Crypto Index Tracker: Crypto Markets Tick Higher

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Crypto markets have been rising over the past week as markets failed to price an FOMC hike in June despite a debt ceiling resolution and a monstrous NFP result.

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Crypto markets rose over the past week as markets refused to price a June FOMC hike despite a debt ceiling resolution and monstrous NFP results.

Attention shifts away from the debt ceiling debacles as President Biden and House Speaker McCarthy reach an agreement to suspend the debt ceiling until January 2025. The deal comes in exchange for a $81 billion reduction in spending or 0.3% of GDP from the CBO’s FY2024 benchmark and a $68 billion increase from FY2023.

From now on, the eyes are riveted on the general account of the Treasury (TGA). Dominique writes that if the US Treasury plans to increase the TGA by $500 billion over the next four weeks, this figure should be revised lower and will ultimately prove bullish for equities.

Finally, May’s non-farm payrolls suggest a hike is unlikely at the June FOMC meeting. The details showed a gain of +339,000 jobs, but with no increase in participation or acceleration in nominal wages.

Performance of our indices

This week, all indices (except our Privacy Index) are in the green with our Smart Contract Index (+1.4% WoW) ahead of our Bitcoin Index (+1.3% WoW).

Our Smart Contract Index remains the most correlated to our Bitcoin Index (+86%). Our DeFi index is lagging behind (+83%). Meanwhile, our Metaverse and Privacy Index are the least correlated (+71% and +70%, respectively; Chart 3).

Equity correlations are increasing with our Bitcoin index now correlated 52% to the Nasdaq 100 and +41% correlated to the S&P 500 (chart 4). Elsewhere, its correlation with 10-year yields (6%) dissipated and turned negative with Brent crude oil (-7%).

Smart Contract Platform Index: Solana (SOL; +6.5% WoW) gained the most while Fantom (FTM; -6.1% WoW) extended losses. DeFi Index: PancakeSwap (CAKE; +7.8% WoW) reversed some of last week’s losses while 1inch struggled (1INCH; -6.0% WoW). Metaverse Index: Redfox-labs (FROX) led the winners higher while the Virtua Kolect (TVK) slipped lower (-13.5% WoW). Secrecy Index: More losers than winners with secrecy (SCRT; -11.5% WoW) having the worst week. Bitcoin Index: is up -1.3% WoW. What do the four clues contain?

Here are the clues in more detail:

Bitcoin: the OG of crypto markets deserves its own category and is in many ways the true benchmark for any other crypto market. Smart contract platforms: After bitcoin, the big innovation has been to have more programmable blockchains. These could host smart contracts or decentralized applications and enabled the emergence of the metaverse and defi. Ethereum (ETH) is the most popular version of a smart contract platform. In addition to Ethereum, we also include some key competitors. The constituents of this index are: Ethereum (ETH), Cardano (ADA), Avalanche (AVAX), Solana (SOL), Fantom (FTM), VeChain (VET), Terra (LUNA), EOS (EOS) and Chainlink (LINK ). We also include Polkadot (DOT) which enables interoperability between blockchains and the use of smart contracts via parachains. Metaverse: pieces associated with creating a virtual space/digital world on the internet using a combination of augmented reality, virtual reality and social media. The constituents of this index are Axie Infinity (AXS), The Sandbox (SAND), Decentraland (MANA), Enjin Coin (ENJ), Aavegotchi (GHST), Terra Virtua Kolect (TVK), Ultra (UOS), Phantasma (SOUL) , RedFOX Labs (RFOX) and Gala (GALA). Decentralized Finance (DeFi): Financial services built on top of blockchain networks without central intermediaries. This can be a broad category, so we’re narrowing it down to platforms that focus on lending/borrowing, yield farming, automated market making, and decentralized exchange tokens. The constituents of this index are: Aave (AAVE), Compound (COMP), Uniswap (UNI), Yearn.finance (YFI), Loopring (LRC), PancakeSwap (CAKE), Maker (MKR), 1inch (1INCH), Thorchain (RUNE) and Terra (LUNA). Privacy Coins: coins that hide transactions on the blockchain to maintain the anonymity of its users and their activity. The constituents of this index are Monero (XMR), Zcash (ZEC), Dash (DASH), Verge (XVG), Horizen (ZEN), Beam (BEAM), Secret (SCRT), Decred (DCR), Keep Network (KEEP ) and Dusk Network (DUSK). Dalvir Mandara is a quantitative researcher at Macro Hive. Dalvir holds a BSc Mathematics and Computer Science and an MSc Mathematical Finance, both from the University of Birmingham. His areas of interest are the applications of machine learning, deep learning and alternative data for predictive modeling of financial markets. Photo Credit: depositphotos.com (The commentary in the above article does not constitute an offer, solicitation or recommendation to make or liquidate an investment or to effect any other transaction. to any investment or other decision. Any investment decision should be based on appropriate professional advice specific to your needs.) Enter your email to read this exclusive Macro Hive

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