Digital assets have shown resilience and growth over our latest rebalance period, bolstered by the historic launch of spot Bitcoin exchange-traded funds (ETFs) in the United States. This development underpins the accelerating mainstream acceptance and adoption of digital assets across the finance industry. Since debuting in January, these products have already accrued over $7.5 billion in new net flows, while total assets under management has reached $48.2 billion. This exponential early growth has significantly eclipsed not only the initial trajectory of gold ETFs but that of any new asset class in ETF history. Denoted by swelling institutional interest and confidence, the introduction of spot Bitcoin ETFs signals a pivotal milestone in the maturation and trajectory of both Bitcoin as an asset and the broader digital asset market. Investors can now fully reap the numerous benefits innate to traditional ETFs - namely liquidity, cost efficiency and ease of trading. These products provide a regulated avenue for institutional and retail investors alike to gain exposure to Bitcoin, streamlining access and substantially expanding its investor base.
On the macro front, robust inflation and income data clash with the case for near-term rate cuts, the Fed seems inclined to dismiss these trends as fleeting, tied to buoyant capital markets. Most market participants anticipate easing to commence by June, as consumer spending tempers amid eroding household balance sheets and creeping labor market slack. Recent economic indicators suggest the lagged impacts of the Federal Reserve's restrictive monetary policy may still be unfolding. This casts doubt on optimistic "no landing" narrative for the economy's trajectory. Lingering strains on regional lending institutions exemplify the credit market's lingering vulnerability to the Fed's hawkish stance. Ultimately, the Fed’s delayed monetary policy effects likely have further to run, despite nascent signs of recovery. However, markets seem poised to dictate upcoming moves based on the sustainability or reversal of the risk asset rally.
Notwithstanding lingering macroeconomic headwinds, the rise of investor interest surrounding the high-profile launch of spot Bitcoin ETFs has helped increase sentiment across the board for digital assets. All of our flagship portfolio indexes posted robust returns, outperforming traditional risk assets such as equities. The CF Web 3.0 Smart Contract Platforms Index rose by 76%, marking its second consecutive quarter of leading all our flagship portfolio indices, outpacing the overall market (as measured by our CF Broad Cap Index) by nearly 17% in absolute performance. Lastly, the CF DeFi Composite Culture Composite Index lagged behind the rest, despite posting a reasonably impressive 50% gain over our observation period.
Equities in Price Discovery, Crypto to Follow?
Strong BTC ETF Demand Bleeds into ETH Futures
Ether's Price Surge Propels Lido's TVL to New Highs
Bitcoin's Next Chapter: Layer-2 Ecosystems
To read the full compilation report or a specific index's report, please click on the respective links below:
Lastly, our Quarterly Attribution Reports are designed to help investors understand the performance of digital assets through a purpose-centric lens called the CF Digital Asset Classification Structure (CF DACS). To learn more about CF DACS, please utilize our interactive CF DACS Token Explorer.
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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell any of the underlying instruments cited including but not limited to cryptoassets, financial instruments or any instruments that reference any index provided by CF Benchmarks Ltd. This communication is not intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. Please contact your financial adviser or professional before making an investment decision.
Note: Some of the underlying instruments cited within this material may be restricted to certain customer categories in certain jurisdictions.
Ken Odeluga