Trakx Weekly Update: January 27

Key Crypto Market Figures

CTIs Weekly Performance

Given that our benchmark Top10 Crypto CTI was unchanged on the week, one could be forgiven for thinking things were quiet, but that was definitely not the case. US politics remained the dominant driver of digital asset markets after Donald Trump wasted no time in getting down to business after Monday’s inauguration. The best performing sector was the defensive Inflation Hedge CTI, which gained 1.8%, closely followed by our newly released Cardano Ecosystem CTI (+1.6%). In contrast, the volatile Meme CTI shed more than 20% over the prior seven day period putting it firmly in last place on the performance table.

Trump Gets To Crypto Eventually

Speaking via videolink at the annual WEF conference in Davos, Switzerland, President Trump reaffirmed his administration’s commitment to ensuring the US becomes the “world capital of artificial intelligence and crypto”. His comments had added significance because there was a palpable sense of disappointment earlier in the week after Trump failed to mention crypto in his inaugural speech or include it in any of the numerous executive orders he issued on Day 1. However, the hopes of the bulls were not dampened for too long as later on in the week Trump issued an executive order seeking to establish a working group on digital asset markets. The working group is tasked with proposing a new Federal regulatory framework governing the issuance and operation of digital assets in the US. Additionally, the group was asked to evaluate the potential creation and maintenance of a “national digital asset stockpile and propose criteria for establishing such a stockpile”. The order was warmly received by the crypto bulls as was the news that pro-crypto Senator Cynthia Lummis will chair the Senate Banking Subcommittee on Digital Assets. That said, the positive vibes were insufficient to stop a liquidation cascade as the weekend drew to a close.

Civil War In Ethereum

Also on a less positive note, Vitalik Buterin one of the founders of Ethereum set the cat firmly amongst the pigeons last week when he took to X to criticize community members who have been pushing for the resignation of Aya Miyaguchi as executive director of the Ethereum Foundation (EF). Not only did he put up a robust defense of Miyaguchi, he stated that he, and he alone, is responsible for deciding the EF leadership team. While some ETH bag holders welcomed the arrival of Vitalik “wartime CEO” Buterin, others were less impressed. The reason being that although Ethereum and the EF are two separate entities, they are unequivocally entwined and such public pronouncements undermine the notion of Ethereum being a highly decentralized blockchain.

Thorchain Pause

Finally, interoperability related tokens were on the back foot after ThorChain announced that it had paused withdrawals of Bitcoin and Ether in its lenders and savers programmes for 90 days. The decision reflected concern about a potential insolvency risk in a situation where savers attempt to deleverage (loans closed and repaid) all at once or if there was a large debt redemption. While ThorChain has been one of the most profitable protocols, the news hit RUNE – the token Thor Chain mints and sell to the liquidity pools in order to meet loan obligations – hard, its value dropping by more than 30%.

Sources: Trakx, Coingecko, Alphavantage

Market Trends

• President Trump says US will be ‘world capital of artificial intelligence and crypto’ in Davos speech: The Block
• Trump orders crypto working group to draft new regulations, explore national stockpile: Reuters
• ‘Mutiny’ at the Ethereum Foundation? Why ETH holders are calling for a ‘Wartime CEO’: The Block
• Dogecoin Logo Appears on Elon Musk-led Department of Government Efficiency Website: Decrypt
• Trump pardons Ross Ulbricht but Silk Road deputy remains behind bars: Protos
• RUNE Plunges 30% as THORChain Pauses Bitcoin, Ether Withdrawals: CoinDesk

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.