Trakx Weekly Update: Altcoins Rally on Fed Cut Hopes

Key Crypto Market Figures

CTIs Weekly Performance

Digital asset prices bounced back last week, led by strong gains in our flagship large-cap Top10 Crypto CTI, which advanced 7.5% over the past seven days. The standout performer, however, was the Meme CTI, surging nearly 19%. Close behind was the DePin CTI, which climbed 17%. On the other end of the spectrum, the BTC Momentum CTI lagged, but still posted a modest 0.5% increase.

Fed Easing To Resume This Week

Following a weaker non-farm payroll report two weeks ago, fresh signs of a slowing US labour market emerged last week with an unexpected jump in jobless claims. The 27,000 increase brought claims to their highest level since the pandemic—an eye-catching move despite the series’ usual volatility. Coupled with inflation data that either met expectations (consumer prices) or came in softer than forecast (producer prices), the stage is now set for the Fed to begin cutting rates at this week’s FOMC meeting. Markets expect this to be the first of several cuts totalling 200bp.

The key question for investors is the magnitude of the first move. A widely expected 25bp cut might not ignite much bullish momentum, while a surprise 50bp cut would likely be viewed positively as a sign of the Fed being more proactive. That said, much will depend upon the tone of the Wednesday’s press conference because if Chair Powell frames the larger cut as a reaction to rapidly weakening growth, recession fears could overshadow the optimism.

More Stablecoin Hype

Hyperliquid, the decentralized perpetuals exchange that launched its own layer 1 blockchain a year ago, made headlines last week after proposing to replace USDC—which currently represents nearly 95% of the $5.8bn stablecoins on its network—with its own native stablecoin (USDH). By making this change, the Hyperliquid community would capture yields on fiat collateral that currently flow to issuers, since US regulations prevent those returns from being shared with stablecoin holders. The revenue potential fuelled strong demand for Hyperliquid’s governance token, which hit a new all-time high.

The call for proposals drew seven serious contenders. Leading names included Ethena Labs, backed by BlackRock (with its BUIDL fund as collateral), Paxos, backed by PayPal, and Frax, which also planned to use BlackRock’s BUIDL fund. Despite these heavyweight backers, the frontrunner from the outset was Native Markets, a relative newcomer founded specifically to support Hyperliquid’s stablecoin ambitions. Their proposal uses Stripe’s Bridge platform for on-chain reserves, while BlackRock would manage off-chain assets. As expected by betting markets, Native Markets ultimately won Sunday’s community vote.

Sources: Trakx, Coingecko, Alphavantage

Market Trends

• Fed’s Sept. 17 Rate Cut Could Spark Short-Term Jitters but Supercharge Bitcoin, Gold and Stocks Long Term: CoinDesk
• Native Markets officially claims Hyperliquid’s USDH stablecoin ticker: Cointelegraph
• Polymarket weighs financing at $9-10B valuation while Kalshi is close to raising at $5B valuation: reports: The Block
• Charlie Kirk’s killing turned into memecoin spectacle: Protos
• Monero’s ‘Largest’ Reorg Yet Erases 36 Minutes of Transaction History: Decrypt
• Ethereum layer-2 solutions Linea and Polygon stumble with outages and finality delays: CryptoSlate

Trakx CTIs Performance

Sources: Coingecko and AlphaVantage

*Return of bitcoin is calculated since 01/05/2020, while CTIs performances were calculated since their respective launch date.
**Includes simulated performance.
***The risk signal is determined according to the historical volatility level, the higher the riskier.

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Disclaimers: No Investment Advice. Index returns and statistics are for illustration only. Index returns do not reflect any transaction costs or expenses. Past performance does not guarantee future results. The information provided in this newsletter does not constitute investment advice, financial advice, trading advice, or any other sort of advice and you should not treat any of the newsletter content as such. Trakx.io does not recommend that any cryptocurrency should be bought, sold, or held by you. Readers shall conduct their own due diligence and consult their financial advisors before making any investment decisions.