Trakx Weekly Update: Sentiment Sours as Cycle Jitters Persist

Key Crypto Market Figures

CTIs Weekly Performance

Digital asset prices remained in a funk last week as investors continued to worry whether the traditional four-year cycle remains intact, raising the possibility that the market top may already be in. Against this backdrop, our flagship large-cap Top 10 Crypto CTI fell 10.5%. The Cardano Ecosystem CTI, last week’s top performer, became the worst performer this week, dropping 25%. The weakness was broad-based: all of our indices declined over the past seven days, including the typically defensive Inflation Hedge CTI. The only exception was the BTC Momentum CTI, which managed to avoid posting a negative return.

US Government Shut Down Ends

After a record-breaking 43 days, the US government shutdown ended last week when the Senate passed a funding bill with the support of eight Democrats, giving Republicans a 60–40 majority. For investors, the end of the shutdown marks the beginning of a gradual return to official US economic data releases, whose absence has added an unusual layer of uncertainty to an already cloudy economic outlook. However, the White House has indicated that October’s jobs report may never be released, creating a significant blind spot for policymakers—particularly the Fed, which is weighing whether to continue its rate-cutting cycle. Before the full data calendar normalizes, a wave of delayed reports will be published, including September’s jobs report, which will exclude the unemployment rate due to data-collection issues.

Chinese Accuses US Of Bitcoin Hack

Nation states like North Korea have often been accused of being behind some of the largest crypto hacks. But last week accusations were directed at another player – the US. A Chinese security firm accused the US of being behind the December 2020 hack of the Chinese-based mining pool LuBain, which it described as being a “state-level operation”. The hack resulted in the swiping of more than 127,000 BTC, worth over $14bn at today’s price, and led to the closure of what was then the sixth-largest Bitcoin mining pool. Driving the suspicion was the fact that after being left untouched for four years, the tokens were transferred to wallets associated with the US government according to analysis by the blockchain analytics firms Arkham. In response, the US government claimed that the seizure of the Bitcoin was legitimate after the Department of Justice filed a civil forfeiture complaint.

Strategy Sales Denied

Social media was awash last week with rumours that Strategy, the original Bitcoin DAT, had been offloading Bitcoin, speculation that added to investor uncertainty. Blockchain analytics firms claimed that Strategy’s had reduced its holdings by 47,000 BTC to 437,000 BTC. Michael Saylor, the founder of Strategy, strongly denied the claims stating that rather the firm continues to accumulate Bitcoin. Certainly, there is little impetus for the Strategy to sell its crypto holdings given the company doesn’t have any convertible bonds maturing until 2028, it has more than sufficient non-crypto-related income to meet coupon payments (as detailed in our last monthly update) and its break-even price remains well below current market levels, even after the recent downturn.

Sources: Trakx, Coingecko, Alphavantage

Market Trends

• Capitulation or rotation? $867M flees Bitcoin ETFs amid dip below $100,000: CryptoSlate
• September jobs report will be out Thursday as first data since shutdown starts to trickle out: CNBC
• China Accuses U.S. of Stealing 127K BTC in High-Profile Crypto Hack: CoinDesk
• Michael Saylor Denies Bitcoin Sale Rumors, Says Strategy’s BTC Buys Are ‘Accelerating’: Decrypt
• McDonald’s Exec Stirs Up Bitcoin Crowd With McRib Return: YahooFinance

Trakx News

• Reminder: We are hosting an AMA for all TRKX holders with our CEO Lionel Rebibo today at 18h CET.

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.

Trakx is a global fintech company creating new standards for digital asset investments. Through our trading platform, we offer thematic Crypto Tradable Indices (CTIs) and customised solutions, providing sophisticated investors with a high degree of compliance, custody and liquidity.

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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.