The NCI closed Sunday (10/02/22) 0.9% above last week’s closing. The index’s neutral performance was influenced by ether (ETH), stable at 0.0%, while bitcoin (BTC) rose 1.4%.
After another week where the Fed acted as the bearer of bad news, crypto asset prices made modest recoveries on Monday despite a day of losses for traditional markets driven by growing fears of a global recession. BTC was trading just above $19,000 and ETH slowly worked its way up to $1,325 as volume picked up during market opening hours in North America.
As markets closed on Monday, crypto asset prices began a steep climb that would last until midday Tuesday, at which point BTC and ETH rallied to their weekly highs of $20,300 and $1,390, respectively. Altcoins followed suit, led by Uniswap’s 15% price spurt.
The sharp momentum was short lived, however, with most tokens plummeting Tuesday morning (EST), eventually erasing their intraday gains by mid-afternoon. In the final hours of Tuesday, crypto assets prices tumbled once again, taking BTC and ETH into their weekly lows of $18,550 and $1,270, respectively, just as Tuesday gave way to Wednesday.
A slew of positive economic data pertaining to the US economy released on Tuesday (housing starts, consumer confidence and durable goods) may have influenced the early-week spike in volatility. In all three cases, the positive numbers contributed to the notion that there is still room for FOMC monetary intervention and make the prospect of a Fed pivot less likely.
Additionally, trading volume seems to indicate that buy pressure picks up anytime BTC dips below $19,000. That psychological maker may have influenced investor behavior last week.
Crypto asset prices recovered part of their losses on Wednesday, following the upward momentum of traditional markets reacting positively to the Bank of England’s announcement of an emergency bond market intervention. Both BTC and ETH maintained their upward momentum for the entire 24 hours.
After a relatively stable Thursday, crypto asset prices traded higher on Friday morning, with BTC peaking at $19.868 and ETH reaching $1,355 before maintaining a slight downward trend for the remainder of the week.
BTC was down 1.62% for the month of September, which has historically been a bad month for the world’s largest crypto by market cap. Despite the success of The Merge, ETH was down 12.79% in the month. .
Bank of America sees growth of use cases for stablecoins
Bank of America published (9/23) a research report that highlighted the growing inflows into stablecoin protocols. According to the bank, inflows grew 58% on a week-over-week basis, reaching 490 million in mid September, as a result of the development of “real world use cases like payments/remittances.” The report also noted that future regulatory clarity is likely to benefit the DeFi (Decentralized Finance) adoption and explained the recent drop of ETH prices as a function of investors realizing that Ethereum’s Merge did not reduce transaction fees or improve scalability issues, noting that investors are taking a “wait-and-see approach regarding future upgrades.”
Citibank highlights growth of decentralized exchanges
Citibank noted (10/03) in a research report that decentralized exchanges (DEXs) grew faster than their centralized counterparts during the last two years. Citi analysts blamed the more onerous know-your-customer procedures of the centralized exchange (CEXs) as one of the reasons that may be causing crypto investors to shift. According to the bank, DEXs are now responsible for 18.2% of spot-trading volume, with over $50 billion in monthly trades. Among the DEXs, Uniswap (UNI) dominates the market with a 70% share of all volume.
This week’s US economic calendar will be highlighted by the Purchasing Managers' Index (PMI) on Monday and non-farm payroll on Friday. Both should give greater clarity to the extent of the impact of the Fed’s monetary intervention so far. In the Eurozone, investors will continue to monitor the ongoing UK financial situation and the Bank of England’s bond buyback plan.
The information contained herein (“Information”) may not be reproduced or redistributed in whole or in part, in any format, without the express written approval of Hashdex Asset Management Ltd. (“Hashdex”) and its affiliates and subsidiaries (“Hashdex Group”). By accepting this document, you acknowledge and agree that all of the Information contained in this document is proprietary to Hashdex Group. While not explicitly referenced within this piece, Hashdex Group manages the Hashdex Nasdaq Crypto Index ETF, Hashdex Nasdaq Ethereum ETF, Hashdex Nasdaq Bitcoin ETF, Hashdex DeFi Index Fund, Hashdex Smart Contract Platforms Index ETF and other investment vehicles focused on digital assets (collectively the “Fund” and each a “Fund”) which invests in digital tokens. The Information is not an offer to buy or sell, nor is it a solicitation of an offer to buy or sell, interests in the Funds or any advisory services or any other security or to participate in any advisory services or trading strategy. If any offer and sale of securities is made, it will be pursuant to the confidential offering memorandum of the Fund (the Offering Memorandum). Any decision to make an investment in the Fund should be made after reviewing such Offering Memorandum, conducting such investigations as the investor deems necessary and consulting the investor’s own investment, legal, accounting and tax advisors in order to make an independent determination of the suitability and consequences of an investment.
Each Fund seeks to track a relevant index. The performance of each Fund will vary from the performance of the relevant index that it seeks to track. The Information is being provided to you solely for discussion purposes and may not be used or relied on for any purpose (including, without limitation, as legal, tax or investment advice) without the express written approval of Hashdex Group. Certain statements reflect Hashdex Group’s views, estimates, opinions or predictions (which may be based on proprietary models and assumptions, including, in particular, Hashdex Group’s views on the current and future market for digital assets), and there is no guarantee that these views, estimates, opinions or predictions are currently accurate or that they will be ultimately realized. To the extent these assumptions or models are not correct or circumstances change, the actual performance of Hashdex Group and the Funds may vary substantially from, and be less than, the estimated performance. None of Hashdex Group, the Funds nor any of their respective affiliates, shareholders, partners, members, directors, officers, management, employees or representatives makes any representation or warranty, express or implied, as to the accuracy or completeness of any of the Information or any other information (whether communicated in written or oral form) transmitted or made available to you.
Each of the aforementioned parties expressly disclaims any and all liability relating to or resulting from the use of the Information or such other information. Except where otherwise indicated, the Information is based on matters as they exist as of the date of preparation and not as of any future date and will not be updated or otherwise revised to reflect information that subsequently becomes available, or circumstances existing or changes occurring after the date hereof. Investing in financial markets, the Funds and digital assets, including Bitcoin, DeFi tokens, and Ethereum, involves a substantial degree of risk. There can be no assurance that the investment objectives described herein will be achieved. Any investment in the Funds may result in a loss of the entire amount invested. Investment losses may occur, and investors could lose some or all of their investment. 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 Group’s investment methodology or that investing any of the protocols or tokens listed in the Information or the Funds may be considered “conservative,” “safe,” “risk free,” or “risk averse.” Neither historical returns nor economic, market or other performance is an indication of future results. 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 Group, and Hashdex Group does not assume responsibility for the accuracy of such information. Hashdex Group 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” or “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 Group or the Funds or the actual performance of Hashdex Group, the Funds, 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 has been filed with the U.S. Securities and Exchange Commission, any securities administrator under any state securities laws or any other governmental or self-regulatory authority. No governmental authority has opined on the merits of the offering of any securities by the Funds or Hashdex, or the adequacy of the information contained herein.