Digital Assets ended the week -7.2% erasing 2.5 weeks of gains.  Declines were broad based with 82% of the top 200 coins / tokens ending the week lower.  Trading was active with the top 5 most actively traded coins / tokens +17% from the previous week.

While media coverage attributed this week’s pullback to reports that Goldman Sachs was walking back previously reported interest in the digital asset space – a combination of aggressive short positioning by big hands and poor order execution in both ETH and BTC looked to be a more likely culprit.

Flow highlights from this week included ICO project Digix Global selling off a ~ $20M chunk of ETH and a long dormant Silk Road linked wallet bringing ~$110M BTC to market.  Given relatively low volumes and the aggressive way in which these orders look to have been executed, these orders alone likely had a significant impact on the week’s price action.

Non-flow related headlines were a mixed bag this week, though positives looked to slightly outweigh negatives.  Positive stories included: ‘conversations’ between BlackRock and Coinbase, NASDAQ moving towards crypto access by 1H19, Yahoo supporting crypto trading on its iOS app, Iran getting crypto friendly and Coinbase continuing to build out its product offering.  Negative stories were led by disappointment around Goldman’s crypto desk, Venezuela’s Petro looking like a complete mess, and Shapeshift bending the knee to regulators.

Given that the bulk of this week’s correction was flow driven, would expect both BTC and ETH to regain their legs somewhat next week.  BTC shorts are now back up to the highs set previously in April and August and are beginning to look slightly overheated with a 50 day Z core of +1.7 standard deviations.  Risk / Reward for ETH also looks favorable with a < 30 RSI after posting one of the largest weekly corrections of the year.

Expect to see BTC price strengthen somewhat into the 2H of Sep as seasonal strength begins to support price.  Over the past 5 years, November and December have tended to be 2 of the strongest months of the year (chart 5).

Read the full report here: Digital Asset Weekly Sep 7 2018

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