Cryptoassets of the Month: March 2023

Every month, 21Shares research team will present the cryptoassets of the month that increased or dropped in value by more than 15%. With a data-driven approach, we highlight the most important developments and events causing price movements.

Figure 1 – 30-Day Performance: Cryptoassets of the Month vs. Traditional Asset Classes

Data Source: 21Shares, CoinMarketCap, and Yahoo Finance, from 28-Feb-2023 to 31-Mar-2023 (Close Price)

XRP Ledger (XRP)

XRP traded up 42.80% in the past month as traders speculate that its legal battle against the SEC seems to be nearing its end. In December 2020, the SEC filed a lawsuit against Ripple, arguing that XRP satisfies the Howey test’s requirements and is thus a security under US laws. On September 17, 2022, both parties agreed to forgo a trial, opting for a summary judgment. A Bloomberg senior litigation analyst, Elliot Stein, estimates that a ruling will happen within the next three months. Furthermore, exchange data from CoinGecko revealed that the XRP surge was primarily driven by South Korean traders. On March 29, XRP trading made up 37% of all volume on Bithumb and 18% on UpBit, the two largest South Korean exchanges by trading volume.

Stellar (XLM)

Stellar’s native token XLM rose 28.81% over the past month. On March 13, it was announced that Stellar would be connected to Polkadot and its ”canary network” Kusama via the newly built Spacewalk bridge. On March 28, Coinme’s wallet integrated USDC on the Stellar network. The move aims to target the cash remittance market, as Coinme is the most extensive crypto-cash network in the US, with over 40,000 locations nationwide. Regarding Stellar Aid Assist, the aid disbursement system leveraging the Stellar blockchain in collaboration with Circle and MoneyGram is being used in pilot programs by the United Nations High Commissioner for Refugees (UNHCR) to deliver cash assistance to internally displaced persons in Ukraine. The program aims to reach 5,000 persons by April.

Bitcoin (BTC)

Bitcoin rallied 23.03% in the past month on the back of a looming banking crisis. On March 13, the Federal Reserve had to step in to protect all depositors of Silicon Valley Bank, which experienced a bank run two days before, and of crypto-friendly Signature Bank, controversially shut down by its state chartering authority. Then, on March 19, UBS agreed to buy Credit Suisse in an emergency rescue deal brokered by Swiss authorities. Meanwhile, Bitcoin decoupled from risk assets like stocks and showed an increased correlation to Gold as investors turned to it as a hedge against bank risk. At its core, Bitcoin is a non-sovereign form of money that exhibits unique characteristics (trustless, permissionless, and censorship-resistant, among others). Indeed, one of Satoshi Nakamoto’s primary motivations for creating Bitcoin was to have an alternative form of money outside central banks’ control.

Strategies of the Month: March 2023

Every month, our research team will also present the best-performing strategies of the month in our product suite. With a data-driven approach, we highlight the most important developments and events causing price movements.

Figure 2: 30-Day Performance: Strategies of the Month vs. Traditional Asset Classes

Data Source: 21Shares Index Management Console and Yahoo Finance, from 28-Feb-2023 to 31-Mar-2023 (Close Price)

HODLV

The 21Shares Crypto Basket Equal Weight ETP (HODLV) appreciated 17.45% over the past month. HODLV tracks the investment results of an equally-weighted index composed of the top 5 largest cryptoassets based on market capitalization. The index’s best-performing asset was XRP, which appreciated 42.80% over the past month, followed by Bitcoin.

HODLX

The 21Shares Crypto Basket 10 ETP (HODLX) traded up 16.49% over the past month. HODLX seeks to track the investment results of an index composed of the top 10 largest cryptoassets based on market capitalization. Bitcoin and Ethereum currently represent ~86% of the index, which explains why the index’s performance was correlated with both assets over this period. Regarding Ethereum, the long-awaited Shanghai upgrade will launch on April 12, closing the loop on staking liquidity by allowing investors to withdraw their staked ETH.

