Digital Asset Weekly, Aug 10

Digital Assets followed through on last week’s declines falling another -13% this week. Declines remained broad based with decliners outpacing gainers at a rate of ~6:1. Selling this week shifted focus somewhat with tier 1 and tier 2 coins / tokens outpacing declines in smaller peers.

Price action remained largely technical with last week’s failure to hold onto $7800 triggering a pullback to the low $6000s. The technical correction was likely influenced – to some degree – by last week’s OkEx futures debacle and exasperated by a postponed decision on VanEck’s ETF application – which triggered a knee jerk plunge lower. Short positions picked up quickly – but look to have likely topped out after breaking just north of the 2 standard deviation mark (on a 50 day mean).

Outside of the delayed VanEck ETF ruling, news flow remained largely constructive with reports that 1) GS is considering involvement in the digital asset custody space, 2) major exchanges – Bittrex, Coinbase and Binance – expanding their product offerings / services, and 3) continued expansion in the mining space with Canaan launching their new 7nm miner and Bitmain announcing an aggressive US capex plan.

Looking forward, would expect BTC to regain its legs somewhat next week. Positive technical indicators include: 1) Shorts looking stretched at a > +2 Z-Score, 2) A ~2M low RSI reading of 30, 3) A TD sequential red 9 and 4) a solid line of support around the $6400 mark. Given that August is a consistent down month (BTC down 3 of the previous 4 Augusts, median decline of -13% MoM), think the most likely scenario for the next few weeks is a relatively low volume consolidation phase.

That said, think mid September is probably the more significant near term period to pay attention to. Not only does mid September put us squarely on the business end of BTC’s multi month triangle pattern, but also matches up well with BTC seasonality – and was a key inflection point (to the upside) in 2015, 2016 and 2017.

Read the full report here: Digital Asset Weekly August 10 2018