The total crypto market cap plunged 15% over the weekend from around $2.7tn on Friday to lows of around $2.3tn. This was due to a combination of macro factors such as Omicron fears and Fed hawkishness and micro factors such as deleveraging and poor liquidity. But crypto weakness was not uniform – both our DeFI and Metaverse indices saw the largest declines of around 20% over the past seven days (Charts 1 and 2). Next it was our Smart Contract Platform Index which fell 15%. Bitcoin fell by ‘only’ 10%.
Here are the performance details:
DeFI Index. All five coins in our DeFi basket fell over the past week. Aave (AAVE) fell most at -23%, while Uniswap (UNI) fell the least at -15%
Metaverse Index. All five coins in our metaverse basket saw large declines. Gala (GALA) fell most at -24%, while Axie Infinity (AXS) fell the least at -19%.
Smart Contract Platform Index. There was larger variation in coin performance within this index. The worst performers were both Avalanche (AVAX) and Polkadot (DOT) at around -22%, while Ethereum (ETH) and Solana (SOL) were relatively flat on the week.
Bitcoin. This only fell 10.3%, but notably it performed less well than Ethereum and Solana.
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. But we also include rivals: Solana (SOL), Cardano (ADA) and Avalanche (AVAX). 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. One of the largest is this space is Axie Infinity (AXS), which is a play-to-earn gaming platform. Another is Decentraland (MANA), which is a virtual world that allows ownership of land amongst other things. The three other coins we include are Sandbox (SAND), Enjin Coin (CNJ) and Gala (GALA).
Decentralised Finance (DeFi): financial services built on top of blockchain networks with no central intermediaries. This can be a very broad category, so we narrow this down to platforms that focus on lending and borrowing or to yield farming. The five coins we have selected are Aave (AAVE), Maker (MKR), Compound (COMP), Uniswap (UNI), and PancakeSwap (CAKE).
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.
(The commentary contained in the above article does not constitute an offer or a solicitation, or a recommendation to implement or liquidate an investment or to carry out any other transaction. It should not be used as a basis for any investment decision or other decision. Any investment decision should be based on appropriate professional advice specific to your needs.)
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