Trakx Weekly Update: Crypto Holds Firm as Geopolitics and AI Anxiety Shake Investors

Key Crypto Market Figures

CTIs Weekly Performance

Digital assets demonstrated notable resilience last week, even after a turbulent February. Our flagship large-cap Top 10 Crypto CTI declined just 1.5%, holding up well in the face of the latest geopolitical shock (see below). Performance across themes was mixed. The standout performer was the Decentralized Exchange (DEX) CTI, which rose 3.6% over the past seven days. At the other end of the spectrum, the Cardano Ecosystem CTI fell 4.7%, closely followed by the Meme CTI, which posted a similar decline.

Iran Strikes

For the second time this year, digital asset markets were unsettled by military action after the US, alongside Israel, launched Operation Epic Fury targeting the Iranian regime. Crypto prices initially dropped around 4% as risk aversion spiked. However, the sell-off proved short-lived. Prices quickly rebounded, underscoring crypto’s growing resilience to geopolitical escalation — perhaps reflecting already subdued investor sentiment over recent weeks.

The rebound was then tested by a sharp surge in oil prices. Crude rose more than 6%, despite OPEC’s pledge to increase production by over 200,000 barrels per day, as traditional financial markets reacted to the effective closure of the Strait of Hormuz — a critical choke-point through which roughly 20% of global crude supply flows. The key concern is that if elevated oil prices persist, they could reignite inflationary pressures. This would reduce the likelihood of the Fed delivering the rate cuts currently anticipated later this year, potentially tightening global liquidity conditions and creating a less supportive backdrop for risk assets— including crypto.

AI Job Fears Materialize

As we outlined in our just-published Monthly Update (see link below), one of the factors that has been driving bearish price action in the crypto space over the past month has been the sharp sell-off in tech related stocks, an industry segment to which crypto prices have shown a high degree of correlation with over recent quarters. This selling pressure has been driven by concern about the economic impact (specifically on the labour market), arising from the widespread adoption of AI.

Perfectly capturing the current zeitgeist, a recent blog post by Citrini Research, containing a very negative scenario where millions of jobs are destroyed by AI, went viral. While there were numerous rebuttals of their pessimistic take, real world validation of the blog’s central hypothesis did not take long to arrive. Last Thursday, Jack Dorsey announced that Block – the fintech payments company founded by the former CEO of Twitter in 2009 – would lay off more than 40% of its 10,000 workforce, because AI is “enabling a new way of working which fundamentally changes what it means to build and run a company”. Dorsey may be one of the first high-profile CEOs to directly attribute large-scale layoffs to AI-driven efficiency gains — but he is unlikely to be the last, so the labour destructive AI narrative is likely to persist.

Jane Street Sued Over Terra Collapse

Finally, Jane Street is being sued by the bankruptcy administrator of Terraform Labs over allegations that the firm used non-public information to front-run trades tied to the collapse of TerraUSD. According to the complaint, private communications allegedly took place between Jane Street traders and current or former Terraform employees. One example cited is that within minutes of Terraform withdrawing $150 million of its Terra stablecoin from the Curve3pool — a move not publicly disclosed at the time — a wallet allegedly linked to Jane Street withdrew a further $85 million. The lawsuit claims this accelerated the stablecoin’s depeg, triggering a “death spiral” that wiped out roughly $40 billion in market value in under a week. Jane Street has rejected the allegations, arguing that the collapse stemmed from large-scale fraud within the Terraform ecosystem. The episode ultimately led to the conviction and sentencing of Terraform founder Do Kwon to 15 years in US prison.

Sources: Trakx, Coingecko, Alphavantage

Market Trends

• Bitcoin drops below $67,000 as Iran conflict uncertainty persists: YahooFinance
• Polymarket attracts record trading ‘world’ volumes as U.S.-Iran bets top $529 million: CoinDesk
• Analysis: Block’s retreat to 2019 scale could be a hint of deeper shifts in payments economics: CoinDesk
• Citrini AI report terrified Wall Street. Here’s why its vision is a boon for Bitcoin’s price: DLNews
• Jane Street Sued For Crypto Insider Trading That Accelerated Terraform Collapse: Zerohedge
• Vitalik Buterin Maps Quantum Upgrade to Ethereum to Replace Core Cryptography: Decrypt
• Bitcoin miner MARA posts $1.7B quarterly loss on BTC slump: Cointelegraph

Trakx News

• Ryan Shea published his Monthly Update examining the drivers behind last month’s bearish price action and what it implies for the future trajectory of digital asset prices.

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.