The New Economy Movement or NEM (XEM) is a distinct, innovative currency that was built with fully unique code in 2014. Based in Malaysia and Japan, NEM presents itself as blockchain ideal for enterprise solutions by being a fast, secure data handler, integratable with legacy payment and IT systems. It is also well known for being popular in Japan and backing from investors in the country was considered a key factor in price rises during early 2017.
From an initial listing price of $0.00023107 (Indexed) on April 5th 2015, XEM currently trades at $0.15869, offering a 68,537.2% for early investors. Like many other cryptographic assets, it has failed to buck the trend of a market-wide bearishness in 2018, falling 91.8% from its January 4th price peak.

However, it maintains its position as a top-15 cryptographic asset by market capitalization. Additionally, the distinctive nature of a number of NEM’s blockchain features, means it has retained market interest and belief.
Exchanges and trading pairs

The most popular pair for trading XEM is BTC/XEM pair with Hong Kong based Coinsuper being the most popular exchange for this pair — handling 25,818,042.0219 tokens worth of daily volume — around 47% of the pair’s trading volume.
 A distinct feature of XEM is the popularity of the Japanese Yen pairing, which makes up around 24% of the trading volume of XEM. All of the JPY volume is handle by Japanese exchange Zaif, around 22,528,703.5 tokens and 24% of the total daily volume of XEM.
The trading fee for the XEM/JPY pair is 0.1%, surprisingly low for a fiat to crypto option. Kraken for example, lists USD, EURO and JPY fiat to crypto pairs starting at 0.26%
Innovations in achieving consensus
The NEM network’s most unique feature is its consensus protocol algorithm. Unlike the vast majority of distributed ledger networks, which generally feature Proof-of-work (PoW) or Proof-of-Stake (PoS) style solutions, NEM uses Proof-of-Importance (PoI). With PoI, tokens are not ‘mined’ but ‘harvested’ by important participants in the network.
 In order to have an importance score, A NEM user must have 10,000 XEM vested in their NEM wallet. XEM becomes vested after it has spent a certain amount of time in a user’s wallet, this depends on the number of XEM. Once the vesting point is hit, a user can start creating blocks. A one time fee is paid in order to start and NEM sets limits for block mining difficulty and rewards fluctuating at around the 5% level.
 While vesting makes up a part of the importance score, another key factor is transactions. At a reducing rate, users are given added importance based on how often XEM is sent between accounts. Based on a higher level of importance, vested NEM users have a greater likelihood of being allocated blocks to produce.
This protocol creates a possible advantage for NEM over other blockchain solutions. Greater influence is given to users who have been long term participants and those who are actively using NEM, rather than with PoS, where influence is weighted heavily towards the richest in the network. Likewise in PoW, where processing power is the greatest factor for salience in the network.
There is clear argument that NEM’s system may be a more fair way to achieve network consensus, rewarding loyalists and believers in XEM as a medium of exchange.
NEM is also known for sTron (available on Binance)g security features, being highly sybil resistant. Within the PoI, importance is downgraded for behaviour associated with whale dumping and spamming. Additionally NEM has a P2P reputation management system which implements an Eigentrust algorithm to ensure confidentiality and authenticity of transactions.
Recent development: Catapulting into the future
In late March this year, NEM launched the Catapult infrastructure. The upgrade adds a number of new capabilities to the network, allowing users a number of new transaction and smart-contract features. It is hoped that the new features will allow for greater speed and scalability on the network.
Catapult will allow for aggreGated transactions, a feature unique to the new NEM network. Now, if there are multiple parties required to coordinate for transactions to be completed, NEM can manage them on the blockchain and ensure they are all executed simultaNEOusly.
Say, for example, a developer wants to purchase a piece of intellectual property (IP) listed on an exchange like IPSX. They want to use NEM for the transaction but are concerned about their private key existing on a hackable exchange, Catapult will handle the transaction without the developer ever having to interact with the third party exchange.
NEM communicates with the developer, it communicates with the exchange. Once they have both met the requirements for the transaction, they are simultaNEOusly executed, allowing for a trustless-process between NEM-holders and third party exchanges.
 Given the number of hacks that have been infiltrated on crypto-exchanges, and NEM’s own experiences facing them, the fluid nature of the aggreGated transaction solution certainly has appeal.
 Another potential use case is fiat to crypto (or fiat to fiat) transactions, without users ever needing to hold crypto in the first place.
Using aggreGated transactions, NEM can secure both ends of the transactions without either side having to actually hold NEM and participate in the blockchain, because multiple related transactions can be handled simultaNEOusly and trustlessly through smart contracts.
While these solutions are compelling, there is a question of how much wider demand there will be for using Catapult, given existing institutions and competition. For example, despite frequent exchange hacks, crypto holders are still more than happy interacting with, and leaving their funds lying in third-party exchanges. For example, Bithumb, which was hacked a week ago, still handles $200 million dollars worth of crypto daily, in spite of security concerns.
Additionally, there are already numerous, functioning systems being used for people to make payments to each other. How to fit new infrastructure within existing solutions, and create mainstream appeal, may prove challenging for NEM.
 This being said, for existing, and new participants coming into the NEM blockchain, Catapult greatly increases the potential for utilizing the network.
Applied use cases
NEM already has a number of blockchain solutions and Dapps existing on its platform. Luxtag provides digitized certificates of authority for consumer products like elecTron (available on Binance)ics and then secures the certificates onto the NEM blockchain. The certificates can have messages attached to them and the system provides a sTron (available on Binance)g protection against counterfeiting.
 Another offering is Qchain, which offers blockchain powered marketing and advertising solutions. The platform aims to provide ease and flexibility of connections between advertisers, publishers and social media influencers. I.e. A marketplace where a brand can connect with a livestreamer, in order for them to promote their product during a broadcast.
 The network has also built a private blockchain solution called Mijin. Transactions in Mijin occur within a private chain built for a NEM corporate partner, XEM is still used and the ecosystem is secured by the wider public blockchain.
 Recognizable Japanese conglomerate Hitachi, has trialled using Mijin for its Pointinfinity system. Here, merchants using Hitachi’s money management systems earn points which can be used to design unique point of sale and membership programs. The NEM private blockchain is seen as a way to fluidly manage a high volume of transactions used by Pointinfinity merchants, quickly and safely.  
Technical analysis
NEM is an interesting project tackling a large use case within the payment and IT industries. Despite its exuberant gains since trading, 2018 has proved quite bearish for XEM, dropping over 90% from its all-time highs.
Exponential Moving Averages (EMA) with Long Term Trends
On the daily chart, the bullish EMA cross, or Golden Cross, using the 50/200 day EMA, has not occurred which confirms the bearish trend.

