CoinDesk Indices Smart Contract Platform Highlights the Difference Between Bitcoin and Ether Performance

• The CoinDesk Indices Smart Contract Platform Index has moderated in price.
• Stablecoin movement on or off of smart contract platforms may hint at where the latter are headed.

CoinDesk Indices Smart Contact Platform Select Index (SCPX) has slowed following a 12% move higher since June 15.

The year-to-date spread in performance between the SCPX (47.16%), and the 81% gain in the bitcoin heavy CoinDesk Currency Select index (CCYS), may represent an opportunity dressed as underperformance. Stablecoin movement into smart contracts may indicate when it may occur.

The SCPX, aggregates the performance of seven digital assets within the smart contract platform sector. Ether represents 82.5% of the index, while the remaining six assets compose the remaining 17.5%.

The index itself is up 43% year-to-date versus a 55% increase in ETH. This discrepancy stems from weaker performance from remaining constituents (ADA, MATIC, SOL, DOT, AVAX, ATOM).

Still, with BTC and ETH maintaining a correlation coefficient of 0.92, the strong pricing relationship implies that performance disparities may narrow over time.

The recent flurry of activity surrounding the potential approval of a spot bitcoin ETF has boosted BTC relative to other digital assets, and understandably. BTC has improved 13% versus ETH since June 6. ETH as an individual asset has risen 3% over the same time period.

Removal of BTC from the CCYS results in the SCPX outperforming the currency select index by close to 4%

Tracking Stablecoins

While bitcoin receives most attention specific to stablecoin flows, stablecoins themselves may hint at where smart contract platforms are headed.. Stablecoin movement on to exchanges often indicates BTC buying – an exchange of one store of value for another.

Stablecoin movement on to smart contract platforms may also foreshadow smart platforms’ path forward, although a more apt description may be an exchange of value for utility. According to on-chain analytics firm Glassnode, the stablecoin supply on smart contract platforms is in a prolonged decline that began in March.

The metric tallies the balances of USDT, USDC, BUSD, and DAI, showing their separate and aggregate impacts. Stablecoin supply increases indicate growing demand for smart contracts usage, which would be bullish for assets with the SCPX. Lessening supply would indicate the opposite.

USDT composes the largest share of stablecoins on smart contract platforms after having passed USDC in May.

SCPX strength, despite the reduced stablecoin supply, underscores the resilience of ETH, despite its underperformance compared to BTC.

Investors who remain bullish on smart contract platforms may be looking for an uptick in stablecoin supplies as a signal of improved sentiment that would affect ETH as well as the remaining assets within the SCPX. This may hold especially true for those with longer investment time horizons, and who have the ability to accumulate positions in SCPX assets, while BTC remains on center stage.

This article was written and edited by CoinDesk journalists with the sole purpose of informing the reader with accurate information. If you click on a link from Glassnode, CoinDesk may earn a commission. For more, see our Ethics Policy.