Monthly Letters
Dear Investor,
May delivered a few positive surprises, especially regarding regulatory policy in the US.
The approval of the listing rules for Ethereum ETFs is another sign that crypto is becoming an increasingly institutionalized asset class. This news from the SEC came the same week as the US Congress demonstrated bipartisan support for legislation to create a comprehensive framework for digital assets, further underscoring the ongoing acceptance of this asset class.
This excitement helped drive the Nasdaq Crypto IndexTM (NCITM) higher, with the index returning 16.7% and nearly erasing April’s losses. The NCI is up over 58% year to date.
Ethereum’s positive outlook goes far beyond just the ETF approvals, and Samir Kerbage writes about the five factors that may lead to ETH “flipping” BTC in his latest Notes from the CIO. On Wednesday, June 12, he’ll be joined by K33 Senior Analyst Vetle Lunde for a webinar covering how the generational divide in crypto is boosting its investment case. You can register 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 a decline in April that interrupted a seven-month upward trend, crypto assets resumed their appreciation in May. The Nasdaq Crypto IndexTM (NCITM) recorded a 16.8% increase, nearly offsetting the 16.7% drop in April. May was also a recovery month for other risky asset classes, with the S&P 500 and Nasdaq 100 stock indices rising 5.0% and 6.4%, respectively.
The beginning of the month already showed a more positive bias, reversing the previous month's decline. By May 15, the NCI had risen by 7.7%, driven by Bitcoin, which was up 9.9%. Starting on May 20, rumors began to circulate that the SEC might approve the launch of spot ETFs for Ethereum, and a few days later, the information became official. This catapulted Ethereum's price by over 25% in the second half of the month, also boosting some smaller assets. For the full month, Ethereum had the third-best performance among NCI constituents, with a 27.7% increase, behind Uniswap (45.5%), which is undergoing a voting process that could direct a portion of the protocol-generated fees to UNI token holders, and Chainlink (40.4%). All constituents posted positive returns.
Among CF Benchmarks' sector indices, the best performance was in Decentralized Finance (DeFi), with a 22.7% increase led by Uniswap. The Digital Culture and Smart Contract Platform indices rose by 16.1% and 19.6%, respectively. The Vinter Hashdex Risk Parity Momentum Index had the most modest gain, at 12.1%.
This year, the NCI is up by 59.1%. It is interesting to note how different factors influence the price dynamics of crypto assets. The approval of the Ethereum spot ETF was considered unlikely by most analysts. Many pointed to political issues influencing this decision. In recent weeks, issues related to the stance on crypto assets have gained relevance in the US presidential race. We are confident that crypto assets will become part of people's lives in the not-too-distant future and that, consequently, they now represent an unparalleled investment opportunity.
Top Stories
Wisconsin invests over $100M in bitcoin ETFs, hedge fund Millennium buys $2B
The State of Wisconsin Investment Board disclosed $163 million in bitcoin ETFs and investments in companies like Coinbase and MicroStrategy, while Millennium Management, a major hedge fund, revealed nearly $2 billion in bitcoin ETF holdings. These significant allocations indicate growing institutional confidence in bitcoin, potentially driving further interest and increasing demand and prices.
Nomura to explore stablecoin issuance in Japan
Japanese banking giant Nomura has reportedly teamed up with GMO Internet Group to explore the issuance, redemption, and circulation of stablecoins denominated in Japanese yen and US dollars. This partnership aims to facilitate the introduction of "stablecoin-as-a-service" products, providing companies with the necessary tools to issue their own stablecoins, underscoring how this has been one of the “killer use cases” for blockchain technology.
PayPal expands PYUSD to Solana, targets payment use cases
PYUSD, Paypal’s stablecoin, recently launched on Solana, expanding its reach beyond Ethereum to enhance adoption, reduce fees, and enable faster transactions. This strategic move is designed to elevate PYUSD to practical utility by leveraging innovative blockchain features that enhance payment security and efficiency, paving the way for its integration into everyday commercial use.
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