Trakx Weekly Update: November 11

Key Crypto Market Figures

CTIs Weekly Performance

Last week was rather quiet in the digital asset space… OR NOT! The benchmark Trakx Top 10 Crypto CTI rallied 27% during the past seven days, as Trump’s victory in the US election triggered a broad surge in crypto prices as market participants celebrated the imminent arrival of the first pro-crypto President in history. While the major cap cryptocurrencies performed very well – Bitcoin celebrated by surging to a new all-time high above $82K – the best performer amongst the suite of Trakx crypto indices was the Meme CTI. It ripped almost 50% higher over the week and even the bottom placed, typically defensive, Inflation Hedge CTI managed to stay in the green, gaining 1.1%.

Trump Clean Sweep

Part of the reason for the strength of the rally was that heading into last Tuesday’s vote most polls considered the result “too close to call”, in contrast to the online betting markets which – last minute minor wobble aside – had Trump firmly out in front. Consequently, Trump’s victory caught some investors by surprise. Moreover, what was certainly not priced-in was the extent of his victory. Trump not only secured sufficient electoral college votes to become President Elect, but he also won the popular vote, a majority in the Senate and quite possibly a majority in the House of Representatives as well (the Republicans require just three more seats as counting continues). If confirmed, such an election “clean sweep” would make it much easier for the Trump administration to turn his pre-election pledges into actual legislation.

Strategic Bitcoin Reserve

Top of the wish-list for crypto investors is the establishment of an officially-backed US Bitcoin Reserve. The idea has been floating around for several months and is championed by crypto supporter Senator Cynthia Lummis (aka Crypto Queen). If approved, her bill would see the US government purchase up to 200,000 BTC per year for five years, meaning the US strategic reserve would own 1 million BTC or just under 5% of the total supply (an amount broadly similar to that held by US spot ETFs). Of course, there are still a couple of months until Trump gets sworn into office and politicians have form when it comes to not keeping their pre-vote promises, so it remains to be seen whether the US will set up such a Bitcoin reserve. That said, given the magnitude of Trump’s victory failing to deliver on his promises would be politically very damaging to his administration.

Election Litmus Test

An early test that many crypto players will judge Trump on will be his promise to free Ross Ulbricht – the founder of Silk Road who the crypto community has always viewed as being harshly treated by the authorities because he provided the first real world use case for cryptocurrency at scale – and the firing of current SEC Chair and arch crypto nemesis Gary Gensler. Indeed, on the later, there is considerable speculation as to who would be his replacement. Top of the selection list is Hester Peirce, a Commissioner with the SEC who is affectionately called “Crypto Mom” by many in the industry because of her support for digital assets.

Fed Easing

Finally, if all that wasn’t enough, the Fed also delivered a follow-up 25bp rate cut at last week’s FOMC meeting, putting the target funds rate some 75bp below the cycle peak. In the accompanying press conference Chair Powell’s tone tilted more dovishly than many central bank watchers had expected in light of the back-up in US bond yields since the first Fed cut. So, even though the cut was fully anticipated, it nevertheless provided a welcome boost to risk appetite (and hence crypto prices) as investors expect global liquidity conditions to ease further in the coming months.

Sources: Trakx, Coingecko, Alphavantage

Market Trends

• Bitcoin price hits $80,000 all-time high in massive weekend crypto rally: DLNews
• How Solana Meme Coins and DeFi Pushed SOL Above $200: Decrypt
• Senator Lummis’ Bitcoin reserve proposal faces uphill battle: Cointelegraph
• Donald Trump More Likely to Pardon Jan. 6 Protestors Than Silk Road Founder: Polymarket: CoinDesk
• Who’s in line to replace Gary Gensler at the SEC?: Protos
• Crypto market remains bullish following Fed rate cut: CryptoSlate

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.