Trakx Weekly Update: May 5

Key Crypto Market Figures

CTIs Weekly Performance

Last week, digital asset markets were relatively diverse in terms of performance, with some segments witnessing strong gains while others lost ground. The best performer was our Recovery CTI, which gained almost 12%. This solid weekly performance was nearly matched by our AI Agents CTI, which finished up 9%. By contrast, the weakest performer was the higher-beta Meme CTI, which lost nearly 10% of its value.

AI HotSpot

As we noted in the previous weekly update, AI has returned as a hot sector in the world of digital assets. Leading the rally last week was Virtuals Protocol—an AI agent project. Its token was up more than 50%, pushing its market cap to over $1 billion after the token was listed on Binance, thereby broadening access to U.S.-based investors. Conviction that AI agents will play a major role in our digitally dominant world is certainly rising, as evidenced by the fact that Virtuals Protocol co-founder and CEO Jansen Teng participated in a panel discussion at last week’s Token2049 conference entitled “Autonomous Agents: When AI Wallets Outnumber Humans.”

Buterin Update

The past couple of years have not been kind to Ethereum—the second-largest cryptocurrency by market cap. Unlike many other tokens, ETH has failed to break above the all-time high achieved during the Covid bubble. As a result of this lacklustre performance, its exchange rate vis-à-vis Bitcoin has dropped to near-record lows. Somewhat ironically, this price underperformance is partly attributable to the success of the wider Ethereum ecosystem, particularly Layer 2 scaling solutions, which have cannibalized Layer 1 fees—much to the frustration of ETH stakers. Amid all the criticism, last week Vitalik Buterin posted his key goals for Ethereum, which he wants to be as “beautifully simple” as Bitcoin. His proposals included faster transaction finality (so-called single-shot), enhanced privacy, and stronger decentralization.

Alt Season Still MIA

One aspect of crypto price trends that investors have come to expect from previous cycles is that altcoins typically witness stronger returns than large-cap tokens during the bull phase. What marks the current rally as unusual is that “altcoin season” has not materialized, despite a doubling of the overall cryptocurrency market cap. In fact, Bitcoin now contributes $2 trillion to crypto’s overall $3 trillion market cap, meaning Bitcoin’s dominance has risen to 64%—a five-year high. One very obvious catalyst that has helped Bitcoin maintain its strong leadership position is robust ETF inflows, reflective of rising institutional investor interest. Such is the strength of these flows that BlackRock’s IBIT spot Bitcoin ETF now controls more than 600,000 BTC, or 3% of the overall supply

Sources: Trakx, Coingecko, Alphavantage

Market Trends

• Over 70 crypto firms join forces to tackle Big Tech’s AI monopoly: Cointelegraph
• Ethereum should be as ‘beautifully simple’ as Bitcoin, says Vitalik Buterin. Here’s how it gets there: DLNews
• Bitcoin Dominance Surges To 64%: What It Means For Altcoins And The Crypto Market Landscape: YahooFinance
• BlackRock’s IBIT holds over 3% of Bitcoin supply following record $970 million inflow: CryptoSlate
• Senate Majority Leader Expedites Vote on Landmark Stablecoin Bill: Decrypt
• SEC Punts on Dogecoin and XRP ETF Approvals: Decrypt

​Trakx News

• Ryan Shea published the April crypto update Damage Done assessing what the volatility-inducing Trump tariffs means for digital assets.

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.