Dear Investor,
August got off to a rough start as a confluence of factors—including the unwinding of the Japanese yen carry trade—raised investor fear to a level not seen since the COVID outbreak.
Crypto assets, even as they performed well in the subsequent weeks, did not recover by month’s end. The Nasdaq Crypto Index™ (NCI™) closed August down 13.9%. Despite this negative performance, the NCI™ is up 25% year to date.
During the month we saw additional signs of the institutionalization of crypto, with bitcoin ETFs seeing record flows and firms like Morgan Stanley, Goldman Sachs, and Mastercard demonstrating commitments to this emerging asset class—all of this taking place as US politicians continue to embrace bitcoin and other crypto assets. These signs all point to an exciting period ahead for this asset class, even as macro and geopolitical uncertainties remain.
As always, we are greatly appreciative of your trust in us and are here to answer any questions you may have.
- Your Partners at Hashdex
Market Review
Crypto assets recorded losses in August, contrary to the main US stock indices. The beginning of the month was marked by turbulence in the Japanese market, as explained in the August 6th letter to our investors. On the 5th, the S&P 500 and Nasdaq 100 closed with cumulative monthly losses of 6.1% and 7.6%, respectively, while the Nasdaq Crypto Index™ (NCI™), naturally more volatile, posted a loss of 21.3%.
From that point on, a recovery began, driven by the expectation of a rate cut by the FOMC. While the two stock indices moved into positive territory mid-month, the NCI™ did not fully recover its losses. Despite appreciating more than 20% between the 5th and 24th, the crypto asset index lost momentum at the end of the month, closing with a decline of 13.9%.
All NCI™ constituents experienced losses, with the smallest being Litecoin (-7.3%), followed by Bitcoin (-9.8%). The biggest negative highlights were Ethereum and Solana, the second and third largest positions in the index, respectively, both dropping 23.3%.
The sectoral indices of CF Benchmarks registered larger declines than the NCI™, ranging between 17.9% (Digital Culture) and 20.3% (Smart Contract Platforms). Meanwhile, the Vinter Hashdex Risk Parity Momentum Index suffered less than the NCI™, with a decrease of 5.3%. The relatively better result was driven by TRON, the largest weighted asset in the index, which rose nearly 20% due to the widespread adoption of new features that facilitate the issuance of meme coins.
Despite two consecutive months of decline, the NCI™ is still up more than 25% for the year. If the behavior observed in previous crypto cycles repeats, we can expect a good outcome in the coming months. We remain confident in the long term.
Top Stories
Morgan Stanley advisors can soon offer spot BTC ETFs to clients
The firm's decision to allow its advisors to offer clients BTC ETFs is a significant milestone for the acceptance of crypto in the traditional financial sector and the opening of new gateways for investors to gain access to the largest crypto asset.
US Senator proposes strategic bitcoin reserve legislation
US Senator Cynthia Lummis proposed a bill to establish a Strategic BTC Reserve and other programs to help US federal government finances. The approval of such a bill would be a major move by the world’s largest economy, potentially triggering the next adoption phase of crypto assets by major governments worldwide.
Goldman Sachs discloses $418M in bitcoin ETF holdings
The firm disclosed over $400 million in Bitcoin ETF holdings, reflecting growing institutional acceptance of Bitcoin. With over $20 billion in net inflows to Bitcoin ETFs this year, rising interest from traditional financial institutions could help drive crypto adoption.
Mastercard launches debit card linked to Ethereum wallets
MetaMask and Mastercard have launched the MetaMask Card, allowing users in the EU and UK to pay with crypto anywhere Mastercard is accepted, highlighting the trend of traditional companies increasingly integrating crypto assets into their business models.
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