Last week produced the second solid week of gains in the cryptocurrency space with the broader market gaining 19%, led by Bitcoin which was up 30% and Lite Coin which gained 48% in just 24 hours starting late Tuesday Night. With this gain, the Cryptocurrency Market is now back above the 500-billion-dollar mark.
Since it was just two weeks ago that the sky seemed to be falling in the majority of asset classes across the board, it is worth noting what other investments returns were over the past seven days.
VIX Down 33% (Hint)
Cryptocurrency Up 19% (Hint, Hint)
SP Futures Up 2.5%
Ten Year Unchanged (Only a few ticks away from multi year lows)
Eurodollar Down .2% (Eurodollar rates highest since July 2015)
Dollar Index Down 1% (DX heavily weighted vs Europe .. 58% EURO 12% POUND)
Gold Up 1%
Please take a look at the past few weeks of market updates to see the strong inverse correlation that is developing between the VIX and the Cryptocurrency market.
The past weeks rally was led by Bitcoin’s rise of 30% while the total market only rallied 19%. That said, BTC has been the primary entry point into the digital currency markets, so for continued expansion of the broader market, I would like to see the rest of the currencies keep pace with the Bitcoin rally on a percentage basis.
On broad based expansions, money historically goes into market leaders then makes its way into the smaller market cap assets. BTC Dominance hit an all time low of 32% in between January 4th and January 7th of 2018, while the Cryptocurrency Total Market Cap hit an all-time high of 832 Billion Dollars on January 7th and January 8th of this year.
Also worth noting:
December 17, 2017, (CME BTC Futures 1st day of trade) the BTC all time high $19,850, and was 55% of the total market
January 8, 2018, Cryptocurrency Market high 832 Billion, and Bitcoin was only 32% of the total market
From December 17, 2018 to January 8, 2018, BTC lost 45 billion in market cap (12%) while the rest of the crypto space gained 268 billion (111%.)
Hence my belief that for a sustained broad-based rally, BTC dominance needs to decrease.
I would also note February 20, 2018 as a historic day in the history of blockchain and digital currencies. Tomorrow will be the first day that a Government will issue a digital currency. Venezuela will start its sale of PETRO.
Whether or not price increases or decreases is of less importance, the fact that a country is issuing a crypto is a water shed moment.
Below please take a look at some of the charts to help illustrate some of the points I noted in today’s market update.
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