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The CoinDesk Market Index (CMI) functions as a benchmark for the performance of the digital asset market, delivering institutional quality information to digital asset investors. Today’s takeaways are provided by Tracy Stephens, senior index manager of CoinDesk Indices with additional analysis from Todd Groth, head of index research at CoinDesk Indices. For more on the CMI you can visit: http://coindeskmarkets.com/.
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This episode was hosted by Noelle Acheson. “Markets Daily” is executive produced by Jared Schwartz and produced and edited by Eleanor Pahl. All original music by Doc Blust and Colin Mealey.
Audio Transcript: This transcript has not been edited and may contain errors.
Wondercraft AI voice here to give you three crypto markets takeaways from last week. And stick around, at the end we'll have additional analysis from Todd Groth, Head of Research at CoinDesk Indices. First, Tracy Stephens, Senior Index Manager of CoinDesk Indices, provides "week-to-date" numbers -- over the Friday to Friday time period.
Among large cap assets, performance has been mixed. Three of the five assets in the Large Cap Select Index are in the red so far this week, those being bitcoin, down 1.4%, ADA, down 1.7%, and ether, down four point three percent. MATIC, up four point seven percent, and SOL, up 2.5%, continue to outperform.
The Computing Sector Index saw a pullback this week, down 6.1%, as major assets in the decentralized computing space saw drawdowns, including ChainLink, down 14% week-to-date and The Graph, down four point seven percent.
Layer 1 Smart Contract Platform Avalanche, up 33% week-to-date, is a top performer this week. This comes following what has been a banner year for another alternative Layer 1, Solana, which is up nearly 5x on the year.
Stay tuned: after the break we'll bring you expert analysis on this week's takeaways, provided by Todd Groth, Head of Research at CoinDesk Indices.
Todd Groth, Head of Research at CoinDesk Indices writes:
Let's break down the week in macro and crypto markets.
Within the broader markets, the economic landscape seems to be setting up to be favorable for digital assets. Recent events like the softer-than-anticipated CPI report suggest a potential nearing end to the hiking cycle, echoing sentiments from the last FOMC event and the U.S. nonfarm payroll miss. Although the crypto market initially retreated on the data releases, this was less about the macro and more about the overextended positioning from a month long price rally, which masked the supportive news.
This slight snag due to overly bullish sentiment resulted in the largest daily liquidations of longs since August, at $300 million, but is necessary for a healthy rally to continue. Recent rally leaders include Avalanche, which surged by 33% this week, following Solana's lead, which in turn is up nearly 5x from last year's bear market.
Increased interest in digital assets and spot ETF newsflow are drawing Closed End Spot Trust discounts to net asset value spreads closer to parity, evidenced by both the Grayscale, Osprey Bitcoin and Ethereum trust discounts converging towards their underlying NAV. However, this enthusiasm has led to overzealousness, seen in widening valuations of altcoin closed-end trust premiums, such as Grayscale Solana (GSOL) and Chainlink Trusts (GLNK), deviating further from net asset value.
The inflated premiums of altcoin trusts serve as an indicator of crypto sentiment, as they are less impacted by the spot ETF newsflow which is focused on Bitcoin and Ether trusts. Interestingly, digital assets have broken away from positive correlations with equities. Bitcoin (XBX) and CoinDesk Markets Index (CMI) trade independently of SPX, while Ether (ETX) trades inversely to equity risk. Also of interest is that the relationship between digital assets and the U.S. 10-year bond yields has strengthened, showcasing a trend where rising yields coincide with crypto gains, particularly ahead of a dovish FOMC and deflationary CPI and nonfarm payroll prints.
Now, onto Reddit's closed Community Points program token, MOON. The token experienced a staggering 230% surge in the past week, amidst hopes for its revival. The total supply will cap at 83 million tokens, as moderators plan to independently develop tools to bolster its value accrual. The recent price spike came after moderators announced intentions to revive and autonomously sustain the program, indicating a solid community response. Reddit admins are set to renounce the Moons contract permanently by the month's end, ensuring no further alterations can be made. Additionally, all MOON held in the "Community Tank" will be burned, reducing the total supply from approximately 125 million to the capped 83 million. The moderator team outlined plans for future developments that could further bolster MOON's value proposition in the coming months, intending to leverage available tools and APIs to enhance Moons' utility.
In essence, the macro outlook for digital assets remains promising amid evolving economic cues, while the example of MOON token's revival shows a renewed enthusiasm for digital assets, being supported by community-driven efforts to augment its value proposition beyond Reddit's purview.
Like what you're hearing? Head on over to coindeskmarkets.com for more. We'll see you tomorrow.