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Jul 02, 2024

Market Recap: 'June Gloom’ Prevails Amidst Building Tailwinds

Key takeaways for the month:

  • Navigating the Tides: Despite cooler inflation prints and declining interest rates providing some renewed tailwinds, risk-off sentiment prevailed. Investors are now turning their attention to November's U.S. elections, focusing on potential policy regime changes that could result from a new administration. Additionally, anticipation of the launch of spot Ether ETFs in the U.S. has prompted asset managers to look for the next big opportunity, with early applications for spot Solana ETFs already being submitted to the SEC.
  • Index Performance: Last month's portfolio index performance was broadly negative. The CF Free-Float Broad Cap Index, our broadest gauge of the institutionally investible market, recorded an 11.1% decline. Mega-cap tokens, represented by the CF Ultra Cap 5 Index, emerged as relative top performers, falling by only 9.9%. In contrast, the CF Digital Culture Index, focused on digital art and collectibles, suffered the most, with a 28.4% decline due to suppressed NFT market activity. The CF Blockchain Infrastructure Index also faced significant challenges, dropping by 26.4%, after leading contributors pared last month's gains.
  • Tokens in Focus: AAVE's AAVE token (-6.1%) and Maker's MKR token (-7.1%) declined the least in June. Positive developments in both ecosystems provided a ballast amid a broader market pullback. Curve DAO's CRV token (-39.0%) and Chiliz's CHZ token (-45.5%) were the month's bottom performers. Curve experienced a series of liquidations totaling 100 million CRV in mid-June, causing the token's underperformance.
  • Bitcoin's Network is Adapting to Change: Bitcoin's network hash rate fell slightly in the past month, declining by 5.3% to reach 410 exahashes per second. The mining difficulty, which measures how hard it is to find a new block and thus adjusts to maintain a consistent block creation time, declined by 0.8% during the month. The next difficulty adjustment will likely be in the first week of July and is trending towards a 6.5% decline. Despite the decline in price, an increase in network fees helped to boost mining revenues by 0.17% in June. Of the miner rewards during the month, 10.1% came from fees, up from 6.7% in May.
  • DeFi Activity is Weathering the Price Storm: Total value locked (TVL) in decentralized finance (DeFi) protocols experienced a slight decline over the past month, falling from $202 billion to approximately $177 billion. This decrease can be largely attributed to the overall decline in cryptocurrency prices. The most significant contributors to this drop were liquid staking protocols on Ethereum, as the value of Ether fell.
  • NFT Market Shift: Solana has taken the top position on the NFT sales volume leaderboard in June, boasting a 30.9% increase in sales, even as transaction counts fell by 60.9%. In contrast, both Bitcoin and Ethereum saw declines in sales volume. Bitcoin's sales volume plummeted by 61.2% as interest in Ordinals waned amid market turbulence. Meanwhile, Ethereum experienced a more modest 15.8% decline in sales volume, though it did see a 4.6% increase in the number of transactions.
Source: CF Benchmarks, Bloomberg, as of June 30, 2024

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