EDG DAO Financial Bulletin: Second Fortnight of August

Provides the community a fair idea about the performance of EDG as compared to the market as well as the peers of EDG.

EDG DAO Financial Bulletin: Second Fortnight of August

(** the figures mentioned in this report are our personal opinions, so please don’t consider this as investment advice)

Part 1: EDG Performance and Technical Analysis

  • During the last fortnight, the overall performance of EDG overall was slightly bullish, with a couple of sharp upward spikes in the price.
  • During the fortnight, the highest price that EDG traded at was approximately $0.00163 around 23/8/22. This occurred during the first spike and was accompanied by relatively higher 24-hr volumes around $250k.
  • The 24 hr volume was the highest around 24/8/22 with the max  value reaching around $262k.
  • The second spike occurred at the very end of the fortnight with prices going up from $0.0012 to $0.00139, but the volumes were close to the  normal levels seen during the fortnight.
  • Based on the financial models discussed below( in Part 2), we see that the returns are expected to be around 4-6% over the next period.

Technical Analysis (Period Considered: May’22- August ’22)

Figure 1

Figure 2



Exponential Moving Average: (figure 1.1)

As evident from the above graph the faster moving Exponential Moving Average(25 day EMA)(green line) is below the slower moving Exponential Moving Average(50 day EMA) (blue line), which indicates that the price is trading at lower than usual. A good indicator to buy in this EMA model is when the faster EMA converges and moves above the slower EMA, as the prices are expected to be on an upward trend after the occurrence of this event. Do keep in mind that this EMA indicator is considered to be a lagging indicator, thus the occurrences mentioned may happen after the expected event has already occurred. The last significant crossing of these indicators occurred around May, after which there haven’t been any considerable indications from this parameter in the recent past, mainly as the price hasn’t shown a significant movement.

Support and Resistance Lines : (figure 1.1)

Theoretically, support or resistance lines are imaginary lines which are drawn based on the price action zones of a particular entity. The action zones are identified based on the following 3 events: Price hesitated to move up further after a brief up move or price hesitated to move down further after a brief down move or if sharp reversals occur at particular price point. It can be noted that $0.0014 was a resistance level which was recently breached, however since then it has shown some signs of recovery.

Relative Strength Index(RSI) : (figure 1.2)

Theoretically, when the RSI is between 0 and 30, the token/asset is considered to be oversold and can move in upward correction. On the other hand, when the RSI is between 70 and 100, the security is considered to be heavily bought and so can show a downward movement from that point. During the spike in prices close to March-April, the EDG went into the overbought zone and thus as expected in the next few days a downward movement was seen. Recently, EDG went into the oversold zone, followed by buying activity which resulted in the return to the moderate RSI zone.

Moving Average Convergence Divergence(MACD): (figure 1.3)

A standard MACD is calculated using a 12 day EMA and a 26 day EMA. MACD Crossover comes in the form of an additional MACD component which is the 9-day signal line. A 9-day signal line is an Exponential Moving Average (EMA) of the MACD line. The sentiment is bullish when the MACD line crosses the 9 day EMA wherein MACD line is greater than the 9 day EMA. When this happens, the investor should look at buying opportunities. The sentiment is bearish when the MACD line crosses below the 9 day EMA wherein the MACD line is lesser than the 9 day EMA. When this happens, the investor should look at selling opportunities. As we can see just before the spike at the end of March, the MACD line(blue) had started moving above the signal line(red), which justifies the above theory. If you observe, the has shown the most appropriate of the mentioned indicators. Also, recently the MACD line has upward crossed the signal line, which is theoretically a buy indicator.

Bollinger Bands : (figure 2)

BBs are used to determine overbought and oversold levels, where a trader will try to sell when the price reaches the top of the band and will execute a buy when the price reaches the bottom of the band. The BB has 3 components: 1. Middle line which is The 20 day simple moving average of the closing prices 2. An upper band – this is the +2 standard deviation of the middle line 3. A lower band – this is the -2 standard deviation of the middle line. The indicator is mostly effective in a sideways moving market and not in a trending market. Recently, EDG has shown the sideways trend and thus Bollinger bands have shown the appropriate signals, with the prices hitting the bottom band and bouncing back.

Part 2: Comparative Analysis

  • Period = 2 weeks (16/8/2022 to 31/8/2022)
  • Beta = Volatility Factor
  • Rf = Risk-free return (Approximately 4%) (Government Bonds)
  • Rm = Return from Equity market (Approximately 10%)
  • Beta = 0.40 (Beta is less than 1 which shows EDG was less volatile than BTC)
  • The approximate Return over this period from EDG was about -17.65%
  • The approximate Return over this period from BTC was about -16.01%
  • **Considering the above data, the expected returns from EDG can be expected to be about 6.45% Approximately over the next periods.
  • Beta = 0.29 (Beta is less than 1 which shows EDG was less volatile as compared to DOT over the considered Period in the opposite direction)
  • The approximate Return over this period from EDG was about -17.65%
  • The approximate Return over this period from DOT was about  -17.27%
  • **Considering the above data, the expected returns from EDG can be expected to be about 5.78% Approximately over the next periods.
  • Beta = 0.29 (Beta is less than 1 which shows EDG was less volatile as compared to KSM over the considered Period)
  • The approximate Return over this period from EDG was about -17.65%
  • The approximate Return over this period from KSM was about -13.52%
  • **Considering the above data, the expected returns from EDG can be expected to be about 5.76% Approximately over the next periods.
  • Beta =0.3 (Beta is less than 1 which shows EDG was less volatile as compared to ETH over the considered Period)
  • The approximate Return over this period from EDG was about -17.65%
  • The approximate Return over this period from ETH was about -18.50%
  • **Considering the above data, the expected returns. from EDG can be expected to be about 5.87% Approximately over the next period.
  • Beta = 0.37 (Beta is Less than 0 which shows EDG was less volatile as compared to AVAX over the considered Period)
  • The approximate Return over this period from EDG was about -17.65%
  • The approximate Return over this period from AVAX was about -30.43%
  • **Considering the above data, the expected returns from EDG can be expected to be about 6.26% Approximately over the next periods.

Conclusion:

Over the period considered for analysis, the EDG token was less volatile as compared to AVAX, DOT, KSM, BTC and ETH.**the returns over the next period can be expected to be positive and around  4-6%**

Part 3: Treasury Spendings:

Treasury Proposals