Trakx Weekly Update:Crypto Slumps On Surprise Fed Chair Nominee

Key Crypto Market Figures

CTIs Weekly Performance

Digital asset prices suffered a brutal sell-off last week, dragging our flagship large-cap Top10 Crypto CTI down by more than 14%. The breadth of the decline was striking. Amid the widespread weakness, the BTC Momentum CTI emerged as the top performer over the past seven days, largely by virtue of remaining flat. At the other end of the spectrum, the AI CTI was the weakest performer, posting a near 20% weekly decline.

Fed In The Spotlight

As expected, the Federal Reserve left interest rates unchanged at last week’s FOMC meeting. While two committee members dissented in favour of a 25bp cut, expectations for near-term easing were tempered by the accompanying statement, which described US economic activity as “expanding at a solid pace.”

More significant for markets, however, was President Trump’s announcement on Friday of his preferred successor to Jerome Powell. Until very recently, Kevin Hassett had been viewed as the front-runner for the role. However, after reportedly impressing the president in a meeting last week, Kevin Warsh ultimately emerged as Trump’s pick. In many respects, Warsh represents an unusual choice given Trump’s repeated criticism of the Fed’s cautious approach to monetary easing. A Fed insider who served on the Board of Governors from 2006 to 2011, Warsh is widely regarded as an inflation hawk and a longstanding critic of quantitative easing.

Taken together, the Fed’s statement and Warsh’s nomination prompted investors to scale back USD debasement hedges — a theme that had gained traction in recent months. The resulting repositioning triggered a liquidation cascade across precious metals and digital assets, exacerbating last week’s sell-off.

Institutional Infrastructure

While headlines were dominated by Fed-related developments, last week also saw continued progress in the build-out of institutional-grade digital asset infrastructure. Tether, issuer of the world’s largest USD stablecoin, formally announced the launch of USAT—a federally regulated, dollar-backed stablecoin designed to comply with the framework established under the GENIUS Act. The token will be issued by Anchorage Digital Bank, the only federally chartered digital asset bank in the US, and is expected to be deployed on major blockchains such as Ethereum and Solana. Unlike USDT, Tether’s original stablecoin—which has long faced criticism over transparency, as its reserves have been attested to but never fully audited—USAT will be subject to monthly independent third-party audits. These audits will verify that sufficient off-chain reserve assets back the on-chain issuance of USAT, making it a considerably safer option for institutional investors.

Separately, BlackRock filed a registration statement with the SEC for its iShares Bitcoin Premium Income ETF. This product is designed to track Bitcoin’s price performance while generating additional income through the writing of covered call options on its IBIT shares. The strategy effectively monetizes Bitcoin’s high volatility, which drives option premiums, to produce yield. While covered-call strategies are well established in tradfi, their application to Bitcoin is more controversial because writing calls caps upside participation, which may prove costly for an asset class known for sharp and explosive bull runs.

Clawd Mauled

The latest viral development in the AI world was ClawdBot—an open-source AI coding agent that was quickly renamed Moltbot following a complaint from Anthropic over its similarity to their LLM, Claude. The agent can be accessed through messaging apps such as WhatsApp, Telegram, and Slack, and is self-hosted rather than cloud-based. Despite the obvious security risks of granting an autonomous AI agent shell access—allowing it to read and write files, run commands, and execute scripts on an internet-connected machine—the project gained rapid popularity. That attention also attracted bad actors. During the rebrand, crypto scammers managed to compromise the GitHub and X accounts of the project’s developer, Peter Steinberger. The attackers used these accounts to promote a fake $CLAWD token on the Solana blockchain. The token briefly surged to a market capitalisation of $16 million before collapsing, after Steinberger publicly denied issuing any token and described the project as a “scam.”

Sources: Trakx, Coingecko, Alphavantage

Market Trends

• Bitcoin price flat after Fed keeps rates still and Powell keeps quiet on politics: DLNews
• Bitcoin Price Holds Steady as Gold Falls and Silver Craters: Decrypt
• Tether officially launches ‘Made in America’ USAT stablecoin as mass TradFi adoption looms: The Block
• BlackRock is cannibalizing Bitcoin gains for “income” in a move that could leave retail investors behind during rallies: CryptoSlate
• Fake ‘ClawdBot’ AI Token Hits $16M Before 90% Crash — Founder Warns of Scam: YahooFinance
• Jeffrey Epstein claims he talked to ‘some of the founder of Bitcoin’: CryptoNews

Trakx News

• We are pleased to announce that Trakx has entered into a non-binding research collaboration with OFZA, a Dubai-based, VARA-regulated platform, to co-research thematic indices and explore how structured index methodologies can contribute to ecosystem development in the MENA region.
• Lionel Rebibo will be in Paris on Tuesday for RCube Crypto Alpha Talk #2. If you’re attending and would like to exchange on crypto indices, CTI token issuance, or interoperability via Canton, please get in touch.
• Ryan Shea published his Monthly Update examining the Trump administration’s shift from a post-WWII rules-based world order to one driven by power and its implications for digital assets.

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.