November 16, 2020

The TIE Weekly Insights (Nov 16)

Some highlights from this week:

Market Overview

The overall cryptocurrency market cap increased by 7.2% this week, from $442B to $474B. The majors saw a median 7 day price change of -1.51%, as BTC, XRP, and LTC were the only three to see positive returns. Long-term sentiment remains rather positive for most of the majors, besides Litecoin. Trade volumes were down across the board. The cutoff threshold for the top 5 coins by market cap dominance is currently 1%.

Market Overview

Weekly Performance of Major Cryptocurrencies

Trending Topics

DeFi Leads The Market

Despite some downtime issues with Infura, the ETH node infrastructure provider that powers several major dApps, DeFi led the cryptocurrency market in returns this week. 18 out of the top 20 DeFi tokens saw a positive return, with SUSHI at nearly +90%. Total Value Locked (TVL) in DeFi has surpassed $13B.

DeFi Performance This Week

Bitcoin Continues To Push To New Yearly Highs

Bitcoin saw a +3.11% price increase while trading within a 11.30% range this week from the low of $14,817 to the high of $16,491. BTC ended up closing the week at its 3rd highest weekly closing price ever (It’s highest since Jan ‘18). The market continues to respond positively to the growing media attention and announcements. BTC market cap dominance has surpassed 65%. Investor sentiment remained positive for the majority of the week, before falling during the weekend. Bitcoin currently has the highest long-term sentiment score among the majors.

Bitcoin this week

Bitcoin also has the highest market-cap as a multiple of trading volume. The TIE uses trading volume, rather than on-chain transactional volume to calculate NVT Ratio.The TIE’s NVT Ratio is calculated by dividing the network value (Market Cap) by the average trading volume of a cryptocurrency over the last 30 days. The NVT ratio is sometimes thought of as a P/E ratio for the crypto space. A lower NVT ratio implies that a given cryptocurrency is trading at a low multiple of its average daily volume. A higher NVT ratio implies that a given cryptocurrency is trading at a high multiple of its average daily volume.

NVT Ratios of Major Cryptocurrencies

Bitcoin Closes 6th Consecutive Up Week in a Row

BTC has just closed its 6th consecutive up/green week in a row. Historically, this has been a bullish signal and has indicated that the asset is currently in an uptrending market. When looking at the 6 weeks following this signal, we can see that there has only been one occurence when the following 6 weeks return was negative. It’s worth noting that the only negative return was -4%, which is also the only single digit 6 week return in this dataset.

The median 6 week return following this signal is +30.95%.

6 Consecutive Up Weeks

Below you can find this dataset in more detail, with each week separated and additional stats.

Weekly Returns of 6 up weeks

Following 6 Weeks Return

Down From All Time High

Bitcoin is currently down -17% from its all time high price. If the aforementioned signal, which resulted in an average 6 week return of +30%, holds, we could expect to see that the price of Bitcoin hit a new ATH within the next 6 weeks.

Down from all time high

Year-to-date Performance of Major Cryptocurrencies

2020 has been a great year for all of the major cryptocurrencies. Chainlink (+618%), Ethereum (+265%), and Bitcoin (+128%) have all seen positive triple digit returns while the median coin is up +58% year-to-date. EOS has been the lagging asset currently at a 0% return, as it's been consolidating around break even for the past 2 months.

YTD Performance

YTD Returns

Is Sentiment Hinting at a Trend Change?

Investor sentiment on EOS has reached a new all time high despite its market cap dominance hitting its lowest point since 2017. EOS’s long-term sentiment score has grown from 30 to 76 so far in 2020, an increase of 160%.

EOS sentiment vs market cap

This put EOS at the highest long-term sentiment score among the majors for a few days before falling behind Bitcoin. Additionally, EOS has seen the 4th highest YTD percentage change in sentiment score (+160%) behind ETH (+311%), BTC (+191%), and XLM (+163.%).

Long term sentiment

NVTweet Ratios

The NVTweet Ratio compares a cryptocurrency's social conversation relative to its Market Cap. The NVTweet Ratio looks at how many tweets a particular coin has per each $1M in Market Cap. The lower a coin's NVTweet Ratio the more tweet volume it has per $1M in market cap. An increasing NVTweet Ratio could suggest that a particular coins' market is becoming increasingly driven by institutional trading. As market cap is increasing faster than social volume, this may suggest less retail involvement in the market for a particular coin.

NVTweet Ratios

In the case of EOS, its NVTweet Ratio has consistently been the highest of the majors throughout all of 2020.

With investor sentiment reaching new highs despite lacking returns and falling market cap dominance, is EOS due for an increasing price rally?

LINK currently has the highest daily volatility, followed by LTC and XTZ. This isn’t surprising as LINK has had triple digit yearly returns.

Daily Volatility

Coinbase Listings Spark Conversations

Twitter conversations soar after new Coinbase listings: CVC (+1366%), MANA (+73%), DNT (+8366%). This sparked a new flame for the older altcoins which led Tweet volume to reach new all time highs for CVC and DNT.


Notable News

SEC Joins Major Authorities, Qualifies Banks as Bitcoin Custodians

Wyoming Senator-Elect Talks About Bitcoin on ABC News

Former Australian Senator Converts to Bitcoin Due To Demand Getting Stronger

This Week's Podcast Episodes

Ep. 26 - Exchange Differentiation with Thor Chan (AAX)
In our twenty-sixth episode Thor Chan (CEO of AAX) discusses cryptocurrency exchange differentiation, leveraging LSEG's matching engine for crypto, and attracting liquidity from both retail and institutional customers. Listen here

Ep. 27 - Uncle Sam is coming with Dan Hannum
In our twenty-seventh episode Dan Hannum (COO of ZenLedger & Founder of Hannum Capital Management) discusses crypto taxes, raising capital from Larry King, and investing in picks and shovels businesses. Listen here