Trakx Weekly Update: March 3

Key Crypto Market Figures

CTIs Weekly Performance

February closed pretty much as it started with heavy losses triggered by the hack of Bybit in the prior week and reignited concerns about a possible global trade war after Trump vowed to impose additional tariffs on Chinese imports. As a result, sentiment amongst crypto investor plummeted pushing the Fear and Greed Index into extreme fear territory. However, March started off on a much brighter tone, with Trump once more the key driver (see below), helping our benchmark Top10 Crypto CTI stay in the green last week, with a positive 1.7% return.

ETF Outflows

Amongst the last cap tokens, leading the sell-off early last week were Dogecoin, Solana and XRP which is not that surprising given they were previous favourites of crypto investors. While not at the forefront, Bitcoin’s price drop had the greatest impact by virtue of its size, with its market cap dropping by $300bn at one stage as institutional investors aggressively unwound basis trades, generating consistent and substantial outflows from spot Bitcoin ETFs (with last Tuesday witnessing a record $1bn outflow).

The sharp correction in the price of the seminal cryptocurrency fueled worries about the potential negative impact on Micro Strategy – the well-known leveraged-long Bitcoin holder run by Michael Saylor. While the company’s fortunes are inevitably tied to Bitcoin’s long-term success, the company finances have been structured in such a way that it is able to weather short-term corrections without needing to liquidate its holdings. Indeed, to assuage such concerns Saylor took to X and posted an AI-generated photo of himself serving a hamburger in orange coloured clothing and suggesting those seeking a second job should acquire more Bitcoin – a pithy take on a popular crypto meme.

All About Trump

Thankfully for the bulls, having damaged sentiment earlier in the week by vowing to impose additional trade tariffs against China, Trump came good over the weekend after he posted on his Truth Social social media network that his working group will “move forward on a Crypto Strategic Reserve that includes XRP, Solana and ADA”. The post resulted in a handbrake turn for the market as the price of those tokens mentioned took off. Solana and XRP gained by around a third in a knee-jerk response, but the star performer was Cardano. Its inclusion in the list, which was clearly unexpected by many given the magnitude of the surge, triggered a 70% rally, gains captured by our newly released Cardano Ecosystem CTI, ensuring it was the top performer last week by some considerable margin.

What was also surprising to many was the notable exclusion of the two largest cryptocurrencies by market cap, namely Bitcoin and Ethereum. Given Trump published a second post less than an hour later quoting the first post and saying that “And, obviously, BTC and ETH”, it appears their initial exclusion was nothing more than an oversight on Trump’s part (an occupational hazard when it comes to social media posting!).

Pectra Testnet Fail

That said, some within the industry probably thought Trump’s failure to mention Ethereum was maybe justified in light of recent developments. First, Aya Miyaguchi, announced that she was leaving the executive director role with the Ethereum Foundation that she has held for seven years to take up the newly-created role of President of the non-profit organization. In her blog post announcing the move, Aya made it clear that she will remain an active participant of the foundation – albeit in a lesser role – and with Buterin continuing to make supportive comments it is unlikely the personnel switch will do much to appease those critical of Ethereum Foundation’s lack of transparency and ineffective leadership – characteristics that the doubters believe have contributed to ETH’s significant underperformance against other large cap cryptocurrencies.

Second, the activation of the Pectra Upgrade on the Holesky testnet – the first of two testnet trials planned over the next few weeks – did not go smoothly. After most Ethereum clients accepted an invalid block the network unable to finalize transactions. Ethereum developers tasked with correcting the buggy code are still hopeful that the mainnet deployment will go ahead in April, but this will only happen if the activation of the Pectra upgrade on the Sepolia testnet due in a few weeks time is successful.

Sources: Trakx, Coingecko, Alphavantage

Market Trends

• Strategy’s Bitcoin Bet Under Pressure: Could a Forced Liquidation Happen?: Decrypt
• Trump names cryptocurrencies in strategic reserve, sending prices up: Reuters
• Ethereum Foundation leadership reshuffle baffles industry: DL News
• Ethereum’s Pectra Upgrade Crashes Holesky Testnet: The Defiant
• SEC declares memecoins are not securities in landmark staff statement: CryptoSlate

Trakx News

• Trakx and Calci Patrimoine are hosting an exclusive training for CGPs & CIFs, in Paris on March 5, on the rapidly evolving crypto-asset market and how to successfully integrate crypto into wealth management. For more details, please contact us at [email protected]
• Ryan Shea published the February crypto monthly update After The Surge exploring the reasons why the January rally ended with a bump.

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.

TRAKX SAS,  10 rue de Penthièvre, Paris, 75008, FRANCE – French société par actions simplifiée Paris Trade and Companies Register number 850 626 078. Crypto Asset Service Provider (CASP) Registered with the Autorité des Marchés Financiers (AMF) under number E2021-020

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.