Weekly Index Highlights, November 25, 2024

A banner week saw Bitcoin flirt with the symbolic $100,000 handle, but ironically equated to relatively modest progress for many mega and large cap token indices, amid evidence of increasing wariness over remaining momentum. Bitcoin added a moderate weekly +5.87%, taking 2nd place on a year-to-date (YTD) basis in this series, +126.15%. That compares to the biggest YTD outperformer, Solana (SOL), +133.77%, after it inched up just +1.36% for the week. Cardano (ADA) was weekly series outperformer, rising +28.86%; extending its YTD gain to +59.76%, as odds for its mainstream integration (via ETFs, etc.) shortened on news of SEC chair Gary Gensler’s confirmed exit.

This was a further consecutive week of solid average gains across key sub-categories (e.g., DeFi +11.10%, Culture +9.97%, Infrastructure +12.45%) and another sizable advance for Non-Programmable protocols, +24.19% on average. The latter were driven by a second weekly parabolic surge for Stellar (XLM), +84.64%, as unconfirmed reports emerged that XLM (and potentially XRP) were under consideration as part of a blockchain pilot of the Federal Reserve’s FedNow instant payment infrastructure. Polkadot’s (DOT) +45.03% outperformance of the Programmable sub-category, accompanied by Cosmos (ATOM), +32.09%, and others, propelled the General Purpose Smart Contract Platforms segment to a second straight weekly advance, this time of 15.38%, on average.

Modest week-on-week increases in our two staking reward rates were seen, with a +10 basis points (bp) change for the CF ETH Staking Reward Rate Index (ETH_SRR), and +22.94 bp for the CF SOL Staking Reward Rate Index (SOL_SRR). ETH_SRR has notably yet to flip definitively positive for the year, as that change still lags by -15.69 bp. Backtested values for our recently incepted SOL_SRR may be examined on the CF Benchmarks CF Staking Series product page, here. The chart there suggests this index has slipped -13.12% since early March 2024.

Indices measuring crypto’s highest capitalized beta advanced modestly across the board for a further week with, again, only nominal differentials between gains. Relative outperformer: CF Broad Cap Index (Diversified Weight), +7.81%. Relative underperformer: CF Institutional Digital Asset Index, +5.62%. Year-to-date (YTD) progress of individual indices within the series is of more interest. For instance, so far, a portfolio of the five largest cryptoassets by market capitalization, AKA the CF Ultra Cap 5, up +104.83%, has outshone all others in the series, narrowly topping the aggregate YTD return of Bitcoin and Ether (structured as the CF Institutional Digital Asset Index) +103.65%; and the CF Large Cap (Free Float Market Cap Weight) index, +103.43%.

The CF Digital Culture Composite Index’s +16.49% week-on-week jump was assisted by the re-emergence of Gaming segment strength, as the recent meme coin semi craze appeared to largely fizzle out. Meanwhile, the CF Blockchain Infrastructure Index’s +12.93% progress still has a way to go to erase its -21.50% YTD decline. The CF Web 3.0 Smart Contract Platforms Index added +11.80% for the week (see the CF DACS section for more detail) confirming that index’s YTD series outperformance, +47.53%.

CME Bitcoin implied volatility drifted mildly higher for a second week, with the CF Bitcoin Volatility Index Settlement Rate’s (BVXS) weekly change +6.17%. This means the year-to-date performance is again approaching a balanced state, as that change has narrowed to -5.18%.

The week saw inferable activity increasing at the short end, up to the middle of the CF Bitcoin Interest Rate Curve term structure. Still, note the 1-week rate moved quicker than the session rate. The former ticked up by around 10 percentage points to approximately 11.2%, while the latter rose about 8.2 points forward to 10.5%. An approximately 4.3 percentage point move at the 2-week tenor brought it relatively in line with the above, leaving it close to 10.3%. Any gains across the rest of the curve were milder from the 3-week onwards, as that rate edged up ~2.1 percentage points to 9.3%, and the 1-month tenor moved up about 1.4 of a point to circa 7.9%. Rates were largely static at the longer end: the 3-month ended the week near 3.7%, the 4-month at 1.4%, whilst the 5-month closed a fourth week with a zero reading.