Weekly Index Performance – April 27, 2022

Weekly Index Performance – April 27, 2022

In this newsletter, we will go through the top weekly performances of the Token Metrics indices, the top TM grades, and how they performed over the past week. The second section of this newsletter will look into which coins are being picked most often for the upcoming week in the Token Metrics indices, and that week’s top-rated coins as well.

Market Review

Over the past week, the total crypto market cap dropped by 7.5% and is currently at the $1.82 Trillion level. The drop was felt across the entire market, with speculative Alts taking the biggest hit. In fact, Bitcoin and Ethereum had weekly losses of close to 6% while other big altcoins like Solana, Terra, Polkadot, and Avalanche suffered losses exceeding 12%. Amid the broader negative macro-environment, Bitcoin is proving to be somewhat of a crypto safe haven, and Ethereum’s relative strength could be due to the flow of capital towards NFTs that have been negatively correlated to the crypto market during this bearish regime. 

Market Indicator

At Token Metrics, we have built multiple market signals that help identify the prevailing trend and strength of momentum. Figure 2 below shows the TM grade market indicator applied to the total crypto market cap time series. We can see that the market indicator is still in a bearish regime ever since April 9th, when the total crypto market cap was at the $2.08 level. Figure 3 below shows the percent of coins that have a bearish TM grade. As shown, the bearish trend is strong since over 90% of the coins have a bearish TM grade. This type of environment favors shorting, as well as short-term mean-reverting strategies, like selling the rip and buying the dip. In addition, allocating a proportion of capital towards stablecoins could help hedge the down moves, as well as earn yield by yield-farming. 

TM Grade Analysis

To see how the TM Grade has been able to flag tokens that outperformed the rest of the market over the past week, figure 5 below shows the time-series of Kyber Network Crystal’s price compared to its TM grade, as well as Meter Governance. From the plots, we can see that although there have been wide moves due to the recent volatility of the market, the TM grade captured the moves of these coins well. 

With the current bearish reading from the TM grade market indicator, very few tokens have had a high TM grade over the past week. The TM grade has proved to work very well during trendy markets, however, choppy markets can cause the TM grade to shift.

The TM grade is a great tool to identify coins that have strong bullish momentum, especially coins that can go under the radar. In fact, as shown in Figure 4 below, the TM grade was able to flag a few tokens that performed well in terms of weekly returns.

Looking Ahead

Looking at the current indices allocation, we can also see that the most popular coins recommended by the AI this week are Kyber Network Crystal, Frax Share, ZRX, Synthetix, and Magic Internet Money.