November 29, 2018   Market Commentary

November 29, 2018 Market Commentary

The past week buyers returned to many asset classes looking for bargains, primarily in the tech heavy NASDAQ and in the world of blockchain.  The NASDAQ put posted a solid rally while the CMC blockchain index rallied more than 22% from this weeks lows to finish unchanged above the 140 billion dollar level.

 

NASDAQ 100 Futures, Three Month

 

Coinmarketcap.com Blockchain Index, One Week

 

Although the Digital Asset market cap is unchanged near the 140 billion dollar valuation, this strong move off of the monthly and yearly lows, set in late November,  should provide major support moving forward.  Another positive is Bitcoin’s percentage of total market cap (BTC Dominance,) remained unchanged during the month of November, holding steady between the 53% and 54% levels.

 

CMC Digital Asset Index, One Month

 

Looking at the Digital Asset sector with a longer term chart, we see technical damage was done during the month of November.  The Cryptocurrency space will encounter resistance between the 180 billion and 200 billion market cap level as sell orders from many looking to “break even” on the year will rest.  The current price band near the 140 billion area will serve as the shoulder line and interim support as the blockchain index will begin to complete the reverse head and shoulders formation during the month of December.

 

Below are charts of four digital assets to watch in the upcoming months

One note on the various blockchain assets below.  In the past, I have focused on US Dollar value, and still believe that is the most important metric in price.  However, with the selloff in November and BTC representing well over half of market capitalization for this asset class, I reference the BTC pairing and the satoshi exchange rate.  In order for the US dollar value of digital assets to  rise in a significant manner, Bitcoin will need to rise over the $6,000 level or BTC dominance will need to fall precipitously.  A rise over the $6,000 level would provide a psychological lift to the market and will have many of the trend following CTA’s and Funds covering shorts and initiating long positions.

 

BTC, One Month

Bitcoin, which currently represent 53.7% of the CMC blockchain index will find support between $3,500 and $4,000.

Resistance rests above near the $6,000 area.  In order for the digital asset sector  to have a broad based rally, BTC Dominance will need to fall dramatically.  One key I am looking for are days where the mega cap assets gain and BTC is flat or possibly down slightly.

 

ETH, Three Month

Ethereum was able to stay above its year low in its Bitcoin pairing, and will need to push above the 3 million BTC Satoshi level in order to regain a bullish bias.

 

LTC, One Month

Litecoin was hit hard during the early parts of November as many leveraged traders were forced to liquidate all positions.  However, during the past ten days LTC was been exceptionally strong and is on the verge of trading a new high in its BTC pairing.  I am looking for this strength to continue.

 

DOGE, One month

Dogecoin experienced selling in early November as under capitalized and over leveraged traders and managers were forced out of positions by exchanges and clearing firms.

Doge, was one of the first large cap digital asssets to rebound and is currently near the midpoint of its November range in its BTC pairing.  Major support vs BTC is just below the 47 BTC satoshi interval, while Dogecoin may see some resistance near the 60 BTC satoshi level.

 

 

$PAC , One month

As we see in the chart, the $PAC project experienced four large selling points, each of which was met with significant buyers coming shortly there after.  One year ago this project was valued at 2.7 million dollars.  Just 39 days later the $PAC project reached a market cap of more than 800 million dollars.  An astronomical gain, largely due to people’s belief in a successful redemption and positive things to come in the new year.  One year later, the redemption is passed, the $PAC project has had many positive notes, yet I still see some who doubt the $PAC team and question its accolades while others remain loyal and continue to believe in the $PAC team and their goals.  I began writing this blog more than a year ago at the request of one of the founders.  I am not here to convince you to buy or sell $PAC assets, that is for you the investor to decide.  The questions below are some that I have asked many investors in various asset classes throughout my career.

What brought you to the investment ?

Why did you decide to buy and what made you choose the price?

If you are buying more or if you are selling, why ?  Did something change for the better, or for the worse ?

Name three reasons why you liked the investment when you added it to your portfolio ?

Did you research and do some due diligence prior to investing?

Was emotion involved in your capital allocation decisions?

What have other comparable companies (projects) in the same asset class done during that time period?

How does the valuation of your investment compare to other comps?

 

I will be the first to say that research in the digital asset space is far harder to come by than in many other asset classes.  After a year long bear market and a month that many cryptocurrency investors would like to put behind them, the opportunity for value investing in the digital asset space is even more prevalent.  I am confident that investors with extra capital to allocate in the digital asset world will be welcomed with open arms by many great projects in this sector.

 

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