The NEAR Foundation submitted a proposal on Jun. 16, 2021, to establish an Ecosystem Treasury DAO.
The Harmony team has updated the release notes for v4.1.8 of its mainnet client.
The proposal to approve Mirror V2 has passed.
The current Granada proposal has passed the Exploration Phase, which ended on Jun. 23, 2021.
Sector Performance Overview
Last week was a bloodbath in crypto markets. According to Messari’s sector convention, all sectors ended the week with double-digit losses. The least affected sector was Currencies which ended the week with a 12% loss aided by Bitcoin’s resilience to the continued market drop as a result of investors moving down the risk curve to less volatile assets.
High beta sectors such as Decentralized Exchange and DeFi suffered the most during the week. The DeFi sector was hurt by the weekly performance of Uniswap (-20.9%), Aave (-30.16%), and MakerDAO (-24.15%). Similarly, the DEX sector was dragged down by Uniswap, PancakeSwap (-15.93%), THORChain (-30.52%), and SushiSwap (-17.99%).
Sector Portfolio Weights
The sector portfolio weights for this week’s report are as follows. The portfolio allocations are constructed following the market capitalization methodology using data as of June 24th.
Sector Drill Down
Performance during the week ending on June 24th was brutal across cryptocurrency markets. China’s expanding crackdown on Bitcoin mining was the main catalyst for this week’s crash. On Monday, China summoned several major banks and payment companies to impose tougher actions over the trading of cryptocurrencies. Institutions were told not to provide products or services that include trading, clearing, or settlement of cryptocurrency transactions which ultimately led to a widespread bearish sentiment across the broader market. As a result, all sectors experienced heavy losses early on in the week with Bitcoin dipping below $30,000 for the first time in more than five months. The market shock was more drastic for risker tokens (primarily in the DeFi, DEX, and Web3 sectors). Losses across high beta tokens ranged from 20-30% over the past 7 days.
Similar to the sector performance, the Currency portfolio suffered the least losses during the week. The portfolio’s relatively high allocation to Bitcoin, which finished the week with only a 10% loss, was the reason for the outperformance of the Currency portfolio relative to other sector portfolios potentially signaling that appetite for risk is nowhere to be found.
The rotation from a risk-on to a risk-off environment can be better visualized by the recent bump in Bitcoin’s dominance. Since the market top in mid-May, Bitcoin’s dominance increased approximately 10% as investors pivot towards low volatility assets.
Following the same pattern as last week, the DEX and DeFi portfolio suffered the most losses ending the week with a -23% return. In both cases, Uniswap was the main driver of performance given its high allocation in the portfolios.
Over the past two weeks, volatility, defined as the rolling standard deviation of daily log returns, reverted back to normal levels after experiencing a massive spike due to the market turbulence in May. However, portfolio volatility is starting to creep up once again as uncertainty about market conditions continues to mount.
Similar to last week, the DEX, DeFi, and Web3 portfolios experienced the highest increase in volatility during the week going from 5-6% to 10-11% in the span of three days. The Bitcoin-heavy portfolios (Top Assets and Currency portfolios) only saw a 2% bump over the same period of time.
In terms of correlation with Bitcoin, sector portfolios continue to see a decline week-over-week. As mentioned earlier, this behavior is due to Bitcoin’s outperformance relative to the broader market.
Similarly, the correlation with Ethereum is also seeing a slight decline this week but not as noticeable as with Bitcoin. Notably, the Currency portfolio (which has an allocation of 88% to Bitcoin) has seen the biggest decline as the correlation between Ethereum and Bitcoin trends lower.
