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The three “waves” that explain the NCI’s worst month

Lettres mensuelles

Dear Investor,

June 2022 will not soon be forgotten. Crypto markets faced incredible macro headwinds and a number of idiosyncratic events that led to unprecedented challenges.

Last week, Hashdex’s Chief Technology and Product Officer Samir Kerbage shared his thoughts on the three “waves” that are driving these markets and where we go from here. Read his full interview here.

We also want to share that we are breaking our monthly communications into a format we believe will better meet your needs. Going forward, this letter will focus on the most relevant news, events, and market activity from the previous month. Later in the month, we’ll send you a Research Report, an in-depth analysis from the Hashdex research team that will help you understand the most consequential factors in the crypto markets today. Next week, we’ll send along July’s theme: inflation and crypto.

These markets have been stressful, but we continue to believe the long-term outlook for crypto assets is as strong as ever. Ultimately, investors that can look beyond short-term price movements will benefit as the crypto ecosystem develops and brings new solutions to old problems throughout the global economy.

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

-Your Partners at Hashdex




Market Review


In June, the Nasdaq Crypto Index posted its most negative return since its inception in December 2020, down 41.7%.  It was also the second highest-returning month in absolute terms in the index's history, behind its inaugural month (up 44.9%). 

Although June was a bad month for risky assets in general (e.g., S&P 500 and Nasdaq 100 were down around 9%), most of the loss in the crypto market was driven by internal factors. Negative news about the financial health of some relevant players in the crypto ecosystem drove the prices down. The main company involved in these issues was crypto lending platform Celsius, which suspended redemptions and transfers on the 13th, as we reported in our Research Commentary. Another case that was broadly repercuted was the insolvency of the hedge fund Three Arrows Capital.

The damaging impact of both internal and external shocks was amplified by liquidations of margin positions, mostly in Bitcoin and Ethereum. This was the main reason why these two cryptoassets, which are the largest in market cap and tend to be more resilient than the others during stress seasons, were among the worst performers in the month, alongside Bitcoin Cash and Axie Infinity. For example, on the day of the Celsius shutdown, the worst day of the month for the NCI, Ethereum and Bitcoin had the two biggest losses among constituents, with 18.4 and 16.0% respectively. A similar situation happened on Saturday, the 18th, the second worst day of the month, with the NCI falling 11.2%. Ethereum was the worst performing asset, with a 12.8% loss, followed by Chainlink and Bitcoin, virtually tied with a 10.9% drop.

Under these circumstances, the other indices followed by Hashdex products outperformed the NCI. The best of them was the CF Digital Culture, with a drop of 32.7%. Next we had CF Smart Contracts (-33.7%) and finally CF DeFi (-34.4%). The best performing NCI constituent was Uniswap which surpassed Ethereum in fee income. NCI dropped 63.5% in the first half of the year.

Despite the challenging short term scenario, both internally and externally, we remain confident in the fundamentals of the main crypto investment  theses in the long term.

Top stories


Lending platform Celsius Network froze all withdrawals, followed by other CeFi platforms.

Crypto hedge fund Three Arrows Capital ($18 billion AUM) fell into liquidation.

FTX lends to BlockFi, before striking a deal that includes an option to buy the exchange.

The US Federal Reserve raised rates by 75 basis points, the largest increase in nearly three decades.

European Central Bank president Christine Lagarde commented on crypto’s liquidity woes. More here





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