Crypto markets have continued their ascent despite negative GDP numbers coming out of the US. Data released on Thursday showed GDP fell by 0.9% on an annualised basis in the second quarter of 2022 – this marks the second consecutive quarter of negative GDP growth which is one definition of a recession. Bitcoin is currently trading at around $23,700 – up around 3% over the past seven days. But ethereum has been outperforming as developers revealed a tentative date for the merge (19 September).
As for our various indices – they are all in the green (except for our Metaverse Index which is flat) (Charts 1 and 2). Our DeFi Index is up the most at 10%. All remaining indices are up between 3% and 5% each.
Our Smart Contract index is the most correlated to bitcoin at 90% (Chart 3). Our DeFi Index is the least correlated to bitcoin at 82%. On macro markets, bitcoin’s correlation to tech increases compared to last month – it is still most correlated to the S&P 500. Meanwhile, its correlation to Oil flips to negative and its correlation to 10Y yields flips to positive (Chart 4).
- Smart Contract Platform Index: EOS (EOS) is up the most over the past seven days at 25%. Avalanche (AVAX) is down the most at 3%. Ethereum (ETH) is up 9%.
- DeFi Index: Yearn.finance (YFI) is up the most over the past seven days at 36%. Thorchain (RUNE) is down the most at 4%.
- Metaverse Index: Axie Infinity (AXS) is up the most at 10% and Ultra (UOS) is down the most at 7%.
- Privacy Index: Horizen (ZEN) is up the most at 9% and Dusk Network (DUSK) is down the most at 2%.
- Bitcoin: this is up 3%.
What Are in the Four Indices?
Here are the indices 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 was to have blockchains that were more programmable. These could host smart contracts or decentralised applications and have allowed the emergence of the metaverse and defi. Ethereum (ETH) is the most popular version of a smart contract platform. As well as 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 allows interoperability between blockchains and the use of smart contracts via parachains.
- Metaverse: coins associated with the creation of a virtual space/digital world on the internet using a combination of augmented reality, virtual reality, and social networks. 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).
- Decentralised Finance (DeFi): financial services built on top of blockchain networks with no central intermediaries. This can be a broad category, so we narrow this down to platforms that focus on lending/borrowing, yield farming, automated market making and decentralised 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 obscure 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 has a BSc Mathematics and Computer Science and an MSc Mathematical Finance both from the University of Birmingham. His areas of interest are in the applications of machine learning, deep learning and alternative data for predictive modelling of financial markets.
Bilal Hafeez is the CEO and Editor of Macro Hive. He spent over twenty years doing research at big banks – JPMorgan, Deutsche Bank, and Nomura, where he had various “Global Head” roles and did FX, rates and cross-markets research.