Dear Investor,

 

Another “Uptober” has come and gone with the crypto asset class rising over 20%. Bitcoin was the standout, its outperformance sparked by false news of a spot ETF being approved in the US.  

Despite the false story, progress in giving investors access to a spot ETF seems to be moving forward and Hashdex is excited to be an important part of the conversation.  

But there was much more than just ETF rumors driving bitcoin’s performance last month. In his Notes from the CIO, Samir Kerbage covers the main factors propelling the next bull market and our research team released their 3Q23 Market Pulse, covering the major developments in the crypto ecosystem investors should be watching. 

The fourth quarter has certainly started off with a bang. We believe the outperformance is a sign of a maturing asset class and remain excited about its potential into 2024.  

 

As always, our team is here to answer any questions you have about these markets. 

 

-Your Partners at Hashdex 

Market Review

We concluded our last monthly letter noting that “we are optimistic about October and the fourth quarter, and our conviction for this asset class over the long term remains strong.” October did not disappoint. Even as the S&P 500 and Nasdaq 100 experienced a slight drop of just over 2%, and the 10-year US government bond yield rose from 4.57% to 4.93%, crypto assets had a very strong month. The Nasdaq Crypto Index (NCI) rose 21.2%, marking the third-best monthly result in two years.

Bitcoin (BTC) performed notably, up 27.6%, while Ethereum (ETH) rose only 7.9%. The primary factor influencing BTC's strong appreciation was speculation regarding the possible approval of a spot bitcoin ETF in the US. The crypto market was trading with a slight decline until, on the 14th, the SEC did not appeal the favorable court decision in the Grayscale case regarding the rejection of converting GBTC (a trust that carries bitcoin) into an ETF. On the 16th, BlackRock CEO Larry Fink stated that the recent appreciation of bitcoin was not solely due to rumors about the spot ETF but also due to a “flight to quality” in the face of the situation in Israel and terrorism concerns. This statement reinforced the thesis of BTC as a store of value. Gold also appreciated, with an increase of over 7% in the month.

The best-performing crypto asset among the NCI constituents was Chainlink, which appreciated by 39.4%. This appreciation likely reflects recent developments, such as integration with the SWIFT interbank payment network and the launch of its cross-chain protocol CCIP. Among CF Benchmarks sector indices, the worst-performing was the DeFi Index, with a 2.5% increase, followed by the Digital Culture Index (12.1%) and the Smart Contract Platforms Index (24.0%). The Vinter Hashdex Risk Parity Momentum Index saw an appreciation of 14.5% with the standout performer being Solana (SOL), which rose approximately 70%. SOL was also the largest contributor within the Smart Contract Platforms Index.

In summary, October lived up to its "Uptober" reputation, despite the challenging scenario for traditional assets. Year to date, the NCI has risen 86.2%, with bitcoin more than doubling in value. This strong recovery after a difficult year like 2022 reinforces our belief that the technological disruption represented by blockchain and crypto assets will continue to materialize as an unprecedented investment opportunity.

 

Top Stories

Spot crypto trading volumes surge 

Bitcoin  had its highest spot volume trading day since the spring, with trading volumes exceeding $24 billion on October 26. Notably, Bitcoin's price upswing had a positive ripple effect on other crypto assets like ETH, SOL, and various alternative coins (alts).

 

Brazil’s Itaú launches its first tokenized Real World Asset

Itaú, the largest Brazilian bank, joined forces with its tokenization branch Liqi to introduce Brazil's pioneering Tokenized Credit Receivables Investment Funds. This initiative marks a significant step in Itaú's foray into the world of tokenization.

 

Standard Chartered says ether could reach $8,000 by 2026

Standard Chartered's forecast highlights the appealing investment potential for Ethereum and underscores the growing acceptance of crypto among traditional financial institutions.

 

Ether futures ETFs have a quiet start 

The launch of several ether futures ETFs early in the month drew much excitement, but relatively limited new assets. The slow start could be a result of the anticipation of a spot ether ETF in the not-too-distant future, given that most investors prefer spot products.

 

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