Crypto markets have been trading poorly along with broader risk markets since the start of 2022. Over the past week, bitcoin is down 11.7% and ethereum is down 17.3%. As for our crypto indices, our DeFi Index has fallen 13.9% over the past week, our Smart Contract index is down 18.1% but the biggest decline has been in our Metaverse index which is down 21% (Charts 1 and 2). The Metaverse index is now down 45% since its peak in late November 2021.
Here are the performance details:
DeFi Index. All five coins in our DeFi basket fell over the past seven days. Aave (AAVE) is currently down the most at 23.8% and PancakeSwap (CAKE) is down the least at 10.8%.
Metaverse Index. All five coins in our metaverse basket saw declines. Gala (GALA) is currently down the most at 30.4% and Decentraland (MANA) is down the least at 14.4%.
Smart Contract Platform Index. All five coins in our smart contract basket also declined. Avalanche (AVAX) is currently down the most at 21% and Cardano (ADA) is down the least at 13.8%.
Bitcoin. This fell 11.7%, but notably has performed better than Solana, Cardano, and Ethereum over the past seven days.
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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