 
However, price volatility for XEM is compressing, visualized by bollinger bands. Volatility compression typically precedes a breakout. The last two times XEM experienced compressed bollinger bands, price went higher (black rocket ships). Additionally, the volume flow indicator (VFI) is approaching 0 and has been forming a divergent uptrend (yellow arrow) since May 17th. The VFI interpretation is: a value above 0 is bullish and below 0 is bearish, with divergences between price and oscillator being high probability signals.

Ichimoku Clouds with Slow Wave Trend Oscillator (SWTO)
The Ichimoku Cloud uses four metrics to determine if a trend exists; the current price in relation to the Cloud, the color of the Cloud (red for bearish, green for bullish), the Tenkan (T) and Kijun (K) cross, Lagging Span (Chikou), and Senkou Span (A & B).
The status of the current Cloud metrics on the daily time frame with singled settings (10/30/60/30) for quicker signals is bearish; price is beneath the Cloud, Cloud is bearish, the TK cross is bearish, and the Lagging Span is beneath the Cloud and price.
A traditional long entry would occur with a price break above the Cloud, known as a Kumo breakout, with price holding above the Cloud. From there, the trader would use either the Tenkan or Kijun as their trailing stop.
XEM is currently sitting at ~$0.15 (first dashed line), which is a long term support level. Previously, price attempted a Kumo breakout, but failed around the technical resistance level of ~$0.42. Since then, the positive TK cross has reversed, price has fallen back beneath the Cloud and erased all gains. However, the SWTO is oversold and turned bullish, which may help price curb further short term declines. The next Kumo breakout attempt will need to break above $0.33 (flat Senkou B) to successfully re-ignite a bullish trend.

The status of the current Cloud metrics on the daily time frame with doubled settings (20/60/120/30) for more accurate signals is bearish; price is beneath the Cloud, Cloud is bearish, TK cross is bearish, and the Lagging Span is below Cloud and price.
Price will need to break above and hold ~$0.35 to successfully complete a Kumo breakout, while a failure will result in likely retests of long term support levels of ~$0.10 (second dashed line) and $0.05 (third dashed line). However, if price does achieve a Kumo breakout, then $0.42 and $0.66, both flat Senkou Bs, become likely price targets.

Conclusion
XEM is an atypical cryptographic asset built on a network that has created novel proposals for issues regarding security, transaction speed, political issues and flexibility, existing within other blockchains. It is popular with developers and has a diverse range of Dapps already built on it.
Its price has suffered in the recent crypto-wide market downturn. However, the NEM network has a sTron (available on Binance)g base and infrastructure with which to push off from if there is a shift in market sentiment. As new features like Catapult continue to roll out, XEM remains a coin worth watching.
XEM’s Ichimoku Cloud technicals are bearish, but the VFI divergence and bollinger bands might be leading indicators of a price trend reversal in the near future. Both, the prudent short term trader (10/30/60/30 settings) and longer term trader (20/60/120/30 settings) will await a positive TK cross, Kumo breakout, and price hold above $0.33 – $0.35 before entering a long position.
More adventurous traders may view the VFI divergence and bollinger bands as a signal to begin scaling into a long position at better prices while the bear trend remains intact. Those traders should use tight stops, but expect near term price targets of $0.42 and $0.66 if their gamble proves correct. However, awaiting a successful Kumo breakout will provide a more reliable signal and mitiGate the downside risk of $0.10, $0.05, or below.
Disclaimer: This analysis has been designed for informational and educational purposes only. Readers are advised to conduct their own independent research into individual assets before making a purchase decision.
About the authors
Christopher BrookinsChristopher Brookins is the founder and CEO of Pugilist Ventures, a quantitative investment firm focused on digital assets and blockchain technology. Chris has a deep knowledge and unique perspective on digital assets formed by his polymath experience in equity trading, credit investing, and business development at two West Coast startups (one acquired). He has been involved in the blockchain community since 2014. Follow @chris__brookins
 

Aditya DasAditya Das is Brave New Coin’s in-house market analyst. Raised in Dubai, UAE, he holds a post-graduate honors degree in Economics from the University of Auckland and a BA in Economics from the University of Sussex. Prior to joining BNC his most recent roles were as a researcher and Economics tutor at the University of Auckland. Follow @Quartlifecrypto