The Biggest Battle-Test for Stablecoins

May ended with the market cap of the entire cryptoassets market resisting at $1.38T down from $1.82T since April. Between panic sellers and ”hodlers,” returning to the fundamentals has been our main thesis that resonates especially during challenging times. In this monthly review, we will delve deeper into the macroeconomic factors driving these drops and showcase some valuable onchain metrics indicating healthy fundamentals. We will also shed light on Terra’s collapse, what led to it, and the repercussions that followed. Moreover, this report will cover the month’s most significant developments on the regulatory landscape, DeFi, and the wider metaverse.

Our Research Team has been exploring onchain indicators such as the Net Unrealized Profit/Loss (NUPL), revealing that investors who bought Bitcoin 1-2 years ago represent over 30% of the selling pressure. In the last bear market, they were representing over 40%. In this section, we’ll walk you through a few indicators our team found insightful this month.

Correlation Matrix

In Figure 1, we can observe that the correlation coefficient between BTC, ETH, and equities, namely the S&P 500 (SPY) and Nasdaq (QQQ), has been increasing consistently over the years. Simultaneously, Gold’s (GLD) correlation to these assets has decreased from very low to negative.

Figure 1 – Asset Correlation Matrix (Multiple Time Horizons)

The red color means higher correlation among assets, blue color means lower or negative correlation among assets. Lower or negatively correlated assets have diversification benefits that could improve portfolio risk-adjusted returns.

Weekly Returns

The returns of the top five cryptoassets over the last week were as follows — BTC (7%), ETH (0.82%), BNB (-1.86%), ADA(9.44%), XRP (2.32%)

Net Inflows per 21Shares ETP

The net outflows of our ETPs amounted to $6.75M in the past week. Find the breakdown of the inflows and outflows per ETP below.

State of Crypto is Out!

We are thrilled to share that our 6th edition of State of Crypto has finally seen the light; this time around we discuss the portfolio allocation of cryptoassets. The report overviews industry happenings over the past few months and provides data on optimizing portfolio allocation for various risk profiles and portfolio strategies based on crypto-native indicators, sourced from the blockchain.

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Research Newsletter

Each week the 21Shares Research team will publish our data-driven insights into the crypto asset world through this newsletter. Please direct any comments, questions, and words of feedback to research@21shares.com

Disclaimer

The information provided does not constitute a prospectus or other offering material and does not contain or constitute an offer to sell or a solicitation of any offer to buy securities in any jurisdiction. Some of the information published herein may contain forward-looking statements. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties and that actual results may differ materially from those in the forward-looking statements as a result of various factors. The information contained herein may not be considered as economic, legal, tax or other advice and users are cautioned to base investment decisions or other decisions solely on the content hereof.