Crypto Assets See New Cycle Highs as Rally Continues

Last week, we discussed crypto assets showing signs that they’d break out to new cycle highs, as multiple sub-indices were showing positive momentum.

Well, that breakout happened, as multiple sub-indices rallied by double-digits and established fresh new highs to extend the rally that started March 13.

The Weiss 50 Crypto Index (W50) — the broadest industry benchmark — posted a 10.62% gain over the seven trading sessions ending Thursday, June 4.

Stripping out Bitcoin and looking at altcoins alone, we see even more robust performance. The Weiss 50 Ex-BTC Crypto Index (W50X) rallied 12.18%.

Breaking it down by market capitalization, however, reveals what may be some signs of exhaustion. Let’s start at the top ...

The Weiss Large-Cap Crypto Index (WLC) was up 9.53% for the week ended Thursday.

And the Weiss Mid-Cap Crypto Index (WMC) was up a remarkable 18.40%.

But the Weiss Small-Cap Crypto Index (WSC) was the clear laggard, as it moved up “only” 8.17%.

Last week, the small-caps provided most of the evidence that the broader crypto space was breaking to new highs. This week, the small-caps are showing the most weakness. Gains were concentrated mostly among the mid-caps, which is dominated by higher-tier altcoins.

It’s not just that small-caps surrendered the lead. It’s the way it happened: The breakout took place on Monday, it was met almost immediately with fierce selling and gains were entirety erased by Tuesday.

This mixed reaction to a new cycle high — in addition to relative weakness from the most “risk-on” assets in the industry — is good reason to question whether the impressive rally we’ve seen since the March 13 crash may be due for a pause in the weeks to come.

We’re also seeing traditional safe havens like gold and U.S. Treasuries take a breather. Those assets typically lead crypto markets — which is being considered by an increasing number of investors an “alternative” safe haven by many — by a few weeks.

Only time will tell if this crypto rally still has legs.

But this is a long-term story, and a “pause” here would be entirely reasonable. When one inevitably happens, it’ll leave crypto refreshed for a run to higher highs.

Best,

Juan

Weiss Ratings is the only financial rating agency that covers cryptocurrencies. Click here for more in-depth information about Weiss Crypto Ratings, including the Weiss Crypto Price Indexes and crypto-asset reviews.

About the Editor

When econometrician and pro trader Juan M. Villaverde first applied his algorithms to Bitcoin, he discovered a regular cyclical pattern. He has since used it to build the world’s first crypto timing model based on cycles. That model has gone 3-for-3 in pinpointing the moment in time when his favorite cryptos were primed for the parabolic phase of the crypto bull market. Just in his monthly letter alone, the average gain on all his crypto trades is 309%, or 4.1x on 29 closed trades.

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