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 the top rated coins for the upcoming week.

Market Review

Over the past week, the crypto market suffered a deep correction with the total crypto market cap dropping by more than 20% to reach $1.7 trillion. The correction hit the entire market as all coins in the top 100 by market cap (except stablecoins) had double-digit losses for the week. As shown in Figure 1 below, the market is close to wiping out all the gains accumulated since the market bottom in July 2021, when BTC dipped below $30,000. Regarding Bitcoin, the biggest cryptocurrency by market cap is now down by over 50% since its high in November, and has slightly gained in market dominance, reaching 40%.

Figure 1: The Crypto Market Cap

Data as of 01/24/2021 – Past performance is not indicative of future performance

Market Regime

We have built multiple market signals at Token Metrics that help identify the prevailing trend and strength of momentum. In Figure 2 below, we show our TM grade indicator applied to the total crypto market cap, which is built by looking at the proportion of coins that have a low TM grade compared to coins with high TM grades. When the majority have a low TM grade, it signals that the market is likely to be in a bearish regime. In addition, Figure 3 below shows our breakout indicator applied on the top 100 coins. The red clouds signifies that we have many more coins breaking below support than coins breaking above resistance, which also signifies a bearish environment.

We can see from Figure 2 that the TM market indicator is still bearish on the total market since the $2.75 trillion level, as we still have more coins with low TM grades in the top 100 coins by market cap. In fact, 97 out of the top 100 coins by market cap have a bearish grade below 40. In addition, Figure 3 shows that almost all coins in the top 100 have broken below their short-term support levels, confirming the bearish trend.

Figure 2: TM Grade Market Indicator

Data as of 01/24/2021 – Past performance is not indicative of future performance

Figure 3: TM Breakout Market Indicator

Data as of 01/24/2021 – Past performance is not indicative of future performance

TM Performance

Although most TM indices had big allocations to stablecoins and gold-pegged coins, the weekly performance was negative during this correction period, especially for low-cap indices. As the TM indices are long-only, none of the indices had weekly gains, however the diversification to stablecoins reduced the overall losses, with indices like the FTX Daily High-Cap index being down 8% over the week.

To be able to analyze the performance of the TM indices on a daily basis, the new Daily Return feature on the indices page on TokenMetrics.com provides an overview of the daily returns of the indices. As shown in Figure 4 below, users can see day-by-day how the index is performing, with green bars indicating a positive daily gain, and red bars indicating a negative loss for the day.

Figure 4: Daily Returns of Indices

Data as of 01/24/2021 – Past performance is not indicative of future performance

TM Visual Trend Indicator

The visual trend indicator on TokenMetrics.com is a tool to identify the reigning price momentum for individual coins based on technical analysis. It is a good risk management tool as it turns bearish during market downturns and bullish during strong bull trends. The plots shown in Figure 5 below show the indicator for BTC, ADA, and DOT, and the table in Figure 6 shows the performance of this indicator on the top 10 cryptocurrencies (excluding stablecoins).

Figure 5: Visual Trend Indicator for BTC, ETH, ADA, and DOT

Bitcoin

Ethereum

Cardano

Polkadot

Data as of 01/24/2021 – Past performance is not indicative of future performance

Figure 6: Visual Trend Indicator on top 10

Data as of 01/24/2021 – Past performance is not indicative of future performance

TM Grade

The TM grade is a great tool to identify coins that have strong bullish momentum. Given that the entire market went through a deep correction, the TM grade flagged stablecoins and gold-pegged coins. Shown in Figure 7 below are the top five coins that had a high TM grade and a good ROI up to today.

Figure 7: Top Performers by TM Grade

Data as of 01/24/2021 – Past performance is not indicative of future performance

Looking ahead

Looking at the current indices allocation, we can also see that the most popular coin recommended by the AI this week is Pax Gold. Other popular coins in the TM indices currently are Bitcoin, Cosmos, Wirex, and Kyber Network.