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Nasdaq Crypto Index Europe: January’s market commentary and performance attribution

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3 månader sedan

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7 februari, 2024

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Please find below a monthly update for January’s performance of the Nasdaq Crypto Index Europe (”NCIE”), the benchmark of our flagship European product, the Hashdex Nasdaq Crypto Index Europe ETP (Ticker HDX1).

NCIE Index Performances in USD (as of end of January 2024) : MTD ~0%, YTD ~0% and 12m ~+71%.

Market update

The Nasdaq Crypto Index Europe (NCIE) maintained a slight positive growth of 0.01% in January, with Bitcoin leading with modest gains of 2.5%, while altcoins lagged behind.

A significant event was the SEC’s approval of Bitcoin spot ETFs, allowing major players like BlackRock and Fidelity to enter the market. This led to a record-breaking $4.5 billion inflows into Bitcoin funds within a week of launch. The true impact of spot Bitcoin ETFs will unfold in the coming months and years as financial institutions enter the market. Despite this uncertainty, we remain optimistic about the crypto asset class for the rest of the year and beyond.

NCIE relative to other asset class

Monthly performance

Source: Hashdex and Bloomberg, as of January 31, 2024.

January saw high volatility in Bitcoin and other crypto assets. Despite significant inflows into ETFs, there were notable outflows, particularly from the Grayscale fund (GBTC), which previously held over $30 billion in assets. The fund’s conversion to a spot ETF allowed restricted investors to liquidate their positions, leading to substantial outflows and downward pressure on Bitcoin prices, as illustrated in the above graph.

NCIE January’s performance attribution

Source: Hashdex and Bloomberg, as of January 31, 2024.

This month, altcoins’ underperformance restrained NCIE gains. Given recent highs, a correction in altcoin prices was expected. Despite this, investors who had exposure in recent months still saw significant price appreciation. The Fed’s announcement of potential interest rate cuts, delayed from March to May, sustained a prevailing sense of risk aversion in the market.