February 6, 2019    Market Commentary

February 6, 2019 Market Commentary

The early part of 2019 had brought new capital allocations to some of the old favorites, while as a whole, the digital asset market has drifted lower with Bitcoin Dominance being the primary headwind.

Correlations that historically are negative, have turned positive which has many scratching their heads.  Below are some charts to help illustrate this point.

 

Coinmarketcap.com Digital Asset Total Market Cap, YTD

 

Coinmarketcap.com Digital Asset Total Market Cap, 3 week

 

Coinmarketcap.com Index, One Week

Although this one week chart may be among the most tame I have seen since the summer of 2018, it is one of the most important.  Currencies as a whole moved less than 5% from the weeks high to the weeks low.  This extremely tight consolidation tends to set up large moves.  When either the upper or lower bound is breached for a significant amount of time, the index will have a high probability of moving quickly at a high velocity.

 

Below are two charts of individual assets I follow in the crypto currency space.  Litecoin and PAC.

 

Litecoin, LTC

 

 

PAC

 

With Bitcoin still representing more than 52% of this asset class, many I have spoken with have been slowly moving away from Bitcoin and allocating capital into other coins, projects and tokens in the space.  This has not been highly publicized, but for those who believe that block chain as an asset class will grow and thrive in the future, this is one of the rare opportunities that allow investors to deploy capital in other names.

 

 

Taking a look at some other asset classes, we can see clearly the talk that a “strong dollar” is negative towards commodities, emerging markets and precious metals has been thrown by the wayside this year.

 

Dollar Index Futures (March DX)

 

 

SP 500 Futures (ES)

 

 

Emerging Markets Equities ETF (EEM)

 

Note this year what is good for US Equities is even better for EM

 

 

Crude Oil Futures (CL)

The Dollar having little effect on Crude so far this year

 

 

Gold Futures (GC)

 

Three assets that do not traditionally move together:  Gold, US Equities and the Dollar are all UP on the Year !!!

Could QE be on the horizon ??

 

 

VIX Futures

Clearly some were on the wrong side of many trades coming into the year.

 

Digital assets are the laggard this year, but I am still optimistic.  The asset class will only move forward when Bitcoin Dominance starts to decrease in significant fashion, showing that investors are willing to re-allocate capital to other projects.

Leave a Reply