Market Recap: Momentum Builds on Dovish Fed Signals

Gabriel Selby -

Key takeaways for the month:

  • Fed's Dovish Tone and Ethereum's Latest Update: The Fed's latest dot plot suggests 75 bps in cuts for 2024, despite an extended timeline, creating a dovish tone that supported digital asset sentiment in the latter half of the month. Concurrently, Ethereum's successful "Dencun" update, aimed at lowering transaction costs and fostering mainstream adoption, coincided with asset managers filing for a spot Ether ETFs and record-high institutional interest on the CME futures market.
  • Postive Momentum Remains Intact: Most digital assets experienced positive price action, with the CF Free-Float Broad Cap Index and CF Diversified Large Cap Index rising by 14.5% and 15.9%, respectively. The CF Digital Culture Composite Index was the top performer, rallying nearly 50% before retracing to end the month about 30% higher. The CF Blockchain Infrastructure Index, however, lagged behind with a mostly flat price performance.
  • Halving Hype Propels Bitcoin Cash & Fantom's Sonic Boom: Bitcoin Cash (BCH) led the major cryptocurrencies as investor optimism grew ahead of its planned April halving. Fantom's FTM token also achieved a triple-digit gain, supported by the upcoming release of Sonic. In contrast, Polygon's MATIC, Chainlink's LINK, and Cardano's ADA were the only three major-tokens to post negative performance in March.
  • Bullish Sentiment Prevails: With the anticipated Bitcoin halving in the coming weeks, futures-based investor sentiment has stayed constructive, leading to a broad-based upward shift in the CF Bitcoin Interest Rate Curve (BIRC). Nearly all tenors experienced increases, except for the one-week (1W) tenor, which saw a nominal decrease. The most substantial changes were observed in the mid to longer-term tenors, indicating cautious optimism for the future.
  • Inflows Remain Strong as Futures Open Interest Hits New Highs: March saw a slight decrease in net monthly inflows, falling from $6.1 billion to $4.5 billion, though they remained near record levels. Total open interest for both Bitcoin and Ether futures continued to climb, rising 23.8% and 9.4%, respectively, from the previous month. Both CME Bitcoin and Ether open interest reached new all-time highs.
Source: CF Benchmarks, Bloomberg, as of March 31, 2024

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