Crypto Index Tracker: Smart Contract Platforms Outperform
- By Bilal Hafeez and Dalvir Mandara
- 3 min read
Crypto markets have been rallying this week with notable moves up in bitcoin and ethereum. Bitcoin is currently trading at around $23,400. It reached over $24,300 on Wednesday but started to pullback after the Q2 earnings report for Tesla revealed it has sold 75% of its bitcoin holdings. Ethereum is currently trading at around $1,600 and has outperformed bitcoin lately. It is up 33% over the past seven days compared to 13% for that of bitcoin. The ethereum rally came after ethereum developers proposed 19 September as a tentative date for the merge.
All our indices are in the green this week (Charts 1 and 2). Our Smart Contract Index is up the most at 18%, followed by bitcoin at 13%. Our Metaverse, DeFi, and Privacy indices are up between 9% and 11% each.
Our Smart Contract index replaces our Privacy index as the most correlated to bitcoin at 84% (Chart 3). Our DeFi Index becomes the least correlated to bitcoin at 75%. On macro markets, bitcoin’s correlation to tech increases compared to last month – it is now most correlated to the S&P 500. Meanwhile, its correlation to Oil has come down (Chart 4).
- Smart Contract Platform Index: All coins in this index are up over the past seven days. Ethereum (ETH) is up the most at 33% followed by Fantom (FTM) at 30%. EOS (EOS) is up the least at 8%.
- DeFi Index: All coins in this index are also up over the past seven days. Thorchain (RUNE) is up the most at 32%, followed by Loopring (LRC) at 13%. Uniswap (UNI) is up the least at 3%.
- Metaverse Index: Enjin Coin (ENJ) is up the most at 23% and Aavegotchi (GHST) is the only coin that is down (0.2%).
- Privacy Index: Dusk Network (DUSK) is up the most at 23% and Beam (BEAM) is the only coin that is down (5%).
- Bitcoin: this is up 13%.
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.