The NCI closed Sunday (8/14/22) 7.1% above  last week’s closing. The index’s performance was influenced by ether (ETH), up 13%, while bitcoin (BTC) rose 4.6%. 

After an uneventful week during which investors stood on the sidelines, crypto markets regained momentum in the early hours of Monday. By the time markets opened in North America, bitcoin had gained over $1,000, surpassing the $24,000 mark, while ETH was up $100, surpassing the $1,800 threshold.

Prices remained mostly steady into and throughout Tuesday. However, as equity markets prepared to close in North America, crypto prices took a steep downturn, returning Monday’s gains as BTC and ETH fell 4% and 5%, respectively.

This retraction was likely a product of the uncertainty surrounding the Consumer Price Index (CPI) reading for the month of July due to be released on the following morning. Previous inflation readings showed signs that suggested inflation would soon peak, but the robust job creation numbers released in the week prior exceeded market expectations and seemed to point in the opposite direction.  

Prices remained stable until the US Labor Department divulged its inflation report at 9:00 EST on Wednesday, at which point prices immediately took off. CPI figures showed inflation had slowed from 9.1% in June to 8.5% in July. Results on a monthly basis were flat (0%), after registering a 1.3% increase in June. Core CPI results were slightly less encouraging—since that result didn’t benefit from the steep drop in energy prices—but were still below market expectations.

Despite the disproportionate influence of the volatile energy category, the CME FedWatch tool showed that the CPI reading had flipped investor sentiment in regards to the next Fed rate hike, with two-thirds of investors now predicting a 50 bp increase in the Fed funds rate in September. Consequently, BTC immediately rose back over the $24,000 mark.

Later on Wednesday night, Ethereum’s Goerli testnet successfully merged with the PoS (Proof-of-Stake) Beacon Chain. The merge of the final testnet did not seem to impact ETH prices much. This lack of movement may have been a consequence of ETH having already registered a $150 rise in the wake of the positive CPI results or, perhaps, a product of the string of successful testnet merges making Goerli’s success a foregone conclusion.

In any case, the successful merge of the final of three testnets moved the de facto merge of Ethereum’s mainnet into the next slot on the chronological docket. Current technical on-chain indicators, like terminal total difficulty, suggest the merge is about a month away (September 15 or 16).   

The growing imminence of “The Merge” has brought about a discussion surrounding the possibility of hard forks, which would result from Ethereum miners attempting to create an offshoot chain that preserves the PoW (Proof-of-Work) consensus mechanism. Ethereum co-founder Vitalik Buterin commented on the matter earlier in the week, reassuring investors that an eventual fork is unlikely to cause “significant harm.”

On Thursday afternoon, crypto markets lost momentum despite no specific negative drivers, only to rally as markets opened in North America on Friday. During the weekend, prices remained near Friday’s highs despite experiencing modest levels of volatility on Sunday.

 

________________________________________

_{This material expresses Hashdex Asset Management Ltd. and its subsidiaries and affiliates (“Hashdex”)'s opinion for informational purposes only and does not consider the investment objectives, financial situation or individual needs of one or a particular group of investors. We recommend consulting specialized professionals for investment decisions. Investors are advised to carefully read the prospectus or regulations before investing their funds. The information and conclusions contained in this material may be changed at any time, without prior notice. Nothing contained herein constitutes an offer, solicitation or recommendation regarding any investment management product or service. This information is not directed at or intended for distribution to or use by any person or entity located in any jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation or which would subject Hashdex to any registration or licensing requirements within such jurisdiction. No part of this material may be (i) copied, photocopied or duplicated in any form by any means or (ii) redistributed without the prior written consent of Hashdex. By receiving or reviewing this material, you agree that this material is confidential intellectual property of Hashdex and that you will not directly or indirectly copy, modify, recast, publish or redistribute this material and the information therein, in whole or in part, or otherwise make any commercial use of this material without Hashdex’s prior written consent.} 

_{Investment in any investment vehicle and cryptoassets is highly speculative and is not intended as a complete investment program. It is designed only for sophisticated persons who can bear the economic risk of the loss of their entire investment and who have limited need for liquidity in their investment. There can be no assurance that the investment vehicles will achieve its investment objective or return any capital. No guarantee or representation is made that Hashdex’s investment strategy, including, without limitation, its business and investment objectives, diversification strategies or risk monitoring goals, will be successful, and investment results may vary substantially over time. Nothing herein is intended to imply that the Hashdex s investment methodology or that investing any of the protocols or tokens listed in the Information may be considered “conservative,” “safe,” “risk free,” or “risk averse.”}

_{Certain information contained herein (including financial information) has been obtained from published and non-published sources. Such information has not been independently verified by Hashdex, and Hashdex does not assume responsibility for the accuracy of such information. Hashdex does not provide tax, accounting or legal advice. Certain information contained herein constitutes forward-looking statements, which can be identified by the use of terms such as “may,” “will,” “should,” “expect,” “anticipate,” “project,” “estimate,” “intend,” “continue”  “believe” (or the negatives thereof) or other variations thereof. Due to various risks and uncertainties, including those discussed above, actual events or results, the ultimate business or activities of Hashdex and its investment vehicles or the actual performance of Hashdex, its investment vehicles, or digital tokens may differ materially from those reflected or contemplated in such forward-looking statements. As a result, investors should not rely on such forward- looking statements in making their investment decisions. None of the information contained herein has been filed with the U.S. Securities and Exchange Commission or any other governmental or self-regulatory authority. No governmental authority has opined on the merits of Hashdex’s investment vehicles or the adequacy of the information contained herein.}

_{Nasdaq®, Nasdaq Crypto Index™, NCI™, Nasdaq Crypto Index Europe™ and NCIE™ are registered trademarks of Nasdaq, Inc. (which with its affiliates is referred to as the “Corporations”) and are licensed for use by Hashdex Asset Management Ltd. The Hashdex Nasdaq Crypto Index ETF and Hashdex Nasdaq Crypto Index Europe ETP (the “Products”) have not been passed on by the Corporations as to their legality or suitability. The Products are not issued, endorsed, sold, or promoted by the Corporations. THE CORPORATIONS MAKE NO WARRANTIES AND BEAR NO LIABILITY WITH RESPECT TO THE PRODUCTS.}