Monthly Letters
Dear Investor,
September has not historically been strong for crypto assets, but central bank easing, increasing global liquidity, and other factors pushed the Nasdaq Crypto IndexTM up 7.7% during the month.
More rate cuts could be a catalyst for continued strong performance, but the US election outcome, crypto’s cyclicality, and increased institutional adoption of this asset class may also help fuel a bull market in the fourth quarter. Samir Kerbage wrote about these developments in his latest Notes from the CIO.
Our research team was in Singapore last month for one of the largest crypto industry conferences in the world. Research analyst Lucas Santana wrote about what they learned and the key takeaways for investors. Dramane Meite, Head of Product, was interviewed by Swiss newspaper Le Temps, sharing his thoughts on US ETFs, how politics is shaping crypto’s future, and the products that may be in demand in 2025. A summary of the interview is here.
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
After the drop recorded in August, the Nasdaq Crypto IndexTM (NCITM) bounced back to register gains. The month was also positive for other risk assets, such as stocks. The beginning of the month was turbulent, with US job creation falling short of expectations, causing uncertainty regarding the FOMC decision. The S&P 500 and Nasdaq 100 indexes closed the first week down 4.2% and 5.9%, respectively, while the NCITM dropped 9.3%. From then on, markets began to recover as expectations solidified that the FOMC would cut rates by 50 bps, which happened on the 18th. By that time, both the NCITM and the stock indexes had already recovered most of the early month losses.
Following the rate cut, the NCITM recorded double-digit gains, but on the last day of the month, it lost steam due to new turbulence from the Japanese market, finishing the month up 7.7%. The S&P 500 ended the month with gains of 2.1%, slightly below the Nasdaq 100, which rose 2.6%.
Despite Bitcoin outperforming the NCITM, up 7.9%, it was only the seventh best among the ten constituents of the index. In a month marked by strong altcoin performance, the highlights in the NCITM were Uniswap and Avalanche, with gains of 26.0% and 23.4%, respectively. The only asset with a negative return was MATIC from the Polygon network. The network is transitioning from the MATIC token to the new POL token as part of its shift to a more scalable and interoperable multi-chain ecosystem.
CF Benchmarks' sector indexes, with a heavy altcoin weighting, all had strong performance during the month. The best performer was the Digital Culture Index, which rose 21.6%, led by gaming-related tokens Immutable X (IMX) and SuperVerse (SUPER), which surged 44.5% and 55.4%, respectively, ending the month as the two largest positions in the index. The strong appreciation of the SUI network, rising over 125%, was the biggest contributor to the performance of the Smart Contract Platforms Index, which gained 15.7%. The Decentralized Finance (DeFi) Index rose 12.3%, despite 7 of the 13 constituents gaining more than 20%. The Vinter Hashdex Risk Parity Momentum Index trailed slightly behind the NCITM, gaining 7.3%, influenced by a 0.6% drop in Tron (TRX), currently the largest-weighted asset. Nevertheless, for the quarter, it outperformed the NCITM by more than 10%, rising 6.9% versus -4.0%.
Monetary easing in the US could be one of the catalysts for a strong appreciation of crypto assets, especially altcoins. Another near-term catalyst could be the outcome of the US elections, as former president Trump continues to court the industry, including using bitcoin to buy a hamburger in September, generating significant attention. Moreover, cyclical behavior observed in the past points to a new cycle of large returns in the coming months. Of course, factors such as geopolitical instability could negatively impact the market, especially in the short term. However, we remain quite optimistic about the medium- and long-term outlook for the market.
Top Stories
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