August 12, 2018    Market Update

August 12, 2018 Market Update

 

Over the past week, the digital asset markets have experienced some selling pressure and the total market capitalization has moved to the 215 billion dollar valuation.

My last piece, I wrote about some pairings to watch as overall market signals as well as the Bitcoin Market Share (Dominance) level.  These pairings also lost some ground as Bitcoin’s percentage of the total market increased to an eight-month high and currently sits at 51%.

This blog will include more charts and pictures than normal and explain my thoughts and the possible signal or correlation.  I plan on having a one hour Question and Answer session this week on the $PAC Discord Channel, please ask the moderators for time and date.

 

 

Bitcoin Market Share (Dominance) of Total Digital Asset Market, currently 51.5%

In my opinion, this is a problem whether the total market is in rally mode or in sell-off mode.  With BTC being the highest volume asset and having the most pairings, in time of market selling.   I can understand why people hold BTC instead of other assets, but in a rally atmosphere the number in theory should come down, but over the past few months you can see the trend has been buying BTC vs selling everything, which is not a positive.

 

 

Bitcoin Underlying price from November 2017 to August 12, 2018.

 

On November 12, 2017, BTC  traded a low price of $5,500.  The range that day had a high price of $6,700.  In my career, I have had success in looking at a small range as an entry or exit point rather than one specific tick.

Moving to December 17, 2017.  Two events, not coincidentally occurred this day:  Bitcoin traded an all time high of $20,153 and the CBOE launched it’s BTC futures contract, the first non cash form of bitcoin.

November 12, 2017, the time of the low trade was just after 6:00pm est.  Why is this important ?  6:00pm est is when the CME Globex platform as well as some other key trading mechanisms opens the week for trade.

December 17, 2017, would you like to guess the time of the all time high ?  if you said just after 6:00pm EST, you are right.

I would also note than in the 35 day period between the aforementioned low price and high, BITCOIN RALLIED 366%

On Friday December 22, 2017, Bitcoin had a $5,000 range.  The high price ($16,000) was near the equity open for Wall St. (9:30am EST), and the low print ($11,000) was near the Futures final trade, (5:15pm EST).

The major theme for this chart is important times in the day.   Futures open 6:00pm EST on Sunday night in the US, close each weekday for 45 minutes at 5:15pm EST and re-open at 6:00pm EST that same day.  US Equities open at 9:30m EST and close at 4:00pm EST.  With the cryptocurrency markets becoming more global and with more derivatives being tradeable in the very near future, these times will be more and more important.

One could even look at the Tether volume at these various times each day and see a surge in volume.

Looking at this chart one can see five different time periods which Bitcoin traded at a major support band.  The major difference between this challenge of the $6,000 level and the prior four instances is the BTC Dominance factor.  It was moving lower on the rallies and only increasing on sell-offs.

 

 

The next pair of charts have been building a larger correlation over time.

 

Gold Futures over the past 12 months

 

 

Total Digital Asset Market Cap, One Year

 

Let’s Look more closing at the Gold and Crypto Correlation from Early May 2018 through August 2018

 

Crypto Total Market Cap …  May – August 2018

 

Gold Futures … May – August 2018

 

Both are alternative form to store capital outside of the traditional system

 

 

 

Next we can take a look at some assets which are generally more “user friendly” and rarely are seen making highs together

 

NASDAQ Futures over past 12 months.

This would appear that the  boat is quite full on the long side

 

US Dollar Index (DX) Futures, One Year.

Very High probability one of these two is priced incorrectly, and by a large amount.  Time will tell

 

One note on this DX chart, although I am not a believer in the DX trade vs. digital assets, as the media makes this correlation more widespread, the more people tend to hear something, the more they believe

But …

Since the US Government made it very clear on record that Tether is not a proxy for the US Dollar, it would appear that digital currency traders have a different opinion.

I will reiterate other key points on why Tether volume is important

Tether is the ONLY Cryptocurrency which trades more than 100% of the shares outstanding on a daily basis

Tether is consistently #2 in daily volume worldwide among digital assets

Tether has the second most pairings across all exchanges behind only Bitcoin.

 

 

The next charts focus on the total market of all digital assets not named Bitcoin

 

 

January 1, 2018 – August 12, 2018 .  Total Cryptocurrency Market excluding Bitcoin

 

August 1st – 12th . Total Cryptocurrency  Market excluding BTC

 

All Digital Assets less BTC need to regain the 130 – 135 billion area to have a sustainable rally

 

 

Below are three of the Large Cap Digital Commodities.  These three in particular will need to start gaining Bitcoin Satoshi’s on days when Bitcoin rallies for a broad based rally.

ETH   2018

 

 

XRP   2018

 

LTC 2018

 

The primary way in which Bitcoin “Dominance” decreases is on rallies, people exit BTC and enter something else.  The larger the divergence between the cash price and the Bitcoin Satoshi price tells you how it is outperforming or underperforming.

With this asset class still being very young and the professional managed money still making its way into the space, it will be difficult to have days in which Ripple, Litecoin, and Ethereum are up 3% while BTC is down 3%.  If and when that happens the broad-based rally is underway and one should take note.

 

 

The next Four charts will focus on $PAC

$PAC vs. BTC since inception, March 2018 – August 2018

 

As a comparison, and the project I am second most familiar with is a DOGE – BTC Chart over the same time period

 

DOGE vs. BTC … March 2018 – August 2018

 

 

In closing, with BTC Dominance at nine-month highs the charts of BTC vs. almost any other asset are going to have a similar shape moving from upper left to lower right.

 

What I have done during my career is look for other pairing offered to see how they perform against other assets.

 

$PAC vs. DOGE since first trade on Cryptopia 

(Chart courtesy of Cryptopia)

 

 

$PAC vs. LTC since first trade on Cryptopia

(Chart Courtesy of Cryptopia)

 

Dogecoin is my proxy for the coins in the top 500, with small per unit denominations.  I think the project is fantastic and have been a strong supporter of DOGE for a long time.

Litecoin is one of the biggest and best with a still affordable per unit price.

 

I show these two charts to put a perspective on the $PAC project and its price performance vs. other currencies which are in perpetual motion.

As Bitcoin Dominance has made new highs for the year day after day, it is becoming more intriguing to me to look at some of the other $PAC pairings.

Over the past week, the $PAC project showed exceptional resilience, gaining in Dollars, Litecoin, Bitcoin, Ethereum and Dogecoin pairings, and is now the top 250 most valuable block chain projects according to coinmarketcap.com.

 

 

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