Trakx Weekly Update: June 10

Key Crypto Market Figures

CTIs Weekly Performance

Crypto investors were on the receiving end of a slew of positive news last week, although it did not provide sufficient fuel to push prices to new all-time highs. Indeed, last week our benchmark Top 10 Crypto CTI was little changed (+0.4%). Top of the performance table was the Diversifier CTI, which gained 4%, while in bottom position was the AI CTI, which after more than doubling so far this year, gave back 12% over the prior seven days.

The first piece of good news came from the latest Bitcoin ETF flows, which showed investors purchased a cumulative $1.8bn in the week to June 7, with last Tuesday recording the second best daily inflow since their launch back in January. These fiat inflows equate to net buying of almost 26,000 Bitcoin, which is more than 8X the pace new Bitcoin are mined after this year’s halving event – a substantial discrepancy between demand and supply which, if sustained, points to underlying upward pressure on prices.

An additional supportive factor was the news that the Bank of Canada became the first G7 central bank to cut interest rates, reducing its key target rate by 25bps. Given that Canadian CPI inflation declined to three-year low the move was widely anticipated by tradfi investors. Nevertheless, it suggests that the monetary policy ratchet that crypto and tradfi markets had endured over the past few years is finally switching into reverse.

Reinforcing the impression of a more accommodative monetary backdrop, the ECB quickly followed suited, trimming its official interest rate by the same magnitude. The question now on every investors lips is when will the Fed follow suit?

If one simply looked at the headline number of last Friday’s US non-farm payroll report the answer would be not soon, given total employment rose by much higher than expected (it was a four sigma beat) and given the up-tick in average hourly earnings. However, the details of the report were substantially softer. Without wishing to get into the weeds, a “statistical” adjustment made by the Bureau of Labor Statistics (BLS) contributed 231k out of the 275k. Moreover, there was a substantial switch from full-time jobs to part-time jobs, yet another indication of weakening demand for labour. The softer underlying details suggests that the US economy, which has proved to be surprisingly resilient over the past several quarters, is finally beginning to weaken, a result that accords with the recent dip in the Atlanta Fed’s GDPnow indicator, a GDP model forecast based on higher frequency macro data. At present the market views a September Fed cut as a coin-toss, so it will be very interesting to see the reaction to this week’s FOMC press conference, which comes a day after the May CPI inflation report.

Sources: Trakx, Coingecko, Alphavantage

Market Trends

• Bitcoin ETFs sucked up 2 months of BTC mining supply in first week of June: Cointelegraph
• Bitcoin, Ether Little Changed Over Weekend After $400M Liquidation Rout: Coindesk
• Robinhood crypto head says Bitstamp will help lure wealthy investors: DLNews
• Russian official says international CBDC payments will be the norm within 5 years: CryptoSlate
• Who Is Roaring Kitty, and What Does His Return Mean for Crypto?: Decrypt

Trakx News

• Ryan published the May report: Crypto Clash, Biden and Trump take opposing sides as November’s presidential race hots up
• There is still time to participate in our Airdrop Campaign: TRKX Token – Discover, Learn and Trade, join us!
• Lionel is attending the DeFI Retreat Conference in Paris (today and tomorrow), do not hesitate to contact him directly for a coffee

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.