CoinDesk Market Index Week in Review

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The CoinDesk Market Index (CMI) functions as a benchmark for the performance of the digital asset market, delivering institutional quality information to digital asset investors. Today’s takeaways are provided by Tracy Stephens, senior index manager of CoinDesk Indices with additional analysis from Connor Farley, CEO and cofounder of Truvius. For more on the CMI you can visit: coindeskmarkets.com.

This episode was hosted by Noelle Acheson. “Markets Daily” is executive produced by Jared Schwartz and produced and edited by Eleanor Pahl. All original music by Doc Blust and Colin Mealey.

Audio Transcript: This transcript has not been edited and may contain errors.

Wondercraft AI voice here to give you three crypto markets takeaways from last week. And stick around, at the end we'll have additional analysis from Connor Farley, CEO and cofounder of Truvius. First, Tracy Stephens, Senior Index Manager of CoinDesk Indices, provides markets highlights as of Friday, January 5th.

Starting with top performers: Powerledger, up 86% week-to-date, and Ethereum Name Service, up 44.7% week-to-date, lead among the 184 constituents in the CoinDesk Market Index this week. Meanwhile, Bitcoin, up 4.1%, has outperformed other large cap crypto assets this week amid expectations of the announcement of a spot bitcoin ETF in the US. Lastly, Liquid staking protocol LidoDAO has pulled ahead of other large protocols by market cap, gaining more than 15% so far this week.

Connor Farley, CEO and cofounder of Truvius, writes:

The new year is a time for reflection, and many in the digital assets industry are reflecting on the fifteenth anniversary of Bitcoin—the first and most recognized crypto asset whose price has since grown from ten cents to over forty thousand dollars and whose market cap now surpasses that of Berkshire Hathaway, Tesla, and Visa following a gain of over 160 percent in 2023. Over this period, however, many other blockchains and crypto-powered assets from multiple other sectors of the crypto economy have emerged, representing highly innovative technologies well-supported by equally compelling if not stronger investment cases alongside Bitcoin.

In fact, there are now over 70 crypto assets with market capitalizations greater than one billion dollars. These blockchain-powered assets are driving new and early business sectors like Decentralized Financial Services and Smart Contract Platforms, and together comprise a diversifying, investable asset class rooted in fundamental value. Examples of non-megacap assets driving recent performance include Injective Protocol, Osmosis, and Lido—all companies re-inventing efficient financial infrastructure built on blockchain technology and whose market capitalizations are in the high hundreds-of-millions to low billions. Market commentators often generalize non-Bitcoin crypto assets as “Alt-Coins,” primarily owing to the nascency of the asset class in the public eye and the learning curve associated with its mosaic of use-cases, but this generalization overshadows the potentially significant early-adopter investment premia for assets other than Bitcoin and Ether.

Evaluating the entire crypto asset class as a whole will be critical in 2024. The two megacap assets Bitcoin and Ether have both seen meaningful price appreciation heading into 2024, gaining 160 percent and 95 percent, respectively, in 2023, supported by a combination of more favorable macro conditions and specific upcoming market events like potential ETF regulatory approval and the Bitcoin halving slated for April. These forces may trigger rapid and broad investment adoption of digital assets and prove highly supportive for the two assets, but investors should keep a close eye on how priced-in these events may already be, and keep a similarly close watch on how fundamentally-driven crypto assets from other sectors of the crypto economy could outperform the megacaps in 2024 and beyond.

Like what you're hearing? Head on over to coindeskmarkets.com for more. We'll see you tomorrow.