The NCI closed Sunday 11.4% above last week’s closing. The index’s performance was heavily influenced by ether, up 19.5%, while bitcoin rose 8.3%.

Crypto markets entered the week with strong momentum, still feeding off Ethereum’s “Merge” optimism and the expectation of a less-hawkish Fed after its Wednesday meeting. 

Bitcoin took off in the early hours of Monday en route to register its best performing day in over a month. By Wednesday afternoon, the beleaguered cryptocurrency was up nearly $3,000, breaching the $24,000 mark for the first time since mid June. ETH traced a similar trajectory during the first half of the week, sustaining last week’s meteoric push through a $200 price increase all the way to $1,600.

Citibank published a report on Wednesday citing the Celsius Network’s bankruptcy filing, market makers making counterparty exposure disclosures, and the narrowing price gap between ETH and stETH (staked ETH derivative) as strong signals that crypto’s contagion fears may be waning. 

JP Morgan echoed a similar sentiment in a report published on Thursday. The investment bank  believes that the deleveraging caused by the crypto market’s credit crunch is coming to a close, as signaled by the shrinking of the stETH to ETH discount. 

According to the report published last Thursday by the investment bank, retail demand for crypto is on the rise and the “extreme phase of backwardation” is in the rearview mirror. JP Morgan first reported on the backwardation phenomenon in crypto markets in early June, citing a discount between future and spot markets as a signal of the reduced demand for bitcoin. 

The second half of the week had bitcoin’s price oscillating between $23,000 and $24,000 until Friday and then between $23,000 and $22,000 during the weekend. ETH’s price wavered between $1,600 and $1,500, never dipping below the price reached by Monday night.

The waning strength of the crypto market during the second half of the week may have been affected by news that Tesla had sold 75% of its bitcoin holdings ($936 million)  in order to “maximize our cash position" amid uncertainty about lockdowns due to COVID-19 in China, which hampered the electric automaker’s output. 

The European Central Bank (ECB) also surprised markets with a greater-than-expected 50 bp hike after 11 years in negative interest rate territory on Thursday.  

While both events may have had some effect over crypto markets, the more likely cause of the waning momentum as of late Wednesday is the realization of strong early-week gains. 

Lastly on Thursday, Ethereum co-founder Vitalik Buterin spoke at the Ethereum Community Conference (EthCC) in Paris. Vitalik defended Ethereum’s impending transition to a proof-of-stake (PoS) consensus mechanism as an integral part of a greater roadmap of changes and rebuked critics that argued that the move to PoS cemented Ethereum’s classification as a security rather than a commodity.     

According to the Ethereum co-founder, there will be more work to be done after the completion of the Merge, which only represents the halfway point of a planned network development plan that will lead to greater security, scalability and transaction processing capabilities.  

________________________________

_{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.