KEYS

The 21Shares Bitwise Select 10 Large Cap Crypto ETP (KEYS) rose 16.48% over the past month. KEYS seeks to track the investment results of an index composed of the top 10 cryptoassets ranked by inflation-adjusted market capitalization. Because Bitcoin and Ethereum’s weights in the index represent about 93%, the index’s performance tends to be highly-correlated with both assets, as was the case over this period.

ABBA

The 21Shares Bitcoin Suisse Index ETP (ABBA) rose 15.08% over the past month. ABBA seeks to track the investment results of an index composed of Bitcoin and Ethereum based on market capitalizations. Investors should understand that Bitcoin and Ethereum serve different use cases and can complement each other in a portfolio. The former is positioned as a non-sovereign form of money, while the latter promises to be the foundational infrastructure for the new iteration of internet services.

HODL

The 21Shares Crypto Basket Index ETP (HODL) traded up 13.49% over the past month. HODL seeks to track the investment results of an index of the top 5 cryptoassets ranked by the 2050 market capitalization. The 2050 market capitalization is calculated using a projected 2050 supply number and current prices. Bitcoin and Ethereum’s weights are currently around 50% and 30%, while Polkadot is the third-largest constituent with a weight of ~13%. Smart contract platforms, like Ethereum and Solana, operate in isolation. In contrast, Polkadot works at a level below (interoperability), supporting a growing ecosystem of specialized blockchains called parachains.

BOLD

The 21Shares Bytetree BOLD ETP (BOLD) traded up 11.21% over the past month. BOLD offers volatility-managed exposure to Bitcoin and gold. Bitcoin’s 30-day rolling correlation to gold reached 0.5, surpassing its correlation to the S&P 500 for the first time since December 2020. Gold is the seminal store-of-value asset, used as money since the early days of civilization. Investors tend to buy gold during adverse macroeconomic conditions and inflationary environments. Due to the banking incidents observed in March, investors have now turned to Bitcoin as an alternative to the traditional financial system. The strategy adjusts weightings monthly according to historical volatility, allocating a higher weight to the less volatile asset. BTC’s allocation in the past month hovered around 20%.

MOON

The Sygnum Platform Winners Index ETP (MOON) rose 9.89% over the past month. MOON seeks to track the investment results of an index composed of the native tokens of the most prominent blockchain protocols, including only the largest network in a family of forks. MOON’s weighting methodology goes beyond backward-looking metrics like market cap and liquidity. It also includes early and leading indicators of value creation in the underlying ecosystems, such as developer engagement and public interest via social media.

ALTS

The 21Shares Crypto Mid-Market Index ETP (ALTS) appreciated 7.55% over the past month. ALTS seeks to track the investment results of an index capturing the mid-cap portion of the cryptoasset market. BNB and XRP are the largest constituents of the index with weights of ~39% and ~22%, respectively. BNB underperformed the broader crypto market as the Commodity Futures Trading Commission (CFTC) charged Binance and its founder, Changpeng Zhao, with “willful evasion of federal law and operating an illegal digital asset derivatives exchange” on March 27.

STAKE

The 21Shares Staking Basket Index ETP (STAKE) traded up 6.49% over the past month. STAKE seeks to track an index comprising the largest cryptoassets with institutional-grade support for staking. Staking is a process whereby investors, commonly referred to as validators, commit a portion of their cryptoassets (the “stake”) to secure a blockchain by confirming transactions – and gain access to a recurring value stream of native tokens to compensate them for their work. Staking is a core energy-friendly feature of Proof-of-Stake (PoS) blockchains, and each blockchain network has its own set of staking requirements. BNB and ADA are the largest constituents of the index with weights of ~30% and ~20%, respectively.

Research Newsletter

Each week the 21Shares Research team will publish our data-driven insights into the crypto asset world through this newsletter. Please direct any comments, questions, and words of feedback to research@21shares.com

Disclaimer

The information provided does not constitute a prospectus or other offering material and does not contain or constitute an offer to sell or a solicitation of any offer to buy securities in any jurisdiction. Some of the information published herein may contain forward-looking statements. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties and that actual results may differ materially from those in the forward-looking statements as a result of various factors. The information contained herein may not be considered as economic, legal, tax or other advice and users are cautioned to base investment decisions or other decisions solely on the content hereof.