CF Benchmarks Quarterly Attribution Reports

Bank Failures and Lingering Inflation Pressures Whipsaw Digital Assets

The onset of the rebalance period introduced a fresh series of challenges for global markets, marked by a series of U.S. bank failures that initially dampened expectations of future interest rate hikes. This development significantly impacted digital assets, resulting in bitcoin prices surging past the $30,000 mark for the first time since June 2022. However, this positive momentum in price was short-lived due to opposing influences arising from persistently higher inflation, coupled with a robust labor market. These indicators suggest that further tightening efforts might be required from a monetary authority standpoint. Market-based expectations for future policy rates have steadily drifted higher over recent months, but investors still anticipate rate cuts by the end of the year.

From an industry standpoint, several network milestones have been achieved. Firstly, the Ethereum network completed its latest upgrade known as the Shanghai hard fork, which unlocked withdrawals of staked Ether for network validators. This upgrade marked the final step in Ethereum's transition to a Proof of Stake (PoS) system. For Bitcoin, the recent launch of the BRC-20 token standard has allowed for new immutable information to be stored on the Bitcoin blockchain. This standard is being utilized to create NFTs (or digital artworks) on the world's most time tested blockchain for the first time, significantly boosting transaction fee revenues for miners.

Ultimately, the positive price performance remained concentrated within the multi-cap series indices. This dominance was largely due to the two leading mega-cap tokens, Bitcoin and Ether, which outperformed the rest of their constituents. The CF Ultra Cap 5 Index led the pack, rising over 14% and outperforming the broader market. Conversely, the CF Digital Culture Composite Index faced broadly negative pricing sentiment, finishing the rebalance period as the group’s primary laggard with a fall of over 21%.

Index Performance

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Lastly, our Quarterly Attribution Reports are designed to help investors understand the performance of digital assets through a purpose-centric lens called the CF Digital Asset Classification Structure (CF DACS). To learn more about CF DACS, please utilize our interactive CF DACS Token Explorer.